What If You Retired in 1994? The 4% Rule, Backtested
A $1,000,000 60/40 portfolio, retiring in 1994 and spending $40,000/yr (inflation-adjusted), made it the full 30 years against real market history.
Year by year: the 4% plan
| Year | Age | Stocks | Bonds | 60/40 | Withdrawal | End balance |
|---|---|---|---|---|---|---|
| 1 | 65 | −1% | −10% | −5% | $40,000 | $916,000 |
| 2 | 66 | +35% | +21% | +29% | $40,000 | $1,133,000 |
| 3 | 67 | +20% | −1% | +12% | $40,000 | $1,220,000 |
| 4 | 68 | +30% | +9% | +22% | $40,000 | $1,435,000 |
| 5 | 69 | +27% | +11% | +21% | $40,000 | $1,682,000 |
| 6 | 70 | +18% | −10% | +7% | $40,000 | $1,754,000 |
| 7 | 71 | −12% | +13% | −2% | $40,000 | $1,680,000 |
| 8 | 72 | −13% | +3% | −7% | $40,000 | $1,532,000 |
| 9 | 73 | −23% | +13% | −9% | $40,000 | $1,363,000 |
| 10 | 74 | +26% | +1% | +16% | $40,000 | $1,535,000 |
| 11 | 75 | +7% | +1% | +5% | $40,000 | $1,564,000 |
| 12 | 76 | +1% | −1% | 0% | $40,000 | $1,527,000 |
| 13 | 77 | +13% | −1% | +7% | $40,000 | $1,597,000 |
| 14 | 78 | +1% | +6% | +3% | $40,000 | $1,604,000 |
| 15 | 79 | −37% | +18% | −15% | $40,000 | $1,329,000 |
| 16 | 80 | +24% | −13% | +9% | $40,000 | $1,408,000 |
| 17 | 81 | +13% | +6% | +10% | $40,000 | $1,507,000 |
| 18 | 82 | −1% | +14% | +5% | $40,000 | $1,541,000 |
| 19 | 83 | +14% | +1% | +9% | $40,000 | $1,633,000 |
| 20 | 84 | +30% | −11% | +14% | $40,000 | $1,809,000 |
| 21 | 85 | +12% | +9% | +11% | $40,000 | $1,960,000 |
| 22 | 86 | −1% | −1% | −1% | $40,000 | $1,901,000 |
| 23 | 87 | +10% | −1% | +6% | $40,000 | $1,965,000 |
| 24 | 88 | +19% | 0% | +11% | $40,000 | $2,145,000 |
| 25 | 89 | −6% | −2% | −4% | $40,000 | $2,012,000 |
| 26 | 90 | +29% | +7% | +20% | $40,000 | $2,371,000 |
| 27 | 91 | +17% | +9% | +14% | $40,000 | $2,652,000 |
| 28 | 92 | +21% | −6% | +10% | $40,000 | $2,879,000 |
| 29 | 93 | −24% | −20% | −22% | $40,000 | $2,203,000 |
| 30 | 94 | +22% | +1% | +14% | $40,000 | $2,457,000 |
What this sequence teaches
Over the first five years of this retirement (1994–1998), a 60/40 portfolio's cumulative real return was +102%. The single worst year in the tested window was 2022, when the 60/40 blend returned −22% in real terms.
Under the 4% withdrawal plan, the real portfolio balance bottomed out at $916,000 in 1994, before recovering in later years.
Because the first five years were strongly positive, this retirement built a real cushion early. A strong start is one of the best protections against sequence-of-returns risk, since later downturns bite a larger balance instead of a depleted one.
What RetireOdds actually simulates
The table above is the transparent skeleton: one portfolio, one withdrawal rule, one sequence of real historical returns, before taxes. It's meant to be checkable by hand.
Inside RetireOdds, the same year-by-year loop runs against your plan and adds what a real retirement actually has to deal with: federal and state taxes with account buckets (taxable, tax-deferred, Roth) drawn in order, Social Security claiming and its partial taxability, Required Minimum Distributions, healthcare costs (ACA subsidies before 65, Medicare and IRMAA after), Roth conversions, and one-time life events.
It also runs three engines instead of one: Monte Carlo (1,000 lognormal real-return paths calibrated to this same 1928–2023 dataset), a block bootstrap of this history, and the historical replay shown on this page. A plan fails if any year is unfunded — including the last one.
Read the full method on /methodology, walk through the product in the user guide, or try your own numbers in the free calculator.
Returns are approximate, rounded, planning-grade real (inflation-adjusted) totals for US large-cap stocks and 10-year Treasuries — this is educational modeling, not financial advice.