SoR is something that is on my mind a lot as a new and early retiree in a time of near zero bond yields, extreme CAPE, and with good reasons to leave a sizeable bequest. In short I need to be lucky as I have little scope for flexibility given my conflicting needs.
SoR is usually thought to be of most concern in the first decade of drawdown. In reality when time is finite and scarce, mortals, we would rather not have to live frugally and for those whose SWR provides their desired income with little excess the SoR is especially concerning. COVID data shows that households can cut spending when they aren't able to (although in this case it was through forced inactivity). Who wants forced inactivity!
The idea of having a bridge, or glide path, whereby one has a cash/bond allocation that is ran down over the first decade works well and it is worth sacrificing some return rather than facing defeat in extra time when the game was already in the bag. Once you have won the game a bit of safe play makes more sense than going for maximum growth.
3 years of cash (like I hold) while enough for our recent corrections, would not have been anywhere near enough for some of the horrible examples history can show at us. Also when looking at bear markets try considering not how long it took to recover in nominal terms but in real terms. The answers can be shocking. Then look at the scenario that you are drawing down and see what that does for your returns. It can be devestating.
Now... a note of caution. The "first 10 years being the major risk" argument only works if you set your withdrawal £ amount and index it each year, if you reset your withdrawal to a new SWR or say take a variable pound amount based on an SWR percentage each year, then your SoR window effectively resets. The reality is that SoR never goes away but if you have indexed income against portfolio growth you will probably outgrow it.
Most people in most times don't encounter SoR as an issue (as markets have tended to rise much more than fall) however prolonged equity bear markets can be crushing, 1990s in Japan, or even better 1803-1857 in the US saw bonds return 3x equities but if that 1803 equity investor hung in and reinvested dividends they would
break even in 1871, or 1929-1949 where bonds beat equities. Bear markets have been much longer than articles that focus on more recent history suggest or our own recency bias.
For more on bear markets to give some historic perspective read one of my favourite finance papers:
https://www.etf.com/sections/features/9 ... nance.html