Originally Posted by
dera
That's an extremely conservative number, less than half of historic S&P500 return. The Trinity Study (where the 4% comes from) has been widely criticized and they did use a somewhat odd portfolio as their data set.
Philanthropic organizations, such as universities, charities, etc. use the 4% rule. The additional return from the S&P 500 is added to the principle to keep the buying power where it is. inflation is a profound thing over the years.