If you look at the article, it shows a 35% failure rate for the 4% rule with 50% equities.
The failure rate drops to a 15.5% failure rate at 75% equities and a 12% failure rate at 100% equities.
That's a lot higher than the 5% people would like to quote.
As for the 3.25% withdrawal rate, the failure rate is below 4%, and below 1% for all instances of 65%+ equities.
Thats for a 60 yr time period. Nobody is retiring and not doing any work at all for 60 yrs straight. They would die of cocaine overdose at 42 out of boredom before that happens.
ERN's article is in the context of a 60yr drawdown period, but all that does is put the initial SWR up for debate, it doesn't change the timing of the best/worst time to retire, and I think the conclusions for the article can be applied to just about any drawdown period
Agreed, it also ignores things like social security.
It is worth reading his discussion, as it makes some valid points to keep in mind before sending your letter of resignation. The 4% rule is best used as a guideline, a one liner for opening a discussion when someone asks “How much do I need to retire?”. If you answer that with a dissertation on world economics and complex statistical scenarios you will lose almost anybody.
Most folks I have discussed retirement fail to answer these basic questions:
1) Do you know how much you spend now?
2) Do you know what you want to do in retirement and how that might change your spending?
3) Do you know where your current money is invested? (“I have a guy” is not a good answer)
4) If you can’t control your spending/debt now, how do you plan to control it once you retire?
So the 4% rule is a fabulous way to frame the discussion to get started with the folks who need a starting framework. Having further discussions as to their particular situation and comfort level as they get close can come later.
My case is that 40 more years is likely, not 60. Most of my spending can be covered by SSA in 25 years, and my spending will go down by about a third in once the mortgage is paid off in a 9 more years. 4% starting WR is very conservative in my particular situation.