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Withdrawal Rate Failure Analysis

Discover how different withdrawal rates affect portfolio failure rates across 769 historical 30-year periods.

What This Analysis Shows

Purpose: This analysis helps you understand the trade-off between withdrawal rate and portfolio security. Higher withdrawal rates provide more annual income but increase the risk of running out of money.

Why It Matters: The difference between a 4% and 5% withdrawal rate might seem small, but with inflation-adjusted withdrawals at 60/40 it's historically the difference between a 4% failure rate and a 28% failure rate.

Key Insight: The 4% rule isn't arbitrary - with withdrawals rising with inflation, 4% succeeded in 96% of historical periods at 60/40, and the worst-case sustainable rate was 3.83% (a December 1965 retiree facing the 1970s stagflation).

Historical analysis for education only — not financial advice; past performance does not guarantee future results.

How to Use This Analysis
1. Choose Your Stock Allocation

Higher stock percentages historically provide better returns but with more volatility. 60% stocks is a common balanced approach.

2. Review the Chart

The chart shows failure rates for withdrawal rates from 3% to 10%. Look for the "knee" where failure rates start rising sharply.

3. Find Your Comfort Zone

Decide what failure rate you're comfortable with. Many retirees choose 0-5% failure risk, while others accept 10-15% for higher income.

60%
Percentage of portfolio in stocks vs bonds
Analysis covers
769 Historical Periods
Off = fixed dollar withdrawals, which look safer because spending shrinks in real terms over time.
Understanding Failure Rates

Failure Rate: Percentage of historical 30-year periods where the portfolio was completely depleted before retirement end.

Success Rate: Percentage of periods where the portfolio lasted the full 30 years with money remaining.

Key Insight: Even small increases in withdrawal rates can dramatically increase failure risk during market downturns.

Historical Context

Retirement start dates run monthly from January 1928 through January 1992, so the analysis includes retirements starting during:

  • Great Depression (1929)
  • World War II (1940s)
  • 1970s Stagflation
  • 1987 Black Monday era

Later crises — the 2000 dot-com crash, the 2008 financial crisis, and the 2020 COVID-19 pandemic — fall within the later 30-year windows (every window ends by December 2021).