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Withdrawal rates › 30 years

Is 5.75% a safe withdrawal rate for 30 years?

A 5.75% withdrawal ($58k a year from $1M, raised with inflation) lasted 30 years in 55.6% of start years since 1871 with a 60/40 portfolio, and 71% with 100% stocks.

It lasted only about half the time or a little more: the money ran out in 55 of 124 start years from 1871 to 1994. Failures clustered in start years 1892, 1895–1917, 1929–1931, 1934, 1936–1941 and 1946, among others.

The worst start was 1969, when the money ran out in year 15. Among the start years that lasted, 1894 came closest, finishing with $28k.

In 34% of start years the portfolio ended above the $1M it started with, after inflation. The median ending balance was $245k.

Cutting spending by 20% whenever the portfolio sat more than 20% below its real high raised success to 75.8%. Holding two years of spending in cash and drawing on it after down years lowered it to 51.6%.

Of the four mixes, 100% stocks lasted most often, at 71%.

1871: lasted, $3.3M left18711872: lasted, $3.2M left1873: lasted, $3.1M left1874: lasted, $2.9M left1875: lasted, $2.8M left1876: lasted, $2.5M left1877: lasted, $3.4M left1878: lasted, $2.2M left1879: lasted, $1.5M left1880: lasted, $1.3M left18801881: lasted, $520k left1882: lasted, $1.1M left1883: lasted, $1.0M left1884: lasted, $911k left1885: lasted, $856k left1886: lasted, $301k left1887: lasted, $171k left1888: lasted, $335k left1889: lasted, $202k left1890: lasted, $48k left18901891: lasted, $203k left1892: ran out in year 291893: lasted, $44k left1894: lasted, $28k left1895: ran out in year 291896: ran out in year 291897: ran out in year 281898: ran out in year 261899: ran out in year 221900: ran out in year 2619001901: ran out in year 221902: ran out in year 211903: ran out in year 221904: ran out in year 241905: ran out in year 201906: ran out in year 181907: ran out in year 191908: ran out in year 241909: ran out in year 181910: ran out in year 1919101911: ran out in year 181912: ran out in year 171913: ran out in year 191914: ran out in year 211915: ran out in year 251916: ran out in year 191917: ran out in year 241918: lasted, $945k left1919: lasted, $1.4M left1920: lasted, $2.1M left19201921: lasted, $3.1M left1922: lasted, $2.2M left1923: lasted, $1.7M left1924: lasted, $1.8M left1925: lasted, $1.6M left1926: lasted, $1.4M left1927: lasted, $1.1M left1928: lasted, $193k left1929: ran out in year 221930: ran out in year 2419301931: ran out in year 301932: lasted, $1.3M left1933: lasted, $1.1M left1934: ran out in year 291935: lasted, $460k left1936: ran out in year 221937: ran out in year 181938: ran out in year 281939: ran out in year 231940: ran out in year 2319401941: ran out in year 291942: lasted, $920k left1943: lasted, $980k left1944: lasted, $563k left1945: lasted, $288k left1946: ran out in year 281947: lasted, $728k left1948: lasted, $1.1M left1949: lasted, $1.0M left1950: lasted, $740k left19501951: lasted, $580k left1952: lasted, $414k left1953: lasted, $391k left1954: lasted, $453k left1955: ran out in year 291956: ran out in year 261957: ran out in year 261958: ran out in year 281959: ran out in year 241960: ran out in year 2319601961: ran out in year 221962: ran out in year 201963: ran out in year 201964: ran out in year 191965: ran out in year 171966: ran out in year 161967: ran out in year 171968: ran out in year 161969: ran out in year 151970: ran out in year 1919701971: ran out in year 181972: ran out in year 161973: ran out in year 151974: ran out in year 211975: lasted, $1.0M left1976: lasted, $335k left1977: lasted, $325k left1978: lasted, $1.4M left1979: lasted, $1.4M left1980: lasted, $2.2M left19801981: lasted, $2.5M left1982: lasted, $4.0M left1983: lasted, $2.7M left1984: lasted, $2.8M left1985: lasted, $3.0M left1986: lasted, $2.0M left1987: lasted, $1.1M left1988: lasted, $1.9M left1989: lasted, $1.7M left1990: lasted, $1.5M left19901991: lasted, $2.2M left1992: lasted, $1.3M left1993: lasted, $1.1M left1994: lasted, $986k left

LastedRan out

Every 30-year retirement since 1871 at 5.75%, 60/40. Each bar is a start year.
$0$1.0M$2.0M$3.0MYear 0Year 10Year 20Year 30

Good 10%MedianBad 10%

Balance over 30 years at 5.75%, 60/40, across every start year. Real dollars, $1M start.

By portfolio and strategy

PortfolioFixedBear-market cutCash bucketBad 10% endingMedian ending
100% stocks71%83.9%67.7%$0$1.4M
80/2066.1%78.2%62.1%$0$632k
60/4055.6%75.8%51.6%$0$245k
40/6043.5%60.5%37.9%$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.

← 5.5% · 6% → · 20 years · 25 years · 40 years · 50 years

Questions

Is 5.75% a safe withdrawal rate for 30 years?

A 5.75% withdrawal ($58k a year from $1M, raised with inflation) lasted 30 years in 55.6% of start years since 1871 with a 60/40 portfolio, and 71% 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 5.75%?

1969: with 60/40 the money ran out in year 15.

Does cutting spending in bear markets help?

At 5.75% over 30 years with 60/40, a 20% cut whenever the portfolio was 20% below its high took success from 55.6% to 75.8%.

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