The quick answer is that the 2nd generation work he mentions (Bengen and Trinity Study) is referenced a lot here. The assumptions he mentions to the 2nd generation studies are correct. The assumptions in the study are clearly spelled out and do need to be taken into consideration so there is no need to call them dubious. The 3rd generation work seeks to build on their work. A lot of the discussion here concerning safety factors addresses the 3rd generation concerns. Also, there are many simulation tools, cFIREsim being one of them, that let you figure out your own SWR based on your personal assumptions which addresses the concern they have about bad assumptions. For example, you can add pension and social security income in CFIREsim and that is not included in the Bengen or Trinity studies; they are only withdrawing money from one account.

Now, a little more discussion if you're interested.

The article questions how can everyone's SWR be 4% and that is a little misleading. The work that came up with the 4% rate said that is the maximum safe rate when backtesting the data. In other words, over all of the 30 year periods tested, 4% was the lowest result; all other time periods had a higher SWR. That is well known.

The only way you are going to know your SWR exactly is to know what will happen in the future. So, you just have to come up with your own best estimate and run with it. On the fly course corrections are discussed a lot here.

To address the question about retirement being longer than 30 years with 4% SWR I'm reposting some work I did looking at that in cFIREsim, see below. Basically, the conclusion is that you need to do the calculations for your own retirement period and conditions (pension, SS, asset allocation, etc) and plan on making adjustments on the fly.

So, I think 4% SWR (save 25X annual expenses) is a great rule of thumb to set your initial target and then while you are on your way to saving that much you fine tune your personal SWR estimate using what you learn.

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In MMM's post

The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?” he shows the 4.04% SAFEMAX value in Figure 2.1. Actually, that figure is derived from William Bengen's work in 1994 (the author, Wade Pfau, extended the results to 1981 using data up to 2010), not the Trinity study. The Trinity study occurred four years after Bengen's seminal work. The only difference between their work is the bond indices they chose. With Bengen, he showed 100% success at 4.15% WR; the Trinity study showed a 95% success rate at 4% WR (not 100%!!!).

If you go to the webpage MMM got that figure from, it redirects to

retirementresearcher.com/the-trinity-study-and-portfolio-success-rates/. Looking at Table 2.1, you can see that at 4% withdrawal rates you have 100% success at 30 years, but only 96% at 35 years and 85% at 40 years.

I tried a really simple experiment in cFIREsim and obtained comparable results. I started with 2015-2045 for a 30 year retirement, with $100 portfolio, $4 spending (4%) with inflation adjust , 50/50 stocks/bonds, no fees, and everything else set to zero. That matches the study parameters. I then ran simulations for 30, 35, 40, ...., 70, and 75 year retirements. I stopped at 75 years for two reasons: most people won't be retired that long and also the data starts to be statistically insignificant because at 75 years only 70 cycles are ran, 80 years gives 65 cycles, etc.

Well, the results were so bad for 50/50 stock/bond allocation I also ran 70/30. The results are shown in the table below. As you can see the success rate keeps dropping and it is not clear to me that there is an asymptotic limit. I'm not sure where the assumption that if the money lasts 30 years it will last forever came from but I consider it suspect. If someone can post some hard calculations or a research paper that shows this I would appreciate it.

Years Retired | 50/50 Success | 70/30 Success |

30 | 90.4% | 93.9% |

35 | 82.7% | 90.9% |

40 | 67.6% | 84.8% |

45 | 65.0% | 80.0% |

50 | 63.2% | 81.1% |

55 | 60.0% | 82.2% |

60 | 60.0% | 82.4% |

65 | 55.0% | 80.0% |

70 | 53.3% | 78.7% |

75 | 50.0% | 77.1% |