Okay, I'm simplifying a long book there, and it's true that there are lots of other ideas in there. But there are a couple of problems with this idea which I feel that I need to address.
One, you can't switch to eating your assets right now, because: risk! We need to play it cautious enough that you're very likely to build up an excess, because of the very real risk that we get one of the worse scenarios. The 4% rule will probably lead to you having an excess later on, but it may not. In about a tenth of cases it's just enough, and in about one in twenty cases you'll have to take extra measures to get to the end of your life without going broke.
Two, Perkins doesn't have much of a sophisticated solution to the conundrum of giving yourself an income in later life. His solution is just to buy an annuity. Well, you see, annuity rates are terrible - at least if you're under the age of about 75. To earn enough to buy a big enough annuity to cover your living costs, you'll spend many more years at work than if you leave things invested in index tracker funds for drawdown and do things the FIRE way.
I think his perspective on this may be influenced by the fact that he's multi-millionaire rich and a gambler. Ordinary people have to think a bit more about keeping food on the table and paying the electricity bill. Running out of money too early is a different thing if that only means being down to your last million.
Is there a solution?
Understandably, you want to have maximum bang for your buck. Is the cautious 4% rule approach leaving money on the table?
We spend most of our time working out our defences for those negative scenarios. We talk about mitigating sequence risk, and flexing our spending down.
Having already adequately covered that, what we need to do is give ourselves an overflow valve - a way to eat the excess if it does come.
I've talked about this previously in the Two Pot Stratagem, and I plan to go back to that idea again at some point and refine it further to take account of the help that your State Pension gives. But the basic idea is, cover your core spending by building a pot from which you withdraw at a very safe rate, and then allow yourself to go a little more wild with the second, "fun" pot.
The key is to plan on burning through the fun pot before you get too old to enjoy it. In this way, my thinking is quite like Die With Zero - but critically not with your core spending pot.
The "before you get too old to enjoy it" part is tricky. In my case I am aiming at age 75, and trying to plan a suitable withdrawal rate to run the fun pot to zero by that time.
Secondly, there's the actual overflow valve. When your core pot shows an excess, as it almost inevitably will since you are being so cautious with your withdrawals from it, you should sweep the spare money into the fun pot to be spent. I do this by setting a Minimum Withdrawal Rate. If you think 3.5% is the ultrasafe level, it follows that when your core pot grows so much that it pushes your actual withdrawal rate down by a decent margin below 3.5%, say to 3%, that you should keep sweeping away any excess money which would reduce your actual withdrawal rate even further.
This sounds messy but really isn't. And the effect is to let you maintain your ultrasafe core spending pot, but eat through everything else, letting you spend all that you possibly can whilst remaining safe.
Want to read more of my ideas? I have a new book out - The Teen Wealth Challenge. Or other books here.
Or you may prefer my FIRE series for beginners.