This all makes sense, except that I am not proposing to withdraw 6% of my investments per year. As I said, I do plan to keep working until I reach my 4% number. Perhaps you meant that, in theory, I am considering a 6% withdrawal?
Well, you're planning to use the 4% SWR. That implies starting with a 4% withdrawal and boosting it each year for inflation. (Although I agree up front that nobody actually spends their FI portfolio in this manner.) If you withdraw 4% during the first year and the market drops 25% during the next year, your withdrawal during the next year will be a lot higher percentage than 4%. That's fine because the Trinity Study analysis allows for variations like this, but you started out with the assumption that the stock market is growing 6% per year despite the fact that (1) it's a geometric average of a very volatile series of numbers, and (2) it might not even be 6%. Your assumption is not supported by the Trinity Study upon which the 4% SWR is based.
This sounds like financial nerdiness (because it is), but it's why Dave Ramsey is so screwed up on his assumptions about market returns. Among other fantasies, he's accused of calculating the stock market's returns as an simple arithmetic average instead of a geometric (compounded) annual return. Simple but deadly for anyone with fewer assets than Dave Ramsey.
If you're planning a dividend distribution model, where you only spend what your portfolio earns that year, then you'd be financially fine. But you'd probably be unhappy during a bear market.
Bob Clyatt spent considerable thought (and a big chunk of his own money) coming up with an alternative. Bob withdraws 4% of his portfolio every year and does not adjust that amount for inflation-- it's just 4%/year. However if the stock market drops 25% the following year, Bob's added an exception to that year's 4% withdrawal. Instead of sticking to a 4% withdrawal of a portfolio that's 25% smaller (in other words, a 25% reduction in spending that year), Bob's system says to take 95% of last year's withdrawal. You keep doing that every year of the bear market until your portfolio recovers and the 4%-of-the-portfolio amount is once again bigger than the 95%-of-last-year amount. Bob's system was designed in the same way as the Trinity Study, and he paid a financial analyst firm to design the portfolios and back-test the system just as FIRECalc does with market history.
Also I just checked and the book you referenced is in my local library--yay! Thanks for mentioning it.
I'm happy to-- Bob wrote his book with the help of the posters on Early-Retirement.org, and he's one of my mentors who got me moving on my book. He's also a living example of what financially-independent early retirees do all day. Take a look at his website:
http://www.clyattsculpture.com/Caution: some of Bob's images may or may not involve naked women. But it's art, so it's safe for work... and his spouse said it was okay with her.