# Updated Trinity Study for 2023 – More Withdrawal Rates!

|**Updated:**|

(Disclosure: Some of the links below may be affiliate links)

Would you like to know precisely which withdrawal rate is safe and will sustain your lifestyle for a long time?

You will find the answer in this article with updated results from the Trinity Study! This study researched different withdrawal rates for retirement. Although the original research was not about early retirement, it is often referred to in the Financial Independence and Retire Early (FIRE) movement!

However, there are two caveats to the original study. First, they are only covering the period until 1995. And then, they are not covering more than thirty years of retirement. Thirty years is not enough for some people wanting to retire early.

Therefore, I reproduce the original study’s results with recent data all the way to 2022! And I extended the data back to 1871. This makes for **much more data than the original study**.

I have also considered **periods as long as 50 years**. It means many more withdrawal simulations than the original study.

In this article, you will find how I did it and all the results I have gathered from this data!

## The Trinity Study

I have already talked at great length about the Trinity Study. It is an excellent research paper done by three professors from Trinity University.

Their research paper’s **goal was to see which withdrawal rates people should use to sustain a particular lifestyle** for up to 30 years. It is important to note that the original research was not about early retirement but official retirement.

It is important to emphasize that we are talking about sustaining a lifestyle (expenses), not capital. So, if you end up with 1 USD at the end of the retirement period, this is a success. If you want to sustain your capital in retirement, it is a different success criterion not treated by the original Trinity study.

They tested **the success rates of withdrawal rates from 3% to 12%**. Also, they tested portfolios with between 0% and 100% stocks by jumps of 25%.

The authors also **took inflation into account in the results**. Indeed, it is interesting to compare the results with and without inflation. Finally, they also provided the terminal values of the portfolio.

I wrote a detailed article about the Trinity Study if you want more information.

### The 4% Rule (of Thumb)

The Trinity Study is the source of the 4% Rule. This rule states that if you only withdraw 4% of your initial portfolio yearly, you can sustain your lifestyle for a very long period. And your withdrawal is **adjusted for inflation every year**.

Some people believe that the original study shows that this will sustain forever. But this is not what the original research was about. They **only tested simulations for up to 30 years**.

It is better to call it **The 4% Rule of Thumb**. Because if you plan to retire very early, you will probably need a lower withdrawal rate. Moreover, your withdrawal rate will depend on your portfolio and asset allocation to stocks and bonds.

## Why did I do it again?

If the study is excellent, why did I want to redo it? I have several reasons for that.

First, I wanted to see **how this worked with recent stock market returns**. The original study was only covering years up to 1995. I wanted to have more recent data. I wanted to ensure the results were holding with more recent stock market behavior. So this simulation will cover returns until the end of 2022!

Secondly, the original study only covered up to thirty years of retirement. I wanted to **ensure that the portfolio could sustain withdrawals for extended periods**. For people retiring early, I think that 50 years is not unreasonable.

Finally, I have to admit that I like to write code. So it was **cool to write code related to this blog**. And being a big geek, now I can run many simulations with the data I want. Overall, it was a lot of fun preparing the data for this article.

Ultimately, I want to extend the Trinity Study to the European markets. It will be challenging to obtain the data. But I will try to find it for as many years as possible.

## How I redid the Trinity Study

My simulation uses** monthly withdrawals**. Most people in retirement will withdraw money monthly. It is also possible to withdraw money at the end of the year instead. But I believe that it is not common.

I have **calculated all the returns monthly**. Doing that makes the results much more accurate than doing it yearly. And the monthly withdrawal is updated with inflation every month as well. Every possible starting month in the available data is tested.

For this simulation, I have **not done any rebalancing**. For more information, I have compared different rebalancing methodologies for retirement.

Withdrawals are based on the current allocation. For instance, if your base allocation to stocks is 60%, but your current allocation is 80%, 80% of the withdrawal will be taken from stocks. I may use different withdrawal techniques in the future.

Based on this simulation, **I collected the same results as the original study**: success rates without inflation, success rates with inflation, and terminal values.

## Success Rates of the Trinity Study

I start the simulation with the entire data from 1871 to 2022.

In this simulation, success is when your portfolio does not run out of money before the end of the simulation. For instance, if we simulate for 20 years and end up with one dollar after 20 years, it is a success. This is a failure if the portfolio runs out of money before that (it could be in the first year or the nineteenth year).

So, the success rate is the percentage of the months that end up with success. The higher the success rate, the better the results are.

We will see what success rates we have when we ignore inflation. We start with 20 years since I do not think anybody will care about a ten-year-long simulation. I will begin at a 3% withdrawal rate and go up to 12%, increasing by 1% at a time.

We can see what we already expect:

- Increasing the withdrawal rate decreases the chances of success
- Any withdrawal rate higher than 8% does not make sense long-term, even without inflation.
- A small allocation of bonds can help with lower withdrawal rates
- Generally, a 100% stock portfolio will perform better than the other portfolios.

Here is what happens when we push the simulation to 30 years.

We can see that increasing the number of years decreases the likelihood of success. It is logical since you are more likely to run out of money.

With 30 years of retirement without inflation, a 6% withdrawal rate with a significant allocation to stocks still makes a lot of sense!

## Taking Inflation into Account for retirement

However, it is much better to consider inflation in our simulation! We see again with 20 years to compare the results:

As we can see, inflation causes a significant hit to our chances of success! Before inflation, an 8% withdrawal rate made some sense. Now 6% is the limit. And even 6% has a barely over 75% chance of success!

Here is what happens in 30 years.

We can now see that anything higher than a 6% withdrawal rate is hazardous, with a less than 75% chance to succeed even with 100% stocks.

### More withdrawal rates

Since we see that reasonable withdrawal rates are in the range of 3% to 6%, we try more withdrawal rates. I have simulated increments of 0.1% of withdrawal rates.

With a large stock allocation, withdrawal rates between 3% and 4% are very safe. Some people would even dare use withdrawal rates of about 4.5%. But even a portfolio with 100% stocks has only an 85% chance of success after 30 years with 4.5%.

### Longer retirement time

One of the caveats of the original study is that they stopped at 30 years. We **run the same simulation again but with 40 years this time**.

After 40 years, we are starting to see lower success rates, even for most people’s 4% withdrawal rate. Unless you have 100% of stocks, your success rate will be less than 90%.

Here is what happens with 50 years.

As expected, we see lower success rates. But it is still not bad at all with reasonable withdrawal rates. A 100% allocation to stocks and a 3.5% withdrawal rate still have more than a 98% success rate. This is significantly more than I expected.

It shows that the study’s original conclusion can still hold for over 30 years. It is excellent news!

## Updated Terminal Values

Another interesting thing from the study was that they also **compared the terminal values of the different withdrawal rates and portfolios**.

So we will see the terminal values of a 1000$ portfolio after 30 years. I did the simulation for a portfolio of 100% Stocks. For the sake of display, I have reduced the number of withdrawal rates.

I did not show the minimum values. Indeed, they are always zero. If the chance of failure exceeds zero, the minimum value will be zero.

However, **the average and median values are quite remarkable**. We will focus on the median since it is generally more representative than the average.

For a withdrawal rate of 3.5%, my current target, the median terminal value after 30 years, is about 6700 dollars! Not only did your portfolio sustain your lifestyle, but it also increased six-fold! Let me repeat this. After 30 years of doing nothing but withdrawing money, you have six times more money than when you started!

The maximum values do not mean a lot. But it is crazy to see that after 30 years, you could have about 30 times more money than when you started! And this is with a 3.5% withdrawal rate!

Here is what happens when we extend it to 40 years.

We can see that the results are comparable. However, all the values are significantly higher. The numbers are all about twice higher. On average, your retirement money will double during the ten additional years. So, even though you are not contributing more money and living from it, your portfolio will double in 10 years. How cool does that sound?

## The success rate is not everything

There is something important with these measurements: the success rate does not tell the entire story. For instance, for you, which of these two scenarios is better:

- 98% to last 50 years, but a chance of running out after ten years
- 96% to last 50 years, but a chance of running out after 48 years

For me, the second scenario is better. You do not want to have a chance of failing after only ten years if you are planning for 50 years. But if it fails after 48 years, you have many years to make some adaptations.

So, **another quite important metric is the worst duration of a scenario**. This means after how many months, the first failure can happen.

For reference, here are the success rates of each portfolio for 50 years and different withdrawal rates:

And now, here are the worst durations for each of these portfolios:

If we only look at the first graph, the conclusion is that higher allocation to stocks is always better. But if we look at the second graph, 100% stocks is the worst one!

So what does this mean: **you need a balance in your portfolio**. Bonds will significantly reduce the chances of your portfolio failing too early. This does not mean that you should optimize for the highest worst duration either. Because if your highest duration is 40 years, but you have only a 50% chance of reaching 50 years, this is gambling, not planning.

So balance is essential. While stocks will increase your success, stocks are more subject to sequences of return risks.

## How to implement the Trinity Study?

Now that we have seen that the results of the Trinity Study are encouraging and would let people retire early, how should we implement it?

Theoretically, the Trinity Study is based on a simple concept: you can retire based on a large principal by withdrawing with a fixed withdrawal rate.

However, in practice, this means you need to accumulate money, more than most people accumulate during their lifetime. And you need to accumulate this earlier than retirement age.

To accumulate this money is not easy, but it is also not complicated. First, you need to save money (as much as possible). For this, you will need to focus on your expenses and earnings.

Then, you will need to invest that money until you can retire. Once you have accumulated the proper amount through capital gains and savings, you will be financially free.

If you are interested, I have many articles on my blog about financial independence.

## How did I do it?

You can find my code and my data on Github. Everything is available to share as much as possible!

I wrote the entire program in C++. I used this programming language because it is my favorite! And it is blazing fast! I have not especially optimized my code, and it takes less than a second to generate thousands of simulations.

If you are not a coder, I also have an online FIRE calculator to do most of the calculations presented here.

My U.S. data s based on the data made available by Big ERN in its Safe Withdrawal Rate series. It is a good dataset that has been tested several times already. Big ERN made all this available for free. I am very thankful for his work! I have completed its data with the missing years using the same methodology.

If you want to use the graphs in this article, I would ask that you cite this article as the source of the image!

## Future of the series

It was fascinating to reproduce these results. And it was very insightful as well. I have learned many things from the results. It is great to see the confirmation that the original conclusions hold for more than 50 years.

And it also shows that my withdrawal rate (3.5%) is a safe bet. I may switch to 3.75% in the future. I will have to run more simulations. It is important to choose a proper safe withdrawal rate.

Talking of simulations, I have run a few more simulations with the same idea:

- Trinity Study Results with Swiss Stocks
- Withdrawal rates and low-yield bonds
- When should you rebalance your portfolio?
- Does the Trinity Study work in recent years?
- How often should you withdraw money?

Since I plan to make more articles like these with more simulations, I would like to get your point of view on this article! Please let me know what you think in the comments below! What should I improve?

What do you think of these results? Would you like me to run more simulations like this? Do you have ideas on what kind of simulations I should run next?

## Conclusions

With all these results, we can have several important conclusions.

First, **the paper’s original conclusions still hold **even with much more data being considered. And it still stands accurate up to 2022! It is excellent since it shows that the 4% rule of thumb still works!

If you increase the simulation time to **more than 30 years, a 4% withdrawal rate is no longer safe**. With 50 years of retirement, you have a 90% chance of success with a 4% withdrawal rate at most. A withdrawal rate of around 3.5% would be safer for most people.

If you want real chances of success, **you will need more than 50% of your portfolio allocated to stocks**. The stocks allow us to fight inflation and cover the withdrawal rate year after year.

If you choose a reasonable withdrawal rate, **you will likely have much more money than when you started**! For instance, a 3.5% withdrawal rate over 30 years with 100% stocks would leave you about six times more money than when you started!

For information about the original study, read my detailed article about the Trinity Study. If you are extremely conservative, you will also be interested in learning how to choose a failsafe withdrawal rate.

If you want to start investing to become Financially Independent, you will be interested in my guide on how to get started in the stock market.

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Grüezi Baptiste,

thank you very much for this really valuable article!

I believe a major flaw of the 4% rule is the (apparent) divergence between the risk of failure (>10% for a stock portfolio at 50 years) and the median terminal values, because in case of bad market crash the constant withdrawal will erode the capital beyond a sustainable threshold.

This is why it would be super interesting to know whether a 4% WR is sustainable in case of variable withdrawals: even frugal people might probably accept to only withdraw x0.7-0.8 of the planned amount for 2-3 years.

For example, we might simulate what would happen with a 4% rule that is lowered to 3% for 3 years in case of market crash, or maybe a withdrawal that is not variable with inflation but rather with the market: -30% market crash = -30% on withdrawals, and viceversa.

I know it is more work and you might not have time to do it: maybe if you could provide the source of your data I might try and simulate myself.

Congrats for your interesting blog!

Hi M,

I am planning to try to simulate more flexibility scenarios. However, we have to be very careful about that because most people assume they can be flexible while in fact they can’t. At least 90% of people could not support a 30% reduction on their expenses.

It can definitely help to reduce your withdrawal whenever the market does not perfom well, no doubt about it. But this should be advertised carefully.

But it’s on my list of simulations to run.

Great article, thank you. How would disregarding inflation impact your chances of success? For example if you chose a 3% withdrawal rate and you keep that withdrawal rate at 3% of your portfolios value so in times of good returns your withdrawal amount would increase and in times of poor returns your withdrawal amount would increase.

Hi Deon,

The withdrawal rate is based on the initial portfolio value, not the current value. If you want results based on the current value, I have another article: Can you withdraw 4% of your current portfolio?

Ignoring inflation will definitely increase your chances of success. However, most people are not nearly as flexible as they think, so flexibility is a risk.

What an incredible article! I have read it twice already..and plan to read all the links also.

Thx so much

I am glad you like it!

Love this article. To be clear you started with a predefined withdrawal rate (for each sim) and essentially upped it by the inflation rate for the year?

So for instance, if you started at a 4.0% WR, and inflation for Year 1 was 2.5% your year 2 withdrawal would actually be (4 X 1.025) = 4.1%? And if Y2 inflation was 2% your Y3 withdrawal rate would actually be (4.1 X 1.02) = 4.18%?

Hi,

Yes, but I work on the dollar value on a monthly basis. I start with 40’000 (4% of 1’000’000) for instance and each month, I adjust the amount for inflation.

Any comments on 3.5%/40yr in Canada ?

Not really, I don’t have any historical data on Canada.

Does your software require the dataset, or simply the Avg/stdev ?

My software requires monthly historical returns for an index.

Ill see if i can get that. May be tricky with index rebalancing. I will keep you posted.

I recently became more interested in investing and retirement. And I like math. I had planned on redoing the Trinity study, among other calculations, and so I was searching the internet for historical data on stocks and bonds. And then I come across you website! Wow! What a wealth of information and simulation results. You have definitely put more work into this than I expected to do.

The biggest learning for me in all of this is to invest more heavily in stocks during retirement than I had planned on. For example, I had planned on a portfolio of 30% stocks and 70% bonds in retirement. From your many posts on the topic, it seems that I would be better of to reverse those ratios to 70% stocks and 30% bonds.

However, all of the blog posts / websites of yours that I have read have focused on the withdrawal or retirement phase of investing. But what about the accumulation phase? I saw one comment from you that you do not own any bonds. From this I take it that you are 100% invested in stocks.

Let me explain, in the United States it is very typical to put retirement investments in a target date mutual fund that uses a glide path. The idea is that when you’re young it’s okay to be aggressive and invest heavily in stocks, but that as you age you should rebalance your portfolio towards bonds. All the major brokerages in the US offer target date funds that use nearly identical glide paths. They are basically all 90% stock / 10% bonds when the target date is more than 25 years away. And then they reallocate on a “glide path” towards 30% stock / 70% bonds 7 years after the target date. After >7 years after retirement, the portfolio allocation is fixed at 30% stock / 70% bonds. (Notes: Each brokerage has their own nuances on the glide path, but the average glide path provided by US brokerages is what I mention above. It’s a simple linear trend with time.)

I had assumed this glide path was determined from a rigorous statistical analysis. However, after investigating on my own, I became skeptical. And now, after reading your many posts on the topic, I am convinced that all these US brokerages use (nearly) the same glide path because that’s what the first one picked and everyone else wants to be the same.

I would be extremely interested if you would perform calculations on the accumulation phase, comparing the standard glide path to a few fixed allocations (100% stocks, 20% bonds, 40% bonds, whatever you prefer to include).

Perhaps you have shied away from post on the accumulation phase because you don’t have a great journal article, such as the Trinity Study, to compare against. But I think a simple set of assumptions would be sufficient. For example, regular monthly contributions. If you want to be more sophisticated, you could make the contributions grow over time to simulate raises and promotions. I read that in the US a 3.75% nominal income growth rate is a reasonable assumption or 1.5% in real (i.e. inflation-adjusted) income growth rate.

Hi Larry,

Thanks for your kind words.

Indeed, with 30% only in stocks, you will need to accumulate a large amount of money to sustain your low withdrawal rate. The reverse seems better to me.

I would also think that the standard target retirement are not particularly smart and are likely all the same.

I have done many articles about the accumulation phase but not many simulations. But i have not yet talked about glide paths. I plan first to talk about them in retirement, but it’s interesting to also consider them during accumulation. I will add this to my list of articles to write! Thanks for the suggestion.

Greta article! Are the 40 year terminal values nominal or real?

The terminal values are real but the expenses are adjusted for inflation.

I love your updated Trinity Study posts. I hope to retire at age 57 and also hope that my retirement needs to last 50 years. :)

Are you familiar with the Required Minimum Distributions in the United States? Starting at age 75, I will be required to pull out 3.7% rather than the 3.25 I had been planning. The percentage increases each year based on a lower and lower life expectancy. At age 85, it is 6.25%. Age 90, you must pull out 8.2% of your retirement fund. If you make it to 100. you must pull out 15.6%. I’m concerned these forced distributions will draw down on my retirement account much faster than planned and perhaps result in running out of funds.

Hi Shelley

Thanks for your kind words.

I have heard about them, but I am not familiar with them. The way I understand is that they only concerns your IRA and 401(k), right? In that case, you could withdraw from your retirement accounts and put the extra money you don’t need in your broker account, no? It will not be extra efficient, but still better than keeping it in cash.

Otherwise, withdrawing 6.25% may be an issue indeed.

It’s also important that this RMD is based on the current value, not the initial value. So they may be a lower percentage of the initial value (or higher) depending on returns and inflation.

But it does need to be taken into account.

Excellent article, many thanks!

I would love to see, if you could and have the time/data available similar study with other asset class such as gold or cash. Assuming you are using 10 year bond? What about long bonds? Inam a great admirer of Harry Browne and his Permanent portfolio.

Congratulations again!

Hi Dani,

I am using 10Y bonds indeed.

Please use the search function, I have already done simulations with gold and with cash.