I've been retired for nearly 14 years on the 4% SWR, including two awe-inspiring recessions, and I think that record counts as "so far so good" for sequence of returns risk.
A question: would you mind saying how much of your initial 4% WR was pension and how much was withdrawals from the portfolio?
I don't mind (the info is public) but I don't think that you're using the generally-accepted definition of a 4% SWR.
I didn't look at my pension as a percentage of SWR. I projected our retirement expenses, subtracted my pension from that, and made sure that our investment portfolio was at least 25x that "expense gap".
FI = 25 x (expenses - pension).
When I retired in 2002, my military pension was $2655/month or $31,860/year.
http://www.dfas.mil/militarymembers/payentitlements/military-pay-charts.html (For those of you with military experience it's O-4>20, Final Pay.)
Today (due to COLAs) I'm receiving $3566/month or $42,792/year. If you compare my pension to an O-4 servicemember who retires today on the 2016 pay charts with a High Three pension, we're pretty close to parity. (My Final Pay retirement system is no longer in effect for most of today's retirees.) According to the CPI, my pension has gone up about 34% in 14 years. Personally, my pension has risen faster than our family inflation rate in almost every category.
I don't have my 2002-03 expenses handy but 2004 was about $75K (call it $6200/month). So the pension was 42.8% of our total expenses, and about $43K of our spending came from our investment portfolio. I have very clear memories of calculating the value of that portfolio on 17 September 2001, after the stock markets re-opened from 9/11. The number was $1.1M: lower than I would've liked (and it got lower during the next 13 months before it started recovering) but it was "close enough".
Keep in mind that back then my spouse had just left active duty for the Reserves and unpaid drill weekends, so we had no expectation that she'd earn more than a small pension starting at age 60. (Our assets had to bridge the big gap between 2002 and 2022, and then still cover a smaller gap after that.) We were loaded down with mortgage debt on our residence, which boosted our expenses but also let our investment portfolio stay big enough to handle the 4% SWR. We were losing money on our rental (thanks to my parents-in-law who were squatting there) and we were still parenting (including putting $5000/year in the college fund). Our investment expenses were pretty close to 1%/year (including a "value" mutual fund charging 1.4%/year) and we had a significant backlog of home maintenance & repairs begging for DIY sweat equity.
In other words, retiring at a 4% SWR into a recession could've been ugly but we had faith in the math and the probabilities. The inflation-indexed annuity assured us a minimum standard of living even if our portfolio was chopped in half by a bear market. Plan B was for one of us to re-enter the workforce, but only if absolutely necessary. My research indicated that we could even hack withdrawals of 6%-7% for a year or two if necessary.
Our spending stayed pretty flat for the next decade (or declined with inflation). In 2013 (the last summary I have on file) we spent $82K. During that decade we dropped our mortgage payment by over 40% (serial refinancings) and launched our daughter from the nest. We built a photovoltaic array and a solar water heating system and dropped our electric bill by over $1400/year. My spouse retired from the Reserves in 2008 with a few extra points and a surprise promotion to her credit. (Her pension still starts in 2022.) My PILs moved back to the Mainland and we were finally able to generate cash flow from our rental property. We took advantage of both recessions to shift our asset allocation to ETFs with low expense ratios and to convert most of our traditional tax-deferred accounts to Roth IRAs. We liquidated a small chunk of our portfolio to upgrade our home, spent another small chunk to fix up the rental property, and gave another small chunk to charity. I've finally submitted my VA disability claim, which may drop my tax bill by $1000-$2000 per year.
I haven't tallied our annual spending since 2013, and in 2015 I stopped tracking our spending. I could reconstruct it from checking account & credit-card statements, but if anything it's actually dropping. We spent five months of last year visiting our daughter in Spain, so that knocked our spending down and our checking account balance is still climbing. Instead of indulging my inner nuke with Quicken details, we're going to automate all of our tracking of our portfolio and our expenses with Personal Capital and/or Mint. It won't be as detailed as Quicken but it'll be "close enough".
My point is that if I'd done these calculations in 2001 and blindly sought an extra margin of safety from a 2.5%-3% withdrawal rate, then I would've worked a corporate bridge career for at least 2-3 more years. I finally would've eased into ER in 2005. Then when the Great Recession hit I probably would've panicked and clamped down very hard on the spending, perhaps even seeking part-time work. But in 2002, instead of succumbing to the lure of an unreachable 100% success rate and "Just One More Year" Syndrome, I avoided employment and learned how to tolerate financial ambiguity & volatility. I learned to get comfortable with the 4% SWR and to optimize our finances even further. Along the journey I learned that I still have tremendous human capital. Screw the corporate career track-- I could have earned an entrepreneurial lifestyle income from handyman labor or appliance repair or writing (or all three).
If I'd succumbed to JOMY Syndrome then I would've missed out on some of the best years of my daughter's life. (Including the exciting "danger teen" era.) I would not have surfed as near as much with her, and I wouldn't have trained alongside her to get our taekwondo black belts. I would've kept gaining weight around my waist (instead of converting it into surfing muscles around my shoulders) and I would've kept gaining points on my blood pressure & cholesterol. I would've had to outsource most of my life (rental property management, housecleaner, yardwork) so that I could earn more margin of safety for the portfolio. My spouse and I would've missed years of even better togetherness & intimacy. I would've endured several (more) years of workplace dissatisfiers and epic rush-hour commutes. I would've missed some incredible world travel (Japan, Thailand, all over the Mainland) and a couple of cruises. Eventually I would've retired (perhaps with an extra push from a family or medical crisis) to discover that I had way more money than I needed-- and had missed out on years of satisfying, fulfilling retirement.
The 4% SWR is a great hypothesis, and the execution is messily variable & volatile, but we appear to be following the track of "way more money than we need".
I think the benefits of the 4% SWR outweigh the risks. The human behavioral financial psychology of loss aversion costs way more than necessary.