Portfolio Safety Tables: By Year
These tables give you insight into the safety of your own portfolio. They show how retirement portfolios perform both when they succeed and when they fail. You will be able to spot dangers early enough to respond.
In all cases, the withdrawal rate was far enough above the Safe Withdrawal Rate to have both successes and failures.
HSWR80
Withdrawal Rate = 5%
Real dollar balances
1921-1980
Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 1
50Ks 0 2 3 2
60Ks 2 2 3 3
70Ks 6 3 0 0
80Ks 3 2 1 0
90Ks 4 3 5 5
100K 30 33 33 34
Total 45 45 45 45
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 2 9 11 12
50Ks 1 2 2 2
60Ks 5 3 0 1
70Ks 2 0 1 0
80Ks 2 1 1 0
90Ks 1 0 0 0
100K 2 1 0 0
Total 15 15 15 15
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 60%. The outcome is unclear at intermediate percentages.
2) The majority of outcomes are obvious by years 10, 11 and 12. A large fraction of the failures have balances below 50%. A very large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) By year 12, all of the failures had fallen below 70% of the initial balance.
4) A few of the portfolios that have done poorly in the first 10, 11 and 12 years are able to recover.
HSWR50
Withdrawal Rate = 5%
Real dollar balances
1921-1980 Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 0
50Ks 0 1 1 1
60Ks 1 1 1 2
70Ks 5 3 3 3
80Ks 4 6 6 3
90Ks 4 2 3 4
100K 22 23 22 23
Total 36 36 36 36
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 0 10 13 14
50Ks 2 3 2 4
60Ks 5 3 2 3
70Ks 4 2 3 0
80Ks 5 5 4 3
90Ks 3 1 0 0
100K 5 0 0 0
Total 24 24 24 24
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 60%. The outcome is unclear at intermediate percentages.
2) The majority of outcomes are obvious by years 10, 11 and 12. A large fraction of the failures have balances below 50%. A large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) Even in year 12, there were some failures that had retained 80% of the initial balance.
4) The region between 50% and 90% remains ambiguous, even in years 10, 11 and 12.
SwAT2 (Constrained TIPS Switching)
Withdrawal Rate = 6%
Real dollar balances
1921-1980 Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 0
50Ks 0 0 0 0
60Ks 0 2 3 3
70Ks 3 2 3 3
80Ks 5 3 1 2
90Ks 8 5 1 1
100K 20 24 28 27
Total 36 36 36 36
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 0 3 8 12
50Ks 0 8 4 2
60Ks 3 2 6 5
70Ks 6 7 3 4
80Ks 7 2 3 1
90Ks 6 2 0 0
100K 2 0 0 0
Total 24 24 24 24
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 70%. The outcome is unclear at intermediate percentages.
2) The majority of successful outcomes are obvious by years 10, 11 and 12. A large fraction of the failures have balances below 50%. A large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) The majority of failures are obvious by years 11 and 12.
4) The region between 60% and 90% remains ambiguous, even in years 10, 11 and 12.
SwOptT2 (Optimized TIPS Switching)
Withdrawal Rate = 6%
Real dollar balances
1921-1980 Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 0
50Ks 0 1 0 0
60Ks 0 0 1 1
70Ks 3 2 2 2
80Ks 6 2 1 4
90Ks 5 9 9 8
100K 22 22 23 21
Total 36 36 36 36
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 0 1 1 4
50Ks 0 3 8 9
60Ks 1 11 8 6
70Ks 5 4 4 2
80Ks 11 3 2 3
90Ks 5 2 1 0
100K 2 0 0 0
Total 24 24 24 24
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 70%. The outcome is unclear at intermediate percentages.
2) The majority of successful outcomes are obvious by years 10, 11 and 12. A large fraction of the failures have balances below 70%. A large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) The majority of failures are not at all obvious by years 10, 11 and 12. Our warning is far from satisfactory. We recognize the failures only because they are not obviously successful.
4) The region between 60% and 90% remains ambiguous, even in years 10, 11 and 12.
HSWR80T2
Withdrawal Rate = 5%
Real dollar balances
1921-1980 Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 0
50Ks 0 0 1 2
60Ks 3 2 3 1
70Ks 3 3 2 2
80Ks 3 4 0 1
90Ks 6 2 7 5
100K 30 34 32 34
Total 45 45 45 45
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 0 9 11 12
50Ks 4 2 2 2
60Ks 3 2 0 1
70Ks 3 0 1 0
80Ks 2 1 1 0
90Ks 1 1 0 0
100K 2 0 0 0
Total 15 15 15 15
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 60%. The outcome is unclear at intermediate percentages.
2) The majority of successful outcomes are obvious by years 10, 11 and 12. A large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) A large fraction of the failures have balances below 60% in years 10, 11 and 12.
HSWR50T2
Withdrawal Rate = 5%
Real dollar balances
1921-1980 Survived Year 5 Year 10 Year 11 Year 12
Under 50K 0 0 0 0
50Ks 0 0 0 0
60Ks 0 2 4 3
70Ks 5 3 1 3
80Ks 4 5 4 2
90Ks 9 3 4 5
100K 23 28 28 28
Total 41 41 41 41
Failed Year 5 Year 10 Year 11 Year 12
Under 50K 0 4 7 11
50Ks 0 6 5 4
60Ks 4 3 2 1
70Ks 5 2 2 2
80Ks 3 3 3 1
90Ks 4 1 0 0
100K 3 0 0 0
Total 19 19 19 19
Observations:
1) We can spot most of the survivors right away. They have grown beyond the initial investment, many as early as year five. It is very bad news if the balance falls below 60%. The outcome is unclear at intermediate percentages.
2) The majority of successful outcomes are obvious by years 10, 11 and 12. A large fraction of the successes have retained 90% of their initial balances. Many have grown even more.
3) A large fraction of the failures have balances below 60% in years 10, 11 and 12.
4) The region between 60% and 90% remains ambiguous, even in years 10, 11 and 12.
Have fun.
John Walter Russell
July 16, 2005