I'm curious is the is reasonable, empirically researched data/studies that make a sincere or valid attempt at invalidating a 4% SWR. In really dumb terms: the Sith to the Trinity Study's Jedi?
Sure. By none other than Wade Pfau, the guy who made the 4% rule popular.
Pfau's recent work doubting the 4% rule have been based on some way or another handicapping expected returns. I've seen two basic methods:
1) Sneak in a 1% management cost. Pretty damn obvious. I and others called him on this one since most of us are with Vanguard and low cost. So.... the next method:
2) Take historical returns. Cut them down 25-50%, then run the Monte Carlo. More subtle. Justified on current low bond yield. This is basically assuming we have times which will be considerably worse than the Great Depression, or 66-82 stagflation for investors. It's fine to play "What if?" - but this isn't really predictive.
I too have found these methods by Pfau to be suspect. You could argue that he's aiming these studies at financial advisors, so the 1% is actually going to the advisor's pockets. But the Monte Carlo analysis has never been reflective of what has actually happened before. Sequence of returns get all crazy with that. In the real world, things don't behave that way.
They're certainly getting him headlines in the financial press (End of the 4% Rule!!!!!!) who use the titles as clickbait - and this also feeds the frenzy over at Bogleheads with their "race to the lowest SWR." Ignore Social Security. Ignore pensions. You cannot ever earn or recieve any other money (such as an inheritance. Or hobby income. Or churning credit cards for travel points. Or just Craigslisting your junk) You cannot vary your spending due to market conditions. Start with 3% as your SWR and you get a bunch of people arguing that it's too risky. You need 2.5%. No, you need 2%. No, I'm targeting 1.7%!
4% actually still seems pretty damn safe. Most of the risk is starting your retirement with a few bad years ("sequence of returns risk") - which can be planned for or solved pretty readily by a variety of methods:
1) I personally plan to have some "fun money" in the budget - primarily money for extended traveling. The traveling can be postponed for a year or two in a market crash, or just made very cheap (ie National Park Camping Tour instead of European River Cruise)
2) In the first few years of retirement, you should be pretty darn employable or otherwise make some money. If the market crashes, work some for a year! (Yes, it's harder to get a job in a recession. Noted.)
3) I've got a lot of stuff around that I want to sell off. Don't have the time at the moment to do more than stay steady with selling off infant junk while acquiring toddler junk.
4) I'm gonna plan on Social Security. I plan to push it out to Age 70 (at the moment) - but if the market crashes hard, I can pull that in by 8 years. Frankly, being married there are a lot of middle ground options. Too complex for this post.
5) Personally, I have a pension.
6) I can have a HELOC in place shortly before I retire that I can draw on if need arises.
7) I am likely to inherit mid 6-figures within 15 years of retirement. (Perhaps morbid, but I am realistic here. The 15 years presumes one parent lives to 5 years older than any ancestor)