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Withdrawal rates › 30 years

Is 6% a safe withdrawal rate for 30 years?

A 6% withdrawal ($60k a year from $1M, raised with inflation) lasted 30 years in 53.2% of start years since 1871 with a 60/40 portfolio, and 67.7% with 100% stocks.

It lasted only about half the time or a little more: the money ran out in 58 of 124 start years from 1871 to 1994. Failures clustered in start years 1890, 1892–1917, 1929–1931, 1934, 1936–1941 and 1946, among others.

The worst start was 1973, when the money ran out in year 14. Among the start years that lasted, 1928 came closest, finishing with $11k.

In 27% of start years the portfolio ended above the $1M it started with, after inflation. The median ending balance was $93k.

Cutting spending by 20% whenever the portfolio sat more than 20% below its real high raised success to 71%. Holding two years of spending in cash and drawing on it after down years lowered it to 47.6%.

Of the four mixes, 100% stocks lasted most often, at 67.7%.

1871: lasted, $3.0M left18711872: lasted, $2.9M left1873: lasted, $2.8M left1874: lasted, $2.7M left1875: lasted, $2.5M left1876: lasted, $2.3M left1877: lasted, $3.2M left1878: lasted, $2.0M left1879: lasted, $1.3M left1880: lasted, $1.2M left18801881: lasted, $339k left1882: lasted, $881k left1883: lasted, $839k left1884: lasted, $759k left1885: lasted, $717k left1886: lasted, $146k left1887: lasted, $33k left1888: lasted, $235k left1889: lasted, $111k left1890: ran out in year 3018901891: lasted, $125k left1892: ran out in year 281893: ran out in year 301894: ran out in year 291895: ran out in year 281896: ran out in year 281897: ran out in year 261898: 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, $787k left1919: lasted, $1.3M left1920: lasted, $2.0M left19201921: lasted, $2.9M left1922: lasted, $2.1M left1923: lasted, $1.5M left1924: lasted, $1.7M left1925: lasted, $1.4M left1926: lasted, $1.2M left1927: lasted, $853k left1928: lasted, $11k left1929: ran out in year 211930: ran out in year 2319301931: ran out in year 271932: lasted, $1.1M left1933: lasted, $858k left1934: ran out in year 261935: lasted, $228k 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: ran out in year 261942: lasted, $734k left1943: lasted, $791k left1944: lasted, $414k left1945: lasted, $175k left1946: ran out in year 261947: lasted, $599k left1948: lasted, $956k left1949: lasted, $924k left1950: lasted, $646k left19501951: lasted, $488k left1952: lasted, $334k left1953: lasted, $294k left1954: lasted, $351k left1955: ran out in year 281956: ran out in year 251957: ran out in year 251958: ran out in year 271959: 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, $780k left1976: lasted, $75k left1977: lasted, $62k left1978: lasted, $1.1M left1979: lasted, $1.2M left1980: lasted, $2.0M left19801981: lasted, $2.3M left1982: lasted, $3.8M left1983: lasted, $2.5M left1984: lasted, $2.6M left1985: lasted, $2.8M left1986: lasted, $1.8M left1987: lasted, $881k left1988: lasted, $1.7M left1989: lasted, $1.5M left1990: lasted, $1.3M left19901991: lasted, $2.0M left1992: lasted, $1.1M left1993: lasted, $914k left1994: lasted, $815k left

LastedRan out

Every 30-year retirement since 1871 at 6%, 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 6%, 60/40, across every start year. Real dollars, $1M start.

By portfolio and strategy

PortfolioFixedBear-market cutCash bucketBad 10% endingMedian ending
100% stocks67.7%78.2%63.7%$0$1.0M
80/2062.1%75%54.8%$0$372k
60/4053.2%71%47.6%$0$93k
40/6037.1%56.5%35.5%$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.

← 5.75% · 20 years · 25 years · 40 years · 50 years

Questions

Is 6% a safe withdrawal rate for 30 years?

A 6% withdrawal ($60k a year from $1M, raised with inflation) lasted 30 years in 53.2% of start years since 1871 with a 60/40 portfolio, and 67.7% 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 30 years with 60/40, a 20% cut whenever the portfolio was 20% below its high took success from 53.2% to 71%.

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