Portfolio Balance And Sustainable Withdrawal Rate

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One aspect of the sustainable withdrawal framework that is often forgotten is the portfolio balance! Planners often talk about whether a given withdrawal rate is sustainable or not, but it’s equally important to look at the account balance under a wide range of market scenarios.

Looking at the portfolio balance allows us to visualise what the journey looks like under a wide range of scenarios.

In this 2mins video, I use Timeline app to show the year-end balance under all historical scenarios since 1900, for any given withdrawal amount.

We can see if and when the portfolio is exhausted under each scenario. Given the wide range of outcomes, we can also see the worst case, the 10th, 50th and 90th percentile scenarios.

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