The 4% rule is safe 95% of the time.
US wars (no homeland destruction) are NOT a cause of failure. Non-US YMMV.
Long term inflation coupled with equity stagnation DOES cause failure (ie 1966).
Right, 95% of the time is not 100% of the time and I agree it's important to look at the specifics of the failure cases. Global wars have not caused portfolio failures. Stagflation has, but I think we're much more attuned to that threat today than we were in the past, and are more adept at using monetary policy to avoid that scenario.
Also, 4% is safe 95% of the time for 30 year periods. I intend to live off my portfolio for longer than 30 years. Fortunately I have SS after only 20 more years.
On the bright side, the average expectation of someone retiring on the 4% rule is that their money will actually grow over time.
In 95% of cases the money survives 30 years.
In 5% of cases the money does not survive 30 years (without spending reductions).
And in 50% of cases, the median future expectation, the money grows. In fact, if you want to just play the long term averages for 30 year periods, we should all be planning on SWRs closer to 6%. That's the withdrawal amount that is "correct" for surviving and average of 30 years. If you're withdrawing less than 6% per year, then you're more likely to have extra money after 30 years than you are to run out before 30 years are up.
Remember, research looking at the 4% rule in every other developed country outside of the US market has not fared nearly as well.
This is true, but the equivalent in most other countries is like 3.5%. I don't think it's a huge difference, given the flexibilities this crowd demands of retirees anyway.
Also, America is very much not 1991 Japan. Let's not dramatize the worst case scenarios. Japan's market collapse, often cited as something Americans need to protect against, came immediately after a period in which their stock market saw 75% annual growth for six years in a row. We're a long way from that level of jeopardy.