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Withdrawal rates › 50 years

Is 4.25% a safe withdrawal rate for 50 years?

A 4.25% withdrawal ($43k a year from $1M, raised with inflation) lasted 50 years in 66.3% of start years since 1871 with a 60/40 portfolio, and 79.8% with 100% stocks.

It lasted only about half the time or a little more: the money ran out in 35 of 104 start years from 1871 to 1974. Failures clustered in start years 1899, 1901–1903, 1905–1907, 1909–1913, 1916 and 1929, among others.

The worst start was 1966, when the money ran out in year 23. Among the start years that lasted, 1946 came closest, finishing with $10k.

In 45% of start years the portfolio ended above the $1M it started with, after inflation. The median ending balance was $858k.

Cutting spending by 20% whenever the portfolio sat more than 20% below its real high raised success to 92.3%. Holding two years of spending in cash and drawing on it after down years lowered it to 55.8%.

Of the four mixes, 100% stocks lasted most often, at 79.8%.

1871: lasted, $4.3M left18711872: lasted, $4.8M left1873: lasted, $5.5M left1874: lasted, $5.5M left1875: lasted, $5.3M left1876: lasted, $4.9M left1877: lasted, $7.0M left1878: lasted, $6.4M left1879: lasted, $5.1M left1880: lasted, $4.3M left18801881: lasted, $1.9M left1882: lasted, $2.5M left1883: lasted, $2.6M left1884: lasted, $3.1M left1885: lasted, $2.8M left1886: lasted, $1.4M left1887: lasted, $1.2M left1888: lasted, $1.8M left1889: lasted, $1.5M left1890: lasted, $878k left18901891: lasted, $1.8M left1892: lasted, $351k left1893: lasted, $907k left1894: lasted, $976k left1895: lasted, $646k left1896: lasted, $924k left1897: lasted, $507k left1898: lasted, $66k left1899: ran out in year 351900: lasted, $305k left19001901: ran out in year 411902: ran out in year 341903: ran out in year 421904: lasted, $219k left1905: ran out in year 381906: ran out in year 291907: ran out in year 351908: lasted, $373k left1909: ran out in year 351910: ran out in year 3819101911: ran out in year 361912: ran out in year 341913: ran out in year 401914: lasted, $84k left1915: lasted, $1.1M left1916: ran out in year 411917: lasted, $839k left1918: lasted, $6.5M left1919: lasted, $8.4M left1920: lasted, $9.0M left19201921: lasted, $11M left1922: lasted, $8.8M left1923: lasted, $6.9M left1924: lasted, $6.0M left1925: lasted, $3.5M left1926: lasted, $3.3M left1927: lasted, $2.8M left1928: lasted, $1.1M left1929: ran out in year 471930: lasted, $172k left19301931: lasted, $665k left1932: lasted, $1.8M left1933: lasted, $1.9M left1934: lasted, $486k left1935: lasted, $1.1M left1936: ran out in year 451937: ran out in year 341938: lasted, $350k left1939: ran out in year 461940: ran out in year 4519401941: lasted, $377k left1942: lasted, $2.6M left1943: lasted, $2.6M left1944: lasted, $2.1M left1945: lasted, $1.4M left1946: lasted, $10k left1947: lasted, $3.4M left1948: lasted, $6.2M left1949: lasted, $7.2M left1950: lasted, $5.7M left19501951: lasted, $4.6M left1952: lasted, $3.6M left1953: lasted, $2.8M left1954: lasted, $3.4M left1955: lasted, $787k left1956: ran out in year 421957: ran out in year 491958: lasted, $785k left1959: ran out in year 381960: ran out in year 3819601961: ran out in year 351962: ran out in year 301963: ran out in year 321964: ran out in year 271965: ran out in year 241966: ran out in year 231967: ran out in year 261968: ran out in year 241969: ran out in year 241970: ran out in year 4019701971: ran out in year 381972: ran out in year 321973: ran out in year 281974: lasted, $885k left

LastedRan out

Every 50-year retirement since 1871 at 4.25%, 60/40. Each bar is a start year.
$0$2.0M$4.0M$6.0MYear 0Year 10Year 20Year 30Year 40Year 50

Good 10%MedianBad 10%

Balance over 50 years at 4.25%, 60/40, across every start year. Real dollars, $1M start.

By portfolio and strategy

PortfolioFixedBear-market cutCash bucketBad 10% endingMedian ending
100% stocks79.8%98.1%76%$0$4.2M
80/2076%96.2%69.2%$0$2.6M
60/4066.3%92.3%55.8%$0$858k
40/6039.4%69.2%30.8%$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.

← 4% · 4.5% → · 20 years · 25 years · 30 years · 40 years

Questions

Is 4.25% a safe withdrawal rate for 50 years?

A 4.25% withdrawal ($43k a year from $1M, raised with inflation) lasted 50 years in 66.3% of start years since 1871 with a 60/40 portfolio, and 79.8% 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 4.25%?

1966: with 60/40 the money ran out in year 23.

Does cutting spending in bear markets help?

At 4.25% over 50 years with 60/40, a 20% cut whenever the portfolio was 20% below its high took success from 66.3% to 92.3%.

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