Accounting for taxes and penalties we will probably be withdrawing about 5% per year. So, assuming 4% returns, we will likely have knocked down our principal by 10% in the first 10 years. At that point we can look at one of us taking social security and we drop to a less than 4% withdrawal rate. That still leaves the other one's social security as a reserve if something has gone sideways or if the government has chopped the benefit level.
My concern is - what if you have a 50% decline in the stock market, a la 2001? What is your asset allocation? I do think this is where thinking through your AA and year-by-year withdrawal plan is important.
For example, if we are choosing an asset allocation of 70/30 for the first 10 years of retirement; we can spend 5% for 6 years (the 30% of the pot), and not have to worry about what the stock market does. After Year 6, it gets dicier. And if we have a 50% decline in the market, that 70% is now 35% of the original sum. Which means things might fail in the long run.
You are assuming that returns will be linear - and they are not.
Also - how are you handling medical coverage? That is the other big variance.
Thinking about these things means that we our plan has shifted a bit. The plan, assuming a $1M portfolio for illustration:
25% - set aside into a "spending bucket" in cash, TIPs, bonds. $250k
75% - the "investment bucket", with AA of 65/35. $750k
Spend $35k per year, in Years 1-6 from the "spending bucket",
PLUS 3.5% of initial value of investment bucket (750k * .035 =
$26,250).
In Year 3: DH files for Social Security = +$20k
In Year 6: House is paid off = + $29k freed up.
Now, in Year 7, we can continue to take the 3.5% SWR on a 65/35 portfolio, and FireCalc says we have a 97% success rate.
In Year 10, I file for SS at age 70 - and we can reduce our portfolio w/d as needed, if it needs to rebound after 10 years of withdrawals. With RMDs now moved to age 75, that means we can stop using the portfolio in Years 11-15.
I would recommend you figure out a plan that is drawn out like this - year by year, assuming no more than a 5% WR until one or the other gets SS, and then reducing it to 3.5%. That plan needs to include SWR, Asset Allocation, and a plan to "wall off" your spending from the portfolio in case of catastrophic declines.