[Retric]

Good point, though the S&P has not averaged 7% annual returns if you consider reverse cost dollar averaging. There where two decades when the S&P went negative in real terms including dividend reinvestment. It's actually tricky to find what percentage you could take out every year from 1950 to now and have the same amount adjusted for inflation at the end, and that's assuming things don't get worse.

Basically, you take out a lower percentage of your money on good years than bad. Further, you need to take taxes out to cover inflation. Aka, you pay taxes on 7% even if your real return was only 4%.

PS: There is a reason many institutions are ok with a very steady 3.5% ROI there is a lot of risk going for more.