It's way too early to tell what the true SWR would be for very recent retirees, the 2000 cohort is not looking too good right now. FIRE can't ever truly die, just get more difficult.
You might be missing the point, @joleran.
The 4% SWR is the *worst* case for the last century, including the period of 1966-82. You're presuming that the 2000 cohort has stumbled blindly along for the last 20 years, blissfully spending their CPI adjustments every year without ever paying attention to their true spending needs or any (American) possibility of Social Security or any possibility of variable spending. For them to fail, the SWR would have to be less than 4%.
The 4% SWR is the worst case for portfolio depletion over 30 years, assuming people happily continued spending their CPI adjustments with depleted portfolios as you say.
All right, I didn't anticipate that interpretation of my words, so let me rephrase for precision.
"The 4% SWR is the *worst* case of 30-year portfolio survival for the last century."
Here's the thing for the 2000 cohort - they're doing really badly. https://earlyretirementnow.com/2017/01/18/the-ultimate-guide-to-safe-withdrawal-rates-part-6-a-2000-2016-case-study/
In order for them to recover and re-validate the 4% rule, we will need substantial outperformance in the next 10 years during a time when 1. even Vanguard has been urging caution about expected equity returns in this timeframe due to high valuations until recently and 2. this recent additional setback due to COVID-19 is likely to have long lasting knock-on effects. That would be utterly amazing to observe, and I'm not saying it won't happen, but the 2000 cohort is right now at high risk for "breaking" the 4% rule.
Right, I get that too. (I've spent quite a bit of time with the 4% SWR.) Let's stipulate that there's plenty of real-world and academic data that the 2000 cohort is doing really badly.
Incidentally, it sort of proves the point that you can see a portfolio failure coming from a long way off. People were talking about it over a decade before Karsten put the spotlight on it.
http://www.raddr-pages.com/forums/viewtopic.php?f=2&t=1208&hilit=Y2KBut that's not my point. Here's my point.
People who retired at the 4% SWR don't have to recover over the next decade, because they've already recovered. They either never blindly followed the 4% SWR's inflation increases or they've already varied the way they spend. They might even start Social Security before 2030. They used the 4% SWR, they saw failure coming, and they acted. They're winning.
We don't have to "revalidate" anything about the 4% SWR. It's a very useful tripwire all by itself, just the way it stands. Failures have already been identified for various asset allocations, and some people might feel uncomfortable with a portfolio value near zero at the end of their lives. Yet we only have to avoid its failure rates by not blindly following the computer simulation.
If you really want to fix the 4% SWR then you'd add in annuities (SPIAs or deferred) or figure out when to implement variable spending (temporary or permanent), or get a few more centuries of data to extend the 4% SWR success rates past 30 years (Monte Carlo). But people are already working on those enhancements.
Here's the really annoying issue with driving the 4% SWR to 100% success, or with revising it to the 3.47952% SWR, or with dismissing it for its other perceived flaws:
People stay in the workforce longer than necessary.
They lock themselves into "Just One More Year" Syndrome, or they decide to gut it out for the pension, or they're afraid to negotiate a career change. A few of them just want someone to tell them what to do, and when we claim that the 4% SWR doesn't work then they don't know what to do.
Instead of trying to optimize the math, we should be optimizing our lives.
For that purpose, the 4% SWR keeps people from spending the rest of their lives trying to eliminate failures out of fear.
That podcast with Michael Kitces (who's also spent quite a bit of time with the 4% SWR) goes a long way toward replacing fear with optimism and confidence.