The 4% Safe Withdrawal Rate (SWR) was always the default. For many years, financial planners, bloggers, and others touted the "4% Rule". If you saved for retirement, in a mix of equities and fixed-income, you could "safely" withdraw at a rate of 4% (with adjustments for inflation), and you would "probably" not run out of money before you died. So, what went wrong?
Well, first and foremost, the bond market. Since the early 1980's, and until just recently, the bond market has been on a tear. Rates fell, and NAVs for bond funds soared. Now, as we all know, bonds (especially bond funds) are tanking, and exert a drag on portfolio yields.
Secondarily, growth has been anemic. Despite the Trumpster's claims he will "Make America Great Again", the reality is that growth in GDP will be in the "terrible twos" for as far as the eye can see.
So, what to do? Folks expecting to just sit back, relax, retire, and cull that 4% SWR from their portfolio might be in for a rude shock. It might be time to revisit the whole concept of asset allocation. Are bond funds really a good choice for my retirement portfolio? Would a ladder of 5-year CDs be better (hint:yes).
Another option is to disregard the entire notion of a 4% SWR with increases tied to inflation. Treat the withdrawals as fixed (for at least a five-year period), then re-visit as necessary.
Bottom Line: The concept of a 4% SWR (with increases for inflation) is probably archaic. Folks in retirement (or reaching retirement) should really do the math.