There are all kind of popular formula as to retirement. 4% x 25, 3.3% x 30, 3% x 33, and so on. These formula describe withdrawal rate and are based on longevity. So what’s the risk? WR in these formula is all about performance. No one really expresses risk.
Here is a picture (monte carlo simulation) of a $1,000,000 portfolio, in a Bogelhead 3 portfolio, with a 40,000K/yr withdrawal projected 30 years, and no sequence of return bias and using historical inflation.

The program runs 10,000 simulations and survives 8,679 times. If I shorten retirement to 20 years survival improves to 9575 times. 15 years takes us to 9915 survivals. 50 years is 7331 survivals.
Here is with a 2 year bad SORR in the first 2 years, 4% over 30 years normal inflation. This is how your portfolio would perform if you retired into a recession, or were laid off because of a recession and decided to retire.

You survive 5,914 times out of 10,000
Here is 50 years because you decided to retire early or couldn’t find a job.

You survive for 50 years only 2827 times.
You say BUT I WOULD CUT BACK TO SUPER SAFE 3%! Here is 50 years at 3%

Better, you survive 6263 Times. How about if this was a 30 year retirement instead of 50 still retiring into a recession?

Better still! Your up to 8435 using “super safe” 3% and 2 bad years of initial SORR. Did you ever read the refrain how FI gives you independence? You call these last few independence? Notice the down tick at the beginning of the graph. This IS a graphical representation of SORR
How about a Bogelhead 3 @ super safe 3% WR over 30 years with normal SORR?

9535 certainly safer but super safe?
How about 50 years super safe 3% normal SORR?

8808 successes over 50 years! That means you fail 1 out of 8 times.
What about 2% Hell nobody retires on only 2%!
First over 30 years:

Now you’re talking! 9929 successes over 30 years at 2% WR! What about 2% at 50 years?

9678, almost 97% survival for 50 years at 2% WR normal inflation, normal SORR. This is why Bernstein says 2% over 30 years is basically bullet proof
These graphs were generated using the Monte Carlo simulator in Portfolio Visualizer. Monte Carlo does a forward looking simulation of 10,000 probable futures and then statistically orders them in terms of likelihood. You can decide, but the risk analysis is quantitative forward looking as opposed to “rule of thumb” or historical . I base my retirement on Monte Carlo.
No pressure in this post. Retire at 40? What the hell!
Haha. My accountant uses 2% for us. He says we don’t have enough yet. I really like my accountant.
That’s probably why I will use my guarantee amounts. I plan to not touch the stash in my paper portfolio when it has a downturn.
Stay blogging since I really want to see how we all fare as time goes on. I think I will learn plenty by watching your progress.
Hey MB I’m really interested in how it all turns out also. I had friends retire in the .com bust. All but one returned. That guy was rich as hell. He was the guy telling all the others how to invest. The moral: If you’re Mark Cuban you can afford to fail because you’re 75% in cash anyway. 3/4 of infinite money is as good as infinite money. If you’re Bogelhead Bill not so much. Your future is finite.