Actually, if you kept withdrawing a constant value over the long term. You will still end up a similar scenario as stated in the chart. Although having dips on a few years in a 20 year time frame, as long as you stay invested, the gains from the following years will average it out. In the end, your portfolio will still end up as if it had earned 8% every year. Again, this piece is all theory based and no one expects constant 8% every year without volatility. Based on your example, continue the $1000 investment. The SnP worst return for any 20 Year time frame is 5% p.a, and that is if you had entered precisely during a crash.

I am also aware that the 4% rule is closer to a 0.5% rule nowadays. which is why I never stated this approach was similar to that. Take note that the author of the 4% rule stated himself that his study was based on the worst case scenario, and the number should not be taken seriously.