[arn]

Historically, 4% withdrawal rate is likely to last you at least 30 years with funds invested.*

Currently people are pessimistic about stock market returns going forward so it could be lower (3-3.5%). And even lower if you want it to last longer than 30 years.

* https://en.wikipedia.org/wiki/Trinity_study

[toyg]

The key is risk. Funds are definitely not risk-free. If you rely on funds to produce cash, chances are that, when 2008 happens, you get to spend a few years living on ramen. Sure, they might recover eventually, but in the meantime you have to sell the car to keep the lights on.