The 4% rule is not a good plan. I can’t exactly say it’s terrible because if a person is even considering this method, it means they have saved money. According to AARP, more than 20% of people over 50 have no savings at all. In my Medicare business, tons of people I work with are on Medicaid, meaning not only do they have little to no savings, but they also have little to no income.
Assuming you have a pretty good nest egg, the problem becomes how to use that pool of money most efficiently. This is where the 4% rule falls apart (and yes I know it was just updated to 4.7% but that does not remove the main flaws). With a set percentage of withdraw, you still have to ask what is protecting the principle. Generally people leave it subject to risk or utilize a stock bond portfolio, which does not eliminate market risk. So if you have a down market when you start drawing, you have a rush of pressure on the nest egg. That will immediately cause declining income. The same is true if you have down markets in the future. A declining income when inflation almost always goes up makes for a poor plan.
You can read more here to discuss the risks of this method: https://www.investopedia.com/why-the-4-rule-for-retirement-spending-no-longer-fits-today-s-market-and-how-to-adjust-your-plan-11938720#:~:text=The%204%25%20rule%20was%20designed,sticking%20to%20a%20rigid%20rule.