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Withdrawal rates › 50 years

Is 4% a safe withdrawal rate for 50 years?

A 4% withdrawal ($40k a year from $1M, raised with inflation) lasted 50 years in 75% of start years since 1871 with a 60/40 portfolio, and 90.4% with 100% stocks.

It lasted most of the time: the money ran out in 26 of 104 start years from 1871 to 1974. Failures clustered in start years 1899, 1901–1903, 1905–1907, 1909–1912, 1937 and 1959–1969, among others.

The worst start was 1966, when the money ran out in year 25. Among the start years that lasted, 1936 came closest, finishing with $57k.

In 55% of start years the portfolio ended above the $1M it started with, after inflation. The median ending balance was $1.4M.

Cutting spending by 20% whenever the portfolio sat more than 20% below its real high raised success to 98.1%. Holding two years of spending in cash and drawing on it after down years lowered it to 66.3%.

Of the four mixes, 100% stocks lasted most often, at 90.4%.

1871: lasted, $4.7M left18711872: lasted, $5.1M left1873: lasted, $5.9M left1874: lasted, $5.9M left1875: lasted, $5.7M left1876: lasted, $5.3M left1877: lasted, $7.5M left1878: lasted, $6.9M left1879: lasted, $5.8M left1880: lasted, $4.9M left18801881: lasted, $2.4M left1882: lasted, $2.9M left1883: lasted, $3.0M left1884: lasted, $3.6M left1885: lasted, $3.3M left1886: lasted, $2.0M left1887: lasted, $1.9M left1888: lasted, $2.4M left1889: lasted, $2.1M left1890: lasted, $1.5M left18901891: lasted, $2.3M left1892: lasted, $776k left1893: lasted, $1.3M left1894: lasted, $1.4M left1895: lasted, $1.1M left1896: lasted, $1.5M left1897: lasted, $938k left1898: lasted, $448k left1899: ran out in year 431900: lasted, $732k left19001901: ran out in year 491902: ran out in year 411903: ran out in year 501904: lasted, $717k left1905: ran out in year 451906: ran out in year 341907: ran out in year 411908: lasted, $1.0M left1909: ran out in year 411910: ran out in year 4619101911: ran out in year 421912: ran out in year 401913: lasted, $75k left1914: lasted, $903k left1915: lasted, $2.0M left1916: lasted, $299k left1917: lasted, $1.6M left1918: lasted, $7.3M left1919: lasted, $9.2M left1920: lasted, $9.6M left19201921: lasted, $12M left1922: lasted, $9.4M left1923: lasted, $7.5M left1924: lasted, $6.5M left1925: lasted, $3.9M left1926: lasted, $3.7M left1927: lasted, $3.2M left1928: lasted, $1.5M left1929: lasted, $154k left1930: lasted, $467k left19301931: lasted, $959k left1932: lasted, $2.0M left1933: lasted, $2.2M left1934: lasted, $804k left1935: lasted, $1.4M left1936: lasted, $57k left1937: ran out in year 391938: lasted, $765k left1939: lasted, $166k left1940: lasted, $167k left19401941: lasted, $821k left1942: lasted, $3.1M left1943: lasted, $3.2M left1944: lasted, $2.6M left1945: lasted, $1.9M left1946: lasted, $599k left1947: lasted, $4.0M left1948: lasted, $6.9M left1949: lasted, $8.0M left1950: lasted, $6.5M left19501951: lasted, $5.4M left1952: lasted, $4.3M left1953: lasted, $3.3M left1954: lasted, $4.0M left1955: lasted, $1.4M left1956: lasted, $204k left1957: lasted, $533k left1958: lasted, $1.4M left1959: ran out in year 491960: ran out in year 5019601961: ran out in year 441962: ran out in year 341963: ran out in year 391964: ran out in year 311965: ran out in year 271966: ran out in year 251967: ran out in year 291968: ran out in year 281969: ran out in year 281970: lasted, $160k left19701971: ran out in year 481972: ran out in year 401973: ran out in year 351974: lasted, $1.6M left

LastedRan out

Every 50-year retirement since 1871 at 4%, 60/40. Each bar is a start year.
$0$2.0M$4.0M$6.0M$8.0MYear 0Year 10Year 20Year 30Year 40Year 50

Good 10%MedianBad 10%

Balance over 50 years at 4%, 60/40, across every start year. Real dollars, $1M start.

By portfolio and strategy

PortfolioFixedBear-market cutCash bucketBad 10% endingMedian ending
100% stocks90.4%100%82.7%$134k$4.9M
80/2086.5%99%76.9%$0$3.4M
60/4075%98.1%66.3%$0$1.4M
40/6047.1%82.7%42.3%$0$0

Success is the share of start years in which the money never ran out. Endings are for the fixed strategy, in today's dollars. 20% cut in bear markets: spending drops 20% while the portfolio is more than 20% below its inflation-adjusted high. 2-year cash bucket: two years of spending held in cash earning 0.5% real, spent after years when stocks fell and refilled after years they rose.

← 3.75% · 4.25% → · 20 years · 25 years · 30 years · 40 years

Questions

Is 4% a safe withdrawal rate for 50 years?

A 4% withdrawal ($40k a year from $1M, raised with inflation) lasted 50 years in 75% of start years since 1871 with a 60/40 portfolio, and 90.4% with 100% stocks. By the usual 95% standard it was not safe on its own; a lower rate or flexible spending helped.

What was the worst year to retire at 4%?

1966: with 60/40 the money ran out in year 25.

Does cutting spending in bear markets help?

At 4% over 50 years with 60/40, a 20% cut whenever the portfolio was 20% below its high took success from 75% to 98.1%.

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