The biggest concern I have about the 4% is that yes it's targeted at surviving the worst historical circumstances, but the study only ranged over 30 years, and many of us are pushing for FIRE for much longer.
I'm aiming for a 4% WR of $50k ($1.25Mil portfolio) but in my pre-FIRE life I'm trying to live on $40k. Hopefully this will make my FIRE more resilient and allow me to stretch and enjoy myself once I pull the pin. In 10+ years... so far away
Lots can change in 10 years..... but if you are spending only $40K on $1.25M, that's a WR of 3.2%. That should be pretty safe, at least based on history.
But just going back to the 4% rule for a moment.....
Just say that you found yourself retiring in one of the worst times in history. You don't say how old you will be when you FIRE, but for the sake of discussion let's assume you will be 45.
In this imaginary dire financial world if you kept spending 4% plus inflation you would be broke at 75, but you find yourself living to 90.... oh no!!
But is this really realistic..... or is the following more realistic....
You go along spending your 4% for 25 years, and then one day you look at your stash and wake up to the fact that it is shrinking fast.
You give yourself a face punch for not looking at your bank balance for the past 10 years, but now you have looked you decide to take action.
Remember, for your stash to run out at 30 years, at 25 years you would still have close to 5x annual expenditure remaining in your stash.
So you find yourself at 70 with a stash that is only 5 times your spending, or in your example $200K.
At this point, as you are 70 you decide that the most you should draw down is 6% of your stash, or $12,000, from that point on rather than $40k.
Now the good thing is that you are 70, so you will also get the govt pension of $20K per year (assuming you are single and own your own home).....
So everything has gone absolutely pear shaped, and you have suffered pretty much the worst economic sequence of returns in history, and your retirement has ended up being $40k per Year for 25 years, and then $32K per year thereafter until you kick the bucket. This should be manageable.
Sure you won't be living a fancy pants lifestyle, but the AFSA modest retirement budget for a single is $24K. Your $32K per year would give you an extra $8K per year to add quite a few luxuries to your modest retirement.
The moral of the story is that even if you have only a small amount left in your stash at pension age, it will make a huge difference to your autumn years so don't worry about the 4% rule.
FIRE and enjoy life. Take stock again 10 years from now amd stop worrying. She'll be right mate.
Of course, as you are planning on spending only 3.2%, it's extremely improbable you'd find yourself in the above scenario!! :-)