There's a thread in the SWR section titled "Scott Burns: Staying Safe in Retirement." The Scott Burns article refers to a September/October 2004 article by Financial Analysts Journal Editor Rob Arnott. Here's a link to a PDF copy of the Arnott article (it is the one titled "Sustainable Spending in a Lower Return World.")
Juicy Arnott Quote #1: ““Relative to current yields on TIPS, the risk premium on stocks is dismayingly small (probably less than 1 percent at this writing).”
Juicy Arnott Quote #2: “Now, consider the taxable investor. Historical real returns since WWII for a 60/40 balanced portfolio have averaged 3.3 percent. When we strip out the effects of falling yields and rising valuation levels, that return falls to 1.9 percent. Given today’s low yields, we cannot reasonably expect more. Because we are taxed on both our real return and the inflation component of our return, a reasonable expectation for the after-tax real return on a 60/40 portfolio is fairly close to zero.”
Juicy Arnott Quote #3: “The arithmetic for taxable investors is remarkably simple if the after-tax return on a portfolio is roughly zero. If a retiree wants to maintain a lifestyle costing $40,000 a year, adjusted for inflation, for a life expectancy of 25 years, he or she will need $1 million.”
The formula being used by Financial Analysts Journal Editor Arnott is not too far off from the formula proposed earlier in this thread by our own RogerR.