95% Rule

The 95% Rule is a withdrawal strategy with a unique priority: it aims to preserve your initial portfolio value for the entire duration of your retirement. Other withdrawal strategies typically only care about having a nonzero amount of money remaining at the end of the estimated retirement.

Using the 95% Rule, your annual withdrawals are based off of percentages, and as a result this strategy will never completely exhaust your portfolio. Unlike the Percent of Portfolio strategy, however, it avoids extreme year-over-year fluctuations that can result from withdrawing a direct percent of your current portfolio value.

It does this through its namesake rule: the 95% Rule. The 95% Rule works like this: each year you can either withdraw your Safe Withdrawal Rate (typically around 4%) or 95% of your previous year's withdrawal.

What this means is that your withdrawal will only ever drop at most 95% from the previous year, even if the market experiences a sudden and sharp decline. This can smooth out particularly turbulent retirement periods, such as the 30 year retirement from 1930 to 1959.

Keep in mind that although year-over-year withdrawal fluctuations are reduced with the 95% Rule, there can still be substantial fluctuations in withdrawals over the course of the entire retirement. Looking again at the 1930 to 1959 simulation: with an initial 4% withdrawal of $40,000, the smallest withdrawal is $20,083.01 while the largest is $62,849.28.


  • Never prematurely exhausts your portfolio
  • Minimizes year-over-year withdrawal amount variability through its namesake rule


  • Like all withdrawal strategies that vary based on market conditions, annual withdrawals can become too low without a minimum withdrawal in place.