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Withdrawal rates › 25 years

Is 6% a safe withdrawal rate for 25 years?

A 6% withdrawal ($60k a year from $1M, raised with inflation) lasted 25 years in 64.3% of start years since 1871 with a 60/40 portfolio, and 70.5% with 100% stocks.

It lasted only about half the time or a little more: the money ran out in 46 of 129 start years from 1871 to 1999. Failures clustered in start years 1898–1917, 1929–1930, 1936–1940, 1956–1957, 1959–1974 and 1999.

The worst start was 1973, when the money ran out in year 14. Among the start years that lasted, 1946 came closest, finishing with $12k.

In 31% of start years the portfolio ended above the $1M it started with, after inflation. The median ending balance was $422k.

Cutting spending by 20% whenever the portfolio sat more than 20% below its real high raised success to 79.1%. Holding two years of spending in cash and drawing on it after down years lowered it to 59.7%.

Of the four mixes, 100% stocks lasted most often, at 70.5%.

1871: lasted, $2.4M left18711872: lasted, $2.3M left1873: lasted, $2.5M left1874: lasted, $2.9M left1875: lasted, $2.1M left1876: lasted, $2.0M left1877: lasted, $3.0M left1878: lasted, $2.1M left1879: lasted, $1.2M left1880: lasted, $1.3M left18801881: lasted, $617k left1882: lasted, $1.0M left1883: lasted, $890k left1884: lasted, $1.0M left1885: lasted, $976k left1886: lasted, $427k left1887: lasted, $336k left1888: lasted, $595k left1889: lasted, $449k left1890: lasted, $266k left18901891: lasted, $594k left1892: lasted, $180k left1893: lasted, $263k left1894: lasted, $229k left1895: lasted, $124k left1896: lasted, $114k left1897: lasted, $57k left1898: ran out in year 251899: ran out in year 221900: ran out in year 2519001901: ran out in year 211902: ran out in year 201903: ran out in year 211904: ran out in year 231905: ran out in year 191906: ran out in year 171907: ran out in year 181908: ran out in year 221909: ran out in year 171910: ran out in year 1719101911: ran out in year 161912: ran out in year 161913: ran out in year 181914: ran out in year 201915: ran out in year 231916: ran out in year 181917: ran out in year 221918: lasted, $970k left1919: lasted, $1.5M left1920: lasted, $2.2M left19201921: lasted, $3.3M left1922: lasted, $1.8M left1923: lasted, $1.2M left1924: lasted, $1.3M left1925: lasted, $1.1M left1926: lasted, $904k left1927: lasted, $751k left1928: lasted, $249k left1929: ran out in year 211930: ran out in year 2319301931: lasted, $96k left1932: lasted, $1.0M left1933: lasted, $830k left1934: lasted, $41k left1935: lasted, $422k left1936: ran out in year 201937: ran out in year 171938: ran out in year 251939: ran out in year 211940: ran out in year 2119401941: lasted, $36k left1942: lasted, $977k left1943: lasted, $1.0M left1944: lasted, $767k left1945: lasted, $490k left1946: lasted, $12k left1947: lasted, $1.0M left1948: lasted, $1.7M left1949: lasted, $1.4M left1950: lasted, $865k left19501951: lasted, $821k left1952: lasted, $744k left1953: lasted, $564k left1954: lasted, $585k left1955: lasted, $150k left1956: ran out in year 251957: ran out in year 251958: lasted, $65k left1959: ran out in year 231960: ran out in year 2219601961: ran out in year 211962: ran out in year 201963: ran out in year 201964: ran out in year 181965: ran out in year 161966: ran out in year 161967: ran out in year 161968: ran out in year 151969: ran out in year 151970: ran out in year 1719701971: ran out in year 161972: ran out in year 151973: ran out in year 141974: ran out in year 191975: lasted, $1.1M left1976: lasted, $390k left1977: lasted, $347k left1978: lasted, $1.1M left1979: lasted, $1.6M left1980: lasted, $2.2M left19801981: lasted, $2.3M left1982: lasted, $3.7M left1983: lasted, $2.4M left1984: lasted, $1.8M left1985: lasted, $2.0M left1986: lasted, $1.6M left1987: lasted, $865k left1988: lasted, $1.4M left1989: lasted, $1.4M left1990: lasted, $1.2M left19901991: lasted, $1.5M left1992: lasted, $989k left1993: lasted, $1.1M left1994: lasted, $903k left1995: lasted, $1.5M left1996: lasted, $808k left1997: lasted, $544k left1998: lasted, $46k left1999: ran out in year 20

LastedRan out

Every 25-year retirement since 1871 at 6%, 60/40. Each bar is a start year.
$0$1.0M$2.0M$3.0MYear 0Year 5Year 10Year 15Year 20Year 25

Good 10%MedianBad 10%

Balance over 25 years at 6%, 60/40, across every start year. Real dollars, $1M start.

By portfolio and strategy

PortfolioFixedBear-market cutCash bucketBad 10% endingMedian ending
100% stocks70.5%83.7%67.4%$0$1.1M
80/2070.5%85.3%65.9%$0$664k
60/4064.3%79.1%59.7%$0$422k
40/6054.3%71.3%49.6%$0$51k

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.

← 5.75% · 20 years · 30 years · 40 years · 50 years

Questions

Is 6% a safe withdrawal rate for 25 years?

A 6% withdrawal ($60k a year from $1M, raised with inflation) lasted 25 years in 64.3% of start years since 1871 with a 60/40 portfolio, and 70.5% 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 6%?

1973: with 60/40 the money ran out in year 14.

Does cutting spending in bear markets help?

At 6% over 25 years with 60/40, a 20% cut whenever the portfolio was 20% below its high took success from 64.3% to 79.1%.

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