I am not.
The 4% Rule was back-tested upon the 4% Rule Portfolio.
The 4% Rule Portfolio is composed of stocks and bonds. This portfolio was selected because these are “investable assets” so much beloved of the investment industry. It is not intended to represent an optimum selection of investment assets, just the most convenient assets for the investment industry. There are mutual funds to be sold and financial advisors to be paid.
The Great Stagnation: Stocks perform poorly in an inflationary environment and bonds are devasted in such an environment. The magnitude and duration of inflation cannot be predicted; thus, a SWR cannot be predicted.
The Great Depression: Stocks are devastated in such an environment and bonds are spent down to buy time until the economy recovers such that stocks can resume their upward trend and replenish the depleted bond component. What surprised contemporaries was that the economy did not recover on its own as Classical Economics said it would; the downturn could have continued for much longer. The massive fiscal stimulus of World War II was necessary for the economy to recover. Is it possible to predict a World War will arise just when you need one or that politicians will agree to approve massive fiscal measures? The origins of the Great Depression are a mystery, but it began with a financial crisis and financial crises appear to be a feature of modern economies. Can you predict that the Federal Reserve can successfully prevent a financial crisis from escalating into an economic crisis? If you can’t do any of this or even develop probabilities of success, then a SWR cannot be calculated.
I attacked the 4% Rule on its core implied assumption that economic growth of the past will continue into the future. Since due to demographics it won’t, the 4% Rule and its 95% confidence level will not hold. I attacked it because people treat it like it’s a rule of law.
The answer is not to develop a better SWR, because you can’t. The answer is to develop contingency plans for overcoming the shortfall if it should arise. In theory, the entirety of ERE - as I understand it - is to reduce the dependency of people on the money economy and replace it with other forms of capital so as to create a resilient person capable of prospering in any economic environment. Instead people seem to want to create a better SWR (or have religious faith in the 4% Rule) and forgo other capital developments.