Those saying <3.5% is a waste of time because never in history has it failed, might be wrong. Just because it hasn't happened in the past 100 years, doesn't mean it couldn't happen. I think one has to a little careful with their justifications for what they believe to be a waste of time.Each person has to work out their appetite for risk.
That said, I am perfectly comfortable rolling the dice once I have 25x saved.
Like others have said:
Step 1: you need to decide when enough is enough. No guarantees, but enough that you are ok with the risk. For me, this is 25x. If I have an average retirement based on history I will die rich. If it's less than average I might die broke, but I am willing to take some risk for some freedom.
Step 2: you need to consider what you will do if there is a crash, long recession, hyper inflation etc to minimise the damage to your stache durIng that period. For me there are 3 things.
A. Diversify and rebalance - I won't have 100% in stocks.
B. My budget includes lots of costs that could be deferred for several years: car replacement funds, home renovation funds (figuring over 40 years I will have to freshen up the kitchen, bathroom etc at least once or twice), home appliances funds, travel, clothes even. In fact I think we could manage on around 50% of our budget for 3-5 years or so. At some point we will want to spend as planned, but we could wait a while
C. Post Fire income.... whatever source. My DW can easily get short contracts as an experienced school teacher. It would be harder for me, but I am sure I could find something if it was necessary. I might work a bit even if it's not necessary. Who knows....
I am comfortable I can turn my 4% in to significantly < 2% for a few years if required. Hopefully, and most probably, the crisis will pass after a few years and then we will go back to Plan A.
I am not really wedded to looking to the past as a guide to the future. I do however sense that 25x is a big enough pile of money to play with and to take some risk based on everything I have read and experienced in my working life. I don't really know how much risk I am taking, but I don't think it is much. I definitely can't imagine all my savings disappearing too quickly. Its not like I am not putting my entire stache on black in a game of roulette. The risks are manageable.