The 4% rule is one of the most enduring guidelines for the decumulation phase of retirement. It is also one of the most debated.

So my research assistants, Taha Abusaymeh and Anton Siren, and I decided to test this idea-in which savers withdraw 4% of their portfolio in the first year of retirement and then that dollar amount, plus more to account for inflation, each year after. We wanted to see where it fails and what is the biggest impediment to making it 30-plus years following this strategy without running out of savings.

Our conclusion: The strategy works in more than 80% of cases in our baseline scenario, with the retiree making it to age 95 with money remaining. But the strategy fails far more often in certain circumstances-namely, when there is high inflation, if stocks slump for a decade (as they did during the early 2000s), or when an investor ?has too conservative an allocation ?strategy or has advisory fees.

Our methodology

To model a theoretical retiree using the 4% rule, we considered a 65-year-old with $1 million in tax-free savings and with the goal of making it to 95 years old with money left over. Withdrawals come at the start of each year, before returns, beginning at $40,000 and growing with realized inflation thereafter.

As for portfolio allocation, we assumed the retiree follows a linear shift in asset mix, starting with 50% stocks at age 65 and moving to 0% in stocks at age 95. We considered a diversified stock portfolio and assumed an average annual 10% return with 15% volatility, while bonds are assumed to have a 4% return and 5% volatility.

Also in our baseline model, we assumed 3% inflation and zero fees on the management of assets, which our theoretical retiree holds in a posttax Roth individual retirement account. We also assumed spending on healthcare and other typical household expenses would be static over time, covered by portfolio withdrawals and Social Security benefits.

With our model in place, we then ran more than 10,000 simulations ?t?o test the probability of success in our baseline assumptions as well as scenarios where we adjusted variables to mimic real-world situations like high inflation or long-term bear markets.

Our findings

In the baseline model, the retiree will make it to age 95 with money left in the portfolio 81.5% of the time-and completely run out 18.5% of the time. The median balance for those with money remaining at age 95 is $792,000-meaning the retiree would lose just $208,000 over a 30-year period if the baseline conditions held fast.

The results get particularly interesting-with failure rates as high as 85.4%-when we alter the baseline assumptions.

If we assume an inflation rate of 6% (instead of 3%) over the 30-year period, while keeping all other variables fixed, one's probability of making it to 95 with money left in the bank drops to 14.6%. And for those retirees who do make it to the end with some money left over, their final balance has a median value of just $23,000.

Assuming stock volatility was 20% a year instead of 15% would diminish one's chances of making it to the finish line with money remaining to just 75%. And if the retiree experiences a bad decade of stock returns (like we saw from 2000 to 2009, when there were two market slides), this drops one's chance of making it to 95 with money remaining to 52.4% (and a median balance of just $44,000).

What would happen if the retiree took a much more conservative investment strategy, moving fully to bonds at age 65 and staying there for the entire 30-year period? It would drop the probability of making it 95 with money remaining to 35.4%.

How about the impact of advisory fees? To address this question, we looked at a simple 1% annual fee on wealth-and it knocked the probability of making it to 95 with money remaining to 61.3%. And the median balance for a retiree with money left over in this scenario was $207,000.

The results highlight how the 4% rule can be successful for roughly 4 out of 5 retirees when stocks are performing well and inflation is modest. But they also show how periods of high inflation or a lost decade in markets, among other factors, can lead many more retirees who follow the rule to burn through their savings before age 95.

Write to reports@wsj.com