The 4 percent rule assumes positive ROI

The four percent rule is a retirement cash-flow principal that begins withdrawing from pensions at a rate of four percent, then adjusts upward each following year to account for inflation. In principal this method is designed to preserve income for the duration of retirement up to 30 years per U.S. News.

However, for retirees seeking to preserve capital, a rate above four percent is necessary after the first year of using  the four percent rule according to the Prosperity Concierge. Moreover, when managing annuities or retirement income from pensions, they must achieve a return on investment of above four percent in order to maintain principal value. That is excluding inflation which would make the actual required return to be more like 7 percent or higher. 

According to the  Statesman Journal maintaining retirement cash-flow is more challenging due to uncertainty in financial markets, inflation and longer life-spans.  That means, early retirees or those who retire at 65 and live more than 30 yrs will experience a dramatic drop in retirement income after the 30 years accounted for by the four percent rule expiration.

Assumption can be a dangerous word in finance and should be a red flag for anyone forecasting future income based on a financial plan. The four percent rule assumes no negative valuation such as equity devaluation during a bear market.  Strong asset allocation is an understatement when assessing the effectiveness of the four percent rule as it is not only desirable, but necessary for the method to work. To obtain optimal benefit, retirement capital should preserved, or at least extended for maximum duration via financial instruments that preserve capital value.

International term-deposits that are laddered for consistent 6 percent or greater yields are one place to start looking. Highly rated utility firms that's equity values keep up with inflation and yield high dividends are another.  Exchange traded funds that invest in solid corporate and government bonds that allocate risk proportionally using a sound investment strategy is another.