Is the 5% Withdrawal Rule Safe? Here’s How It Stacks Up Against 4%

The 4% retirement rule has proven to be successful for over 90% of retirees over a 30-year period, while the 5% rule only succeeds for 71% of retirees. A $750,000 portfolio produces an additional $7,500 annually with the 5% rule, but early market downturns can be more damaging as more shares are sold at depressed prices. The 5% rule tends to be a temporary measure until Social Security or a pension kicks in, at which point dropping to a 4% withdrawal rate becomes the smarter move.