Pretty much. I think the disconnect for me is that the two options don't seem comparable. What I mean is following a 4% SWR and a spending of $40k/yr, is not even remotely close to following a vwr with a spending of $40k/yr but the option that you will adjust your spending down significantly in down markets. Of course the vwr will "win" in that situation, it's designed to by definition. If you are able to FIRE on a vwr that gives you $40k/yr, but might cut it down to $30k/yr, and you can still get by comfortably for a few years without sacrificing, then saving up 25X your $40k budget to use a 4% SWR means you are grossly over saving. It would be more comparable if your VWR option was like $50k/yr and might be reduced to a minimum of $40k/yr (which is the budget of the 4% SWR example).
To me the $40K/yr fixed WR and the $30K - $50K/yr VR are comparable simply because over a reasonable period of time you are getting ~$40K/yr to spend so your lifestyle will be the same.
If you guys really can't adjust your spending by +/-25% per year than I can see that this won't work for you, but that lack of flexibility seems pretty shocking to me.
There are so many COL items I have that I want to spend on in FIRE, but that I don't feel forced to execute in any one year:
- replace computer/camera/phone
- major home reno projects
- replace car/motorcycle
- replace clothing
- major trips
- replace sports equipment [bike, surfboards, fly fish gear, etc...]
I just don't see it as a hardship or challenge to adjust my spending so these sorts of expenditures avoid market downturns. I'll end up with the same lifestyle as the $40K/yr fixed WR person, but have to work 2.5yrs less [using the sample values I posted above].
And yes the VWR plan is designed to weather market shocks, but that's my whole point. It seems superior with the assumption that you do not need exactly $40K/yr every year.
The disconnect I have with your example is how you can compare a $40K fixed WR with a $40K - $50K variable WR??? In every year you do the same or better than the $40K/yr fixed WR that's not equivalent.
I also don't understand how Arls can posit that being able to defer $10K/yr of expenses from a budget of $40K/yr for a few years during a market downturn means you would be fine FIRE-ing with a $30K/yr fixed WR for a 30yr+ retirement??? That just doesn't compute for me. I can put off replacing a car, a roof or buying new clothes for a few years. but at some point those expenses have to occur.