Would it be more accurate to calculate my withdrawal as 4% base on a rolling average of asset value instead of latest asset value? Market has fluctuate a lot and my net worth right now is much higher than a year ago. So 4% on a sudden run-up may be risky assumption?
If I understand correctly, you're asking if - due to recent run-ups in stock market levels - you could reduce your risk by using a rolling average of your asset values and using that as your 4% withdrawals. If that's correct then yes, you would be reducing your risk a bit, but it seems to me to be a roundabout way of doing so. Let's use some hypothetical numbers to see. If we assume your predicted post-FIRE spending is $40k, then you'll need $1M if you follow the 4% rule. Let's say you're at $1.1M today and your rolling 12 month average just cleared $1.0M. Essentially what you're doing is using a 3.64% withdrawal rate of your current assets or a 4% rate of your 12-month rolling average. If you do that, then you can look at historical success rates for 3.64% (like using BigERN's numbers that
@terran linked to), or you could use CFIRESim or FIRECalc. I don't think there are any resources that quantify how much you're reducing your risk using a rolling average but there are resources that help if you use a lower initial withdrawal rate. As a result, I don't see much benefit to thinking of it as a rolling average.
The larger picture in my mind is what your risk mitigation strategies are. Depending on your situation, 4% may be overly conservative or overly aggressive. There's nothing magic about 4%. If, for instance, you are in a field (like medicine, to name one) that has a very high barrier to entry if you're out of work for many years and if you have dependents who depend on you (e.g. special needs children) and you have a very lean budget with nothing to cut, and on top of all that you don't qualify for any pension or Social Security income, then 4% is probably too aggressive. If you have a fat budget that has easy cuts available, no dependents, and plenty of hobbies that could generate income, then 4% is probably overly conservative. Saving more money (and that's what the rolling average does in practice) is just one of a number of risk mitigation strategies for FIRE.