It depends what you call a conservative AA :)
Well, you're right, I underestimated what a -1% would do on 60 years. those compounded interests are really amazing ! But I think keeping on par with inflation with a somewhat conservative AA (more on what I call conservative below) is totally possible. And then, with a big stash, living on the capital is, IMO, much less risky than living on the interests of a small stock-heavy (>= 80%) portfolio.
Actually, I'm a big Permanent Portfolio fan. I think its asset allocation is what many (including myself) would call very conservative, with only 25% stocks in it and even 25% of pure cash ; even saving accounts or CDs are called speculative bets in the PP theory ! However, it provides very decent returns. Maybe we are living good years for the PP (with a secular bear market for stocks, a never seen before gold bull market, and tremendous returns on treasuries) that will never be seen again, but I'd really be surprised if it did not provide at least close-to-inflation returns on the next 60 years.
Anything with less than, say, 1/3 stocks/RE can be called conservative I guess, but might still provide decent returns on the long run if you include some sort of inflation protection in it (it could be swiss francs, gold, TIPS, farmland, commodities, a mix of all that, your choice).
As for stock market drops : don't underestimate them. An ER/ERE can possibly make its stash in very few years and then expect living on it for very long. If you made your stash just before a bear market (say, form 1995 to 2000), you will be forced to consume a part of the capital for your living expenses, thus selling your stocks precisely at the moment they are worth very little. When the market really recovers a decade later (or even a little before), a big part of your stash has vaporized and it can't sustain you anymore. Yes, that's pure bad luck, on average it probably won't happen to you, but no one chooses his birthdate.