Hi, Firebug here….the “Fuh git bout it” guy. Re-reading the comment it does come across as flipped, and as most late night postings go, that was not my intent. But I find this thread interesting.
Firstly I in no way disparage or criticize the 4% Rule with respect to its underpinnings, data, or models. I did not mean to imply the ‘rule’ is irrelevant but rather to get away from the fixation 4% is a magical bullseye. I know that many participants on this forum are great with math and financials. Sadly, while coming from a family of engineers, I never received that mathematical gene. I believe the rule itself to be solid in most of its forms. But I tend to look at things a little more abstractly. It would be great to get into the head of founders to understand what their hopeful end goal was to be. My guess is that they hoped to quantify a mathematical function identifying a specific WR that given a set of predefined investments, historical data and economic principles, would statistically guarantee returns sufficient enough to enjoy retirement without running out of money. Fair enough.
But I think you hit it on the head when you referred to it as “whatever”. If the model even remotely presented itself as a “whatever’ I would have just glossed over this topic as another interesting thread. But, here’s (in my opinion), the difference. People often look rules to simply their lives. Everyone can’t be an expert in everything and as this forum can attest to. Perhaps the biggest hurdle of all with respect to financial freedom is the understanding that it is not rocket science. To that end when people hear (quite frequently I might add) that there is this thing call a 4% rule. They gravitate towards it, accept it, and use it. Note it’s not referred as the 4% guideline, or the 4% approach. Rules tend to have very narrow boundaries and seek to minimize exceptions and while I don’t know who coined the phrase 4% rule I can assuredly tell you that is what people know it by. I too would like it to be a “whatever”. But it is not.
Having looked at this topic (other threads) many times, I can see where the comments are decisively like this, “That 4% rule…yeah good stuff, but I find that 3.75% is my sweet spot”, “3.25% over here”. “I like 4.5%”, “Conservative at 2.75%”… I just take issue with aligning with something called a 4% rule. So when the OP questions the details of a specific unwavering 4% WR, my point, although poorly made, is it’s more of a guideline, than a rule and while past performance does not dictate future results, one could argue that todays financial climate is not as historically aligned as we might think.
and no....you are not picking on me. thx