You can see that my assumptions end results are pretty close to yours.
Remaining portfolio:...Mine=$876K...yours=$847K.
I wrote: "At the end of the 22+ years, it [Bengen's model, not mine] shows a remaining portfolio value of $1.366M, or $847K in inflation adjusted dollars (check the inflation-adjusted box at the bottom of the graph).
Your scheme: $543K in inflation adjusted dollars (check the inflation adjusted box at the bottom of the graph).
From this point it may get much harder not easier. FBNDX(bonds) past performance since 1998 was 5% annually, it's going to be about 2% lower. This means that the same portfolio could make about 2% lower than the above and further erosion
All talk, no numbers. Here's a start.
Take 50% US Stocks, 50% US Bonds. Start with a nominal value of $1.366M, i.e. Bengen's value as of now. Use your 3% nominal return figure for bonds. Use your 7% nominal return figure ("now it's lower 7 - 2 = only 5%") for stocks.
As a starting withdrawal, take Bengen's 4.5% figure ($45K on $1M), adjusted upward for inflation over the past 22 years (about 60%, as I've already shown), i.e. start with a withdrawal amount of $7200. Follow Bengen's scheme, not yours - adjust that withdrawal amount for inflation annually (based on historical inflation, which is likely too high, but that just makes this model more conservative).
Run a simulation based on these parameters for 10 years - a higher bar than the 8+years needed to complete the 30 year span. The survival rate is 1000/1000.
I'm done. You're writing about, to use @davidrmoran's term, what you "feel". I'm writing about numbers.

Note the word "immutable". Market returns of 20 years ago do not change as they are reexamined.

Right. It's the feeling that is not immutable.

The idea in using historical data is to use historical data. One doesn't input one's own hypotheticals. In particular, one uses actual inflation rates (which PV supports).
Also, the idea is to reproduce Bengen's scheme, not introduce one of your own design. Bengen starts with a fixed amount (4.5% of the initial pot), and adjust that dollar amount annually by the actual rate of inflation. What you did instead was withdraw 7% of the portfolio value at the end of each year.
From Bengen's original paper:

The withdrawal dollar amount for the first year (calculated as the withdrawal percentage times the starting value of the portfolio) will be adjusted up or down for inflation every succeeding year. After the first year, the withdrawal rate is no longer used for computing the amount withdrawn; that will be computed instead from last year's withdrawal, plus an inflation factor.

https://www.retailinvestor.org/pdf/Bengen1.pdf
Here's Bengen's model in PV applied to the time frame you selected.
At the end of the 22+ years, it shows a remaining portfolio value of $1.366M, or $847K in inflation adjusted dollars (check the inflation-adjusted box at the bottom of the graph). It's hard to see this investor's portfolio going down to zero in the next seven years, given that it's only dropped 15% in real value over the first 22 years.
FWIW, the annualized inflation rate for the years 1998-2019 (based on the NYU/Stern figures I previously cited) is 2.16%, and the current year's inflation rate is even lower.

Don't want to get off on a tangent, but a quick side opinion....if a professional ChFA with 30 years of experience managing millions with a large staff of assistants and networks of peers with unlimited resources cannot beat the SP500 over long periods of time, why do individuals with limited resources believe they can? The greatest advantage an investor has is to have a budget to asset ratio that allows him to not be forced to compete against the SPY benchmark. Survival is the top priority IMHO. Some of these professional PM's are even benchmarked by sector.

I like simplicity. We never had CAPE > 30 and interest rates so low which isn't a good start from here.
For my portfolio sustainability I always add inflation. The last time CAPE was over 30 was in 01/1998. I'm trying to be fair and not start at much higher CAPE such as 01/2000.
PV(link) shows that 4.5%(withdrawal)+ 2.5%(inflation) = 7% withdrawal in PV isn't good enough. I know, it's not 30 years but almost 23 years is still a good one.
It's worse now because bonds future returns will be worse in the next 30 years.

Note the word "immutable". Market returns of 20 years ago do not change as they are reexamined.
On the other hand, yesterday in the history course I'm taking, we discussed how various reports and analyses on the Rwandan refugee crisis of the mid 90s offer not only different (often diametrically opposed) perspectives, but radically different figures. These numbers are not immutable.

It's the eternal question, speculating about future data.
>> You can hope that he revisits his partitioning of CAPE ranges in a few years when he has more high CAPE data points to work with.
Yup. I wonder what the wisest advisers are telling clients now and for the last several years of CAPE needle jamming. 'Sure, go ahead and plan w 5%? 4.5%' -- ?
>> One's "feeling" about immutable historical numbers does not change.
Har, not the case, or not invariably, with historians I read, including science historians.

>> I wonder if he still feels this way.'
One's "feeling" about immutable historical numbers does not change. Though one can add more historical data as time passes. What I illustrated is that today, all the historical data, including the additional dozen data points since Kitces' piece, (probably) does not change the Kitces' result. Of course all the additional data since Bengen's original work does not change his conclusions, as he reiterated them (with refinements) in his current work.
>>My curiosity, as I said, is about what the scenario might look like
That's a different question. You're asking what they would speculate about future data. I addressed that in writing "Bengen doesn't make market predictions."
The curiosity is understandable. The closest you're going to come to an answer is Bengen's observation: "Unfortunately, as Michael observed in his 2008 article, the “CAPE needle” has been jammed against the upper valuation stops for almost all of the last 25 years. As a result, almost the only choice for safe withdrawal rates has been the highest CAPE value in each table."
That means that there are now a few 30 year spans that started with high CAPE ratios. Obviously not enough for Bengen to break out into a separate (higher CAPE) bucket, else he would have done so in his current paper. You can hope that he revisits his partitioning of CAPE ranges in a few years when he has more high CAPE data points to work with. Though as I've tried to show, the 4.5% withdrawal rate still works with the first few periods that have rolled in since Kitces' paper.
I expect the 4.5% withdrawal rate to succeed with the next data point (1991-2020) as well. PV shows that after 29 years (1991-2019) one would be left with 4.2x one's starting value.. For the annual inflation-adjusted withdrawal at year end (Dec 31, 2020) to exhaust that portfolio would require an incredible market swoon in the last two months of the year.

The results are all historical. The latest current 30 year period is Jan 1990 - Dec 2019. The last 30 year period in 2008 was Jan 1978 - Dec 2007.
No need to wonder. Just check whether any of the following additional periods would have failed with a 4.5% withdrawal rate, inflation adjusted:
1979-2008, 1980-2009, 1981-2010, 1982-2011, 1983-2012, 1984-2013,
1985-2014, 1986-2015, 1987-2016, 1988-2017, 1989-2018, 1990-2019.
Portfolio Visualizer can give you a good sense on the second row (its data starts with 1985). I don't believe there was a bond index fund around then, but FBNDX can serve as a proxy.
Here's 1985-2014 to start with. As you can see, the mid 80s were a good time to start, even with the 1987 crash.
As far as the starting in one of the previous six years (1979-1984) is concerned, you can find the figures for those years here.
For 1979, $5K stocks rise to $5,926. $5K in bonds, worst case (using the worst performing bonds in the table) fall to $4,899.50. Total is $10,826. WIthdraw $450, leaving $10,376. Rebalance into stocks and bonds: $5,188 each. Adjust next year's withdrawal for inflation: $500.63.
For 1980, stocks rise to $6,834. Bonds, worst case, drop 3.32%, to $5,016. Total is $11,850. Withdraw $500, leaving $11,350. Rebalance into stocks and bonds: $5,675 each. Adjust next year's withdrawal for inflation: $568.47.
For 1981, stocks fall to $5,408. Bonds, worst case, rise to $6,140. Total is $11,548. Withdraw $568, leaving $10,980. Rebalance into stocks and bonds: $5,490. Adjust next year's withdrawal for inflation: $627.19.
For 1982, stocks rise to $6,611. Bonds, worst case (3 mo. T-bills), rise to $6,072. (T bonds and Baa bonds rose around 30%) Total is $12,683. Withdraw $627, leaving $12,056. Rebalance into stocks and bonds: $6,028. Adjust next year's withdrawal for inflation: $665.64.
For 1983, stocks rise to $7,375. Bonds, worst case, rise to $6,221. Total is $13,596. WIthdraw $666, leaving $12,930. Rebalance into stocks and bonds: $6,465. Adjust next year's withdrawal for inflation: $687.01.
For 1984, stocks rise to $6,863. Bonds worst case (3 mo T-bills), rise to $7,080 (T bonds and Baa bonds rose around 14%) Total is $13,943. Withdraw $687, leaving $13,260. Adjust next year's withdrawal for inflation: $716.55.
At this point, we can use PV, with a starting balance of $13,260 and a starting withdrawal of $717. It goes from Jan 1985 through Dec 2008. The early 2000s are not good, and 2008 is not good, but by then the mountain of cash has risen so high that it hardly matters.
That takes care of showing that 4.5% works for 1979-2008. The five other 30 year periods are left as an exercise for the reader. Also, make sure to check my arithmetic, I wasn't too diligent here.

Michael Kitces is my favorite writer: a better choice is to start with lower % in stocks in early retirement years and increase the % with age.
As I've posted before, this work by Pfau and Kitces work breaks down when rates are low. Dr. Pfau acknowledged this, writing that

It does indeed seem that retiring at times with particularly low bond yields, which can be expected to increase over time, may not favor rising equity glidepaths during retirement. It essentially causes the retiree to lock in low bond returns and even capital losses on a bond fund as bond yields gradually increase (on average) over time.

Kitces, incorporating CAPE P/E 10 data, concluded that the safe withdrawal rate is never less than 4.5%, and can be increased if the ratio at the start of retirement is under 20.
The only enhancement that Bengen made to Kitces' work was to incorporate inflation, i.e. part of what you are concerned about.

Inflation directly affects the periodic withdrawals, as it is assumed that dollar withdrawals are increased annually by CPI. If inflation is high, it results in rapidly increasing withdrawals. ... the inflation trend hints at a reliable cause-and-effect relationship. As inflation (defined as the trailing 12-month Consumer Price Index at retirement) increases from top to bottom, SAFEMAX correspondingly declines.

Now he says SP500 performance will be around 7%.
You may have misread Marketwatch's writing: "Historically, he says, the average safe withdrawal rate has turned out to be about 7%." Bengen doesn't make market predictions.

I should also issue the usual cheerful disclaimer that this research is based on the analysis of historical data, and its application to future situations involves risk, as the future may differ significantly from the past. The term “safe” is meaningful only in its historical context, and does not imply a guarantee of future applicability.

Also on point regarding predictions, he writes: "if you have strong feelings that the inflation regime will change in the near future, you can choose another [presumably more conservative] chart".
Thanks to @bee for having posted Bengen's article yesterday, so that one could read what he actually wrote.
https://mutualfundobserver.com/discuss/discussion/57156/william-bengen-revisits-the-safe-withdrawal-rate-at-retirement

Thanks to all for the discussion about HVDC transmission.
The first major HVDC transmission line in the US has been sending renewable hydropower from Bonneville Dam to the Los Angeles area via an 846-mile long overhead line for about 50 years.

https://new.abb.com/news/detail/45972/abb-completes-upgrade-of-first-major-hvdc-link-in-us-transmission-history

Bengen doesn't make sense and why the rule should definitely be under 4% and not 5%.
From 1992 to 2005-6 inflation(link) was around 2.5-3%. In the last several years it's about 2%. When the long term performance of the SP500 was about 10%, Bengen used 4%. Now he says SP500 performance will be around 7% and inflation is lower (at 2%), the rule should be under 4%.
In the past it was 10-3 = 7% performance(after inflation) and now it's lower 7 - 2 = only 5%. Lower performance means lower withdrawal rate.
Our portfolio withdrawal rate would be under 2% long term. This will keep our current standard of living and our portfolio for the next 4-5 decades similar to today.
Michael Kitces is my favorite writer: a better choice is to start with lower % in stocks in early retirement years and increase the % with age.
BTW, The withdrawal rule has nothing to do with distributions. Higher distributions isn't a guarantee for better performance or volatility but it's being promoted for years as the best solution.

@bilperk
1) Ballast - This is what most investors think
That's the first site(link) I found at Google:

Historically, when stock prices are rising and more people are buying to capitalize on that growth, bond prices have typically fallen on lower demand. Conversely, when stock prices are falling and investors want to turn to traditionally lower-risk, lower-return investments like bonds, their demand increases, and in turn, their prices.

2) "Most of us don't have the time or desire to do the research and then jump in and out of lower-rated and often newer bonds fund." How about admitting it's not about time at all. Investing was always may passion, I do research regardless if I trade or not. When I do it specifically for trading it takes me maybe an hour per month. In the period of 2000-2010 when I traded less often it took me about an hour every several months. The bigger and more important question is...do you see better results?
If I remember correctly you do change your asset allocation and funds according to market conditions which means you are not a buy and hold investor and it worked pretty well for you. I came to conclusion FOR ME that the only way to achieve my strict goals and rules and use mainly bond fund is what I do.
BTW, sometimes I don't change for months-years. I held a huge % in PIMIX for several years but in the last 2-3 years it's getting harder and from this point a lot harder for high-rated bonds.

FD - So you know more about investing than the professionals quoted in Barron’s?

It's not about knowing more, it's about backing up a "new" concept with real numbers. The best teacher is the market.
I posted the following list several times:
1) US stocks are over value, the rest of the world is undervalue. US stocks did better in the last 10 years.
2) The GMO team and Arnott have been wrong for 10 years.
3) Gundlach was way wrong when he predicted the 10 year will be at 6% in 2021. Gundlach, the bond king, and his fund DBLTX was beaten by TGLMX for 1-3-5-10 years.
4) Bogle was wrong when he predicted stocks/bonds performance based on the past and averages.
5) Inflation and interest rates can only go up. Both wrong for years.
6) inverted yield signals recession = wrong. High PE, PE10 signal the end of the bull market...wrong again for years.
7) There is no way stocks will have a V recovery in March 2020 based on blah, blah, whatever...and they did.
8) The economy is bad, unemployment is high, the debt is huge = bad future stock market. The reality? Stocks are still up.
I can add more.
9) Investing in value, high yield, low SD are better just to find that the "stupid" SPY beat all/most of them;-)
10) There is no way to have a better risk-adjusted performance. I have done it for years.
Basically, I was always questing many "experts", research and rule of thumps. Most investors would do better with simple, very cheap indexes (Bogle) + hardly trade. The following is optional: use 20% (maybe 30%) to find better risk/reward funds, this task isn't easy and very limited. Examples: PRWCX,VLAIX,VWINX,PIMIX for several years.

msf, great explanation but this is what I have learned about bonds and bond funds
1) "A duration of five years means that you're "driving" at 5% per 1% rate change." that formula only works for treasuries but you can find it in so many articles. It does not even work for a common index such as BND which also have Corp+MBS bonds.
2) I'm mainly a bond investor and most of the money I made was in MBS/securitized where skilled managers can find nuggets in different categories within securitized, especially after a meltdown. I also made more money in Muni HY which act differently.
3) Most investors use high-rated bonds as ballast and dampen volatility but even these go down in a black swan and why I sell to cash. This year from peak to trough the following investment grade bond lost the following: VSIGX(Treasuries) 2.5%... VBTLX(US tot bond index) over 6%...VCIT(Corp IG)=over 13%.
So only "pure" treasury fund is a real ballast but even that was down. These high-rated funds recovered within weeks but in the last 3 months the above 3 indexes are down while the lower-rated funds are still making money.

@Baseball_Fan, I haven’t followed many of @FD1000‘s posts as members’ reputed past performance doesn’t interest me. However, I do enjoy learning about new innovative funds, the trends among various markets, changes at the fund houses where I invest, Fed policy, and different ways of constructing portfolios. So those who have studied FD’s performance posts are the ones that may want to respond. I do enjoy reading Barrons. It may well be that some here are better investors than the ones quoted there. But, I don’t feel Barrons is a waste of money either. I think it’s been helpful to me over many years. Have read it since the early 70s (which pre-dates MFO) :)
Here’s the quote I earlier referenced. My recollection as to the specific article may have been incorrect. This is from an article that appeared in April 2020 in Barrons. However, I think there has been more said in Barrons. I just don’t have the wherewithal to go back and reread every copy.
- “Industrial analyst Deane Dray also believes safety is important, but he recommends investors take a so-called barbell approach. He suggests an 80% weighting in safer stocks, while reserving 20% for more-cyclical names.” (Article posted online by Barrons April 1, 2020)
-
Here’s what I was able to dig up on Dray’s experience. Doesn’t mean he knows more than any of us. But he doesn’t sound like a lightweight either.
Experience
RBC (Royal Bank of Canada) Capital Markets Managing Director Since Sep 2014 - (tenure 6 years 2 months) - Sellside equity research analyst covering the Multi-Industry & Electrical Equipment sector.
Citi Global Research Director - Jun 2010 - Sep 2014 (4 years 4 months)
New York City Senior equity research analyst covering the Multi-Industry & Electrical Equipment sector. Global sector leader of Industrials. Global sector leader of the water sector
FBR Capital Markets Senior Industrials Analyst
FBR Jan 2009 - Jun 2010 (1 year 6 months)
New York Senior equity research analyst covering the Multi-Industry & Electrical Equipment Sector.
Goldman Sachs Vice President
Goldman Sachs 1997 - 2009 12 years
Greater New York City Area Senior equity research analyst covering
the Multi-Industry & Electrical Equipment Sector.
Lehman Brothers Vice President
Lehman Brothers 1987 - 1997 10 years
Greater New York City Area
Education
New York University - Leonard N. Stern School of Business
Master of Business Administration (M.B.A.)Finance
1980 - 1982
Brown University
Bachelor's DegreeDouble major: Political Science and Law & Society
1976 - 1980
Activities and Societies: Cum Laude Deerfield Academy Deerfield Academy
Deerfield Academy 1972 - 1976
Licenses & Certifications Chartered Financial Analyst
Sourced from Linkedin https://www.linkedin.com/in/deane-dray-cfa-1b1b53a2

Hi All, hmm, candidly, I personally do not doubt that FD1K is a better investor than many professionals, regardless if he does or does not know more about the markets than the professionals, excuse me, so called professionals. He might not be caught up in market dogma, group think, career risk, other people's money, etc...wasn't their some website that tracked the "guru's" and how their predictions panned out, most of them had a batting average of well below 40%...
My real life experience has shown me that many MBA holders from some well known schools are not really that sharp, no common sense, no practical knowledge, BS'd their way thru school, Daddy paid their way thru, had the right connections, taught by career academics who have never walked the walk. I saw a homework assignment come off a fax *ya, it was a few years ago from a co worker from a "Top 10 MBA program" and I thought, WTF, I've had way tougher questions when I was going to the local community college that the class was being taught by a guy who was a youngish retired executive from a tech company and had a net worth over $75MM, came to class like he just cleaned his garage, uber casual. Also was in a executive program class with a gal who was an analyst from a top investment firm...I wouldn't give them a dime of my dough to invest, I have no idea how she got that job but she sure had the credentials from an east coast school etc...no business acumen at all! My old boss had a MBA from the same "Top 10"MBA progam...to quote my finance director....a mental midget when it came to running a business and understanding finance, etc.
Don't buy into the experts etc, think for yourself, think clearly, be open minded.
Best to all,
Baseball_Fan

Investment professionals come up with new terminology every several years and try to convince their clients they found a new and great investment ideas just to find years later the old ones still work and most times even better.
How many times did you hear/read that value, high yield, low SD are better just to find that the "stupid" SPY beat all/most of them ;-)
I also remember that
Arnott research showed he would do better and it didn't.
AQR funds with plenty research did worse too.

Yes, I go back as far back as PV allows, to fund inception if possible. This is extremely relevant absent a change in how the fund operates over that period. How funds perform in Black Swan events (like '08 and Covid) is as and maybe more important then everything else. Just look at IOFAX, years of gains wiped out in a few sessions. So, yes, back to inception matters particularly if you go back to '08. Scroll down to the drawdowns on PV and you'll see...TCW has the lowest drawdowns, and overtime losing less matters, quite a lot. As I noted elsewhere, I'm a big fan of BIV (and BSV) but active management and portfolio mix can add value over a long period of time. TCW and Metwest Total Return share similar mngt yet the securitized portion of the market that TCW focused on back to Gundlach has paid off big in sell offs.

It's all good, FD. PIMIX is still good for long term holders. I'm meeting my goals. That is what is important to me. Keep convincing yourself that getting 5% per year with low SD is the only game in town. I guess there's a reason people live in Georgia :o}

Again, the thread is not about me but after you couldn't come up with anything to debunk the original post you resort to make it personal. I never said that what I do is the only game in town, it works extremely well for our portfolio. I actually posted many times that the average Joe should buy several funds (indexes+managed) and hardly trade.
But, please don't worry about me. I posted the following about a week ago, so I will just copy it below.
Remember, since I retired in 2018, we have enough money to sustain our standard of living for another 40-50 years if our portfolio will make just 4% annually including inflation. Our portfolio is 35+ times our annual expense without our SS. This is why I set up the following goals: make 6% average annually with the lowest SD I can get (preferably under 3) and never lose 3% from any last top. We don’t care about maximizing performance anymore but to meet our specific goals. To do that I use mainly bond mutual funds + several short term trades (hours-days) using stocks/ETF/CEFs/other. The 3 year results are much better than my goals. I never lost more than 1% from any last top in the last 3 years. Below is a copy from my Schwab accounts as of yesterday 10/14/2020 which is about 95% of our total money. There is no way to achieve these results without being a good trader and why I posted other funds too
3 year performance/SD...SPY 13.1%/17.7...VBINX (60/40) 10%/11.1....VWIAX (40/60) 7.04/6.6%...PIMIX 3.75%/5.6....IOFIX 0.2%/23.7
My portfolio performance was 9.9% annually for 3 year with SD=2.18
Below you can see an image of performance as of 10/14/2020 from Schwab. Column 1=one year...Column 2=YTD...Column 3=one year...Column 4=3 years

Below is the SD for one year and 3 years

BTW, welcome to MFO.