Someone else asked me about the 4% vs 5% thing.
Honestly, I haven’t figured it out yet.
I thought my numbers were wrong at first but nope, the numbers were right.
Therefore, I blame my brain. I have no idea what algorithm they used to reach these conclusions (you can try by reading their study here, if you figure it out please let me know).
However, I do imagine it has something to do with this part:
“Calculations of monthly portfolio returns implicitly assume rebalancing of portfolios each month to the desired allocation of stocks and bonds.”
Maybe somewhere in the rebalancing, they changed their final results for the short-term? I’m not sure.
As for your second question, the 3% thing didn’t mean you couldn’t withdraw 3% unless you invested more money.
It meant that if you wanted to withdraw $x per year, you’d have to work backwards and know how much you’d need to invest.
So if your goal is to withdraw $40,000 per year, you’d need to have $1,000,000 for a 4% withdrawal.
If instead you wanted $40,000 per year at a 3% withdrawal (which is safer, albeit TOO safe), you’re need $1,333,333.