Safe Withdrawal Rate Simulator
Find out how long your portfolio can sustain withdrawals under different strategies
Key Points
- ▸The 4% rule: withdraw 4% of your initial portfolio, adjusted for inflation each year.
- ▸A 60/40 portfolio historically survived 30 years in 95% of scenarios.
- ▸Sequence of returns risk is the biggest danger in the early withdrawal years.
- ▸Variable withdrawals (% of current portfolio) reduce depletion risk.
- ▸This simulator uses real returns (already inflation-adjusted).
Configure the Simulation
Set your parameters and click Simulate to see results.
What Is Living Off Investments?
Living off investments means covering living expenses with portfolio returns, without needing to work. This concept is central to the FIRE (Financial Independence, Retire Early) movement. The simulator helps you understand how many years your portfolio can sustain withdrawals before running out — or whether it grows enough to last indefinitely.
What Is the 4% Rule?
The 4% rule comes from the Trinity Study (1998): analysing historical US market data, a diversified portfolio survived 30 years in 95% of scenarios if annual withdrawals did not exceed 4% of the initial capital, adjusted for inflation. Note: the rule does not guarantee success for horizons beyond 30 years or for non-US markets.
Key Risk Factors
Sequence of returns risk is the most insidious: if the market crashes in the early years of withdrawals, the portfolio shrinks before recoveries can help. Inflation erodes the purchasing power of fixed withdrawals. Longevity is a real risk: living longer than expected can deplete the portfolio. Variable withdrawals and a cash buffer help manage these risks.
Frequently Asked Questions
What is the safe withdrawal rate (SWR)?
The safe withdrawal rate is the maximum percentage of your portfolio you can withdraw each year without depleting it over the long term. The Trinity Study (1998) found that 4% of the initial capital (inflation-adjusted) had a 95% historical success rate over 30 years for a balanced 50-60% equity portfolio.
Is the 4% rule still valid in 2026?
It is debated. With higher interest rates and lower expected returns compared to historical US data, some researchers suggest a more conservative SWR of 3.3-3.5% for horizons beyond 30 years or for European portfolios. The 4% rule remains a useful starting point, but not a guarantee.
What is the difference between fixed and variable withdrawal?
Fixed withdrawal takes the same amount each year (inflation-adjusted in the 4% rule). Variable withdrawal takes a fixed percentage of the current portfolio value: if markets fall, you withdraw less; if they rise, you withdraw more. Variable withdrawals reduce depletion risk but make income less predictable.
What is sequence of returns risk?
It is the risk that negative market returns in the early years of withdrawal irreparably damage your portfolio. If markets drop 30% in year one while you are withdrawing, you sell shares at low prices and reduce the base available for subsequent recoveries. The first 5-10 withdrawal years are the most critical.
Does the simulator use real or nominal returns?
The simulator uses real returns, already net of inflation. You do not need to add an inflation adjustment: portfolio values shown represent purchasing power in today's constant euros/currency.
How much should I hold in bonds vs equities?
There is no universal answer. A 60% equity / 40% bond portfolio is the most historically tested (Trinity Study). A higher equity allocation increases expected returns but also early-year volatility. A bond allocation reduces sequence risk. Many advisors suggest gradually reducing equity exposure as you approach and enter the withdrawal phase.
Can I use DonkyCapital to monitor my withdrawal plan?
Yes. DonkyCapital lets you set portfolio targets, monitor real allocations and project plan sustainability based on actual returns. You can see in real time whether you are on track with your planned withdrawal pace.
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