Will Your Portfolio Last? Meet the Drawdown Simulator

Most retirement math starts with the "4% rule" — the tidy idea that a diversified portfolio can support a steady 4% withdrawal. But that rule was built around lower-return, lower-volatility balanced portfolios. If you hold a higher-growth, more concentrated equity book — the kind that compounds faster but also swings harder — the tidy rule tells you very little.

The question that actually matters is: if I start with $X and withdraw $Y a month, how long is the money likely to last? And the honest answer is that it depends on far more than the average return.

Our new Portfolio Drawdown Simulator lets you explore that question three ways.

1. A constant-return projection

The simplest lens: assume the same return every year and watch the balance evolve month by month. It's a useful baseline, and it immediately surfaces the withdrawal rate that matters. Draw $12,000 a year from $150,000 and you're spending 8% a year; sustaining that indefinitely (before inflation) needs roughly an 8% average return. But a constant return is a fiction — markets never behave that smoothly.

2. Specific market sequences

Here's where it gets interesting. The tool lets you drop a bad year — or two — into the timeline and see what happens: an early −30% crash, a severe −40%, a two-year bear market, or a downturn six years in. You can also type your own sequence of yearly returns.

The lesson lands fast: two portfolios with the same average return can end very differently depending on when the losses arrive. A crash in year one, while you're withdrawing, does far more damage than the same crash a decade later, because early withdrawals shrink the capital that would otherwise ride the recovery. This is sequence-of-returns risk, and it's the most under-appreciated danger for anyone drawing down a volatile portfolio.

3. Monte Carlo simulation

Finally, the tool runs up to 25,000 randomised return paths from your expected return and volatility, and reports the range of outcomes: the probability the portfolio survives 10, 20, 30 years or your full horizon; the percentiles of when it runs out; and where the ending balance is likely to land.

The default scenario is a useful shock. A portfolio that comfortably survives 40 years under a constant 10% return has only about a 45% chance of lasting that long once realistic volatility is added. Flip the chart to a log scale and you can watch each percentile hit its own depletion cliff — the median around year 31, the unlucky tenth percentile near year 11.

Why this matters

The point isn't to predict the future — no model can. It's to build intuition for three things a single "expected return" hides:

• how sensitive longevity is to the withdrawal rate;
• how much the timing of returns matters, not just the average;
• how wide the real range of outcomes is.

Then you can stress-test the levers you actually control: spend a little less, keep a cash buffer so you're not selling into a crash, or use a flexible-spending rule that trims withdrawals after a bad year. The simulator models all three.

Open the Portfolio Drawdown Simulator →

Educational content only — nothing here is financial advice, a prediction, or a guarantee. The simulator shows hypothetical illustrations based on assumptions you choose.