Die with Zero Calculator

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Reviewed and validated by:

David Chen, CFA

The Die With Zero Calculator helps you determine the maximum inflation-adjusted annual amount you can spend from your current savings without running out of money by a specified target age. Optimize your spending and maximize your life experiences.

Die With Zero Annual Spending Calculator

Your Maximum Sustainable Annual Spending:

$0.00

(This amount is inflation-adjusted, meaning your withdrawals will increase each year to maintain purchasing power.)

Calculation Details:

Die With Zero Calculator Formula

The calculation uses the Present Value of an Annuity formula, adjusted for inflation by using the Real Rate of Return ($r_{real}$). The goal is to solve for the inflation-adjusted annual withdrawal ($S$) that results in a zero final portfolio balance.

$$r_{real} = \frac{1 + R}{1 + I} – 1$$ $$S = P \times \frac{r_{real}}{1 – (1 + r_{real})^{-N}}$$

Formula Source: Investopedia: Annuity Formula, Wikipedia: Real Interest Rate

Variables Explained

  • Current Savings (P): The initial portfolio or lump sum value you have saved today.
  • Years until Target Age (N): The total number of years you plan for your savings to last.
  • Expected Nominal Return (R): The anticipated annual percentage return on your investments (before adjusting for inflation).
  • Expected Inflation Rate (I): The anticipated annual percentage rate of inflation, which reduces purchasing power.
  • Sustainable Annual Spending (S): The calculated maximum amount (in today’s dollars) you can withdraw annually.

What is the Die With Zero Calculator?

The “Die With Zero” philosophy, popularized by author Bill Perkins, centers on optimizing life’s experiences by strategically timing your spending. Instead of minimizing consumption to maximize inheritance, the goal is to maximize the utility of money over your lifetime, ensuring that your net worth hits zero exactly when you die (or at a predetermined life expectancy). This calculator is a critical tool for this strategy.

It moves beyond the traditional “safe withdrawal rate” (like the 4% rule) by being time-bound. It calculates a higher, but sustainable, withdrawal rate over a fixed period (e.g., from age 60 to 90), acknowledging that the savings must deplete entirely by the target end date. This allows for front-loading life-enhancing experiences while you are still healthy enough to enjoy them.

How to Calculate Die With Zero Spending (Example)

Let’s find the sustainable spending for a person with $1,000,000 savings over 30 years, expecting a 7% return and 3% inflation.

  1. Determine Real Rate ($r_{real}$): First, calculate the real rate of return. $$r_{real} = \frac{1 + 0.07}{1 + 0.03} – 1 = 1.03883 – 1 = 3.883\%$$
  2. Calculate Annuity Factor: Calculate the term $(1 + r_{real})^{-N}$: $$(1 + 0.03883)^{-30} \approx 0.3159$$
  3. Calculate Annual Spending (S): Apply the result to the main formula: $$S = 1,000,000 \times \frac{0.03883}{1 – 0.3159} \approx 1,000,000 \times 0.05677$$
  4. Final Result: The maximum sustainable inflation-adjusted annual spending (in today’s dollars) is approximately $56,770.

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Frequently Asked Questions (FAQ)

  • Is Die With Zero the same as the 4% Rule?

    No. The 4% Rule is designed to make your money last indefinitely (or 30 years with a high probability), often leaving a substantial legacy. The Die With Zero strategy is explicitly designed to deplete your wealth by a certain age, maximizing the amount you can spend during your prime years.

  • What if my expected return is the same as inflation?

    If $R = I$, the real rate of return ($r_{real}$) is 0%. In this specific case, the calculation simplifies to simply dividing your total savings ($P$) by the number of years ($N$). Your annual spending is $P/N$.

  • Do I include Social Security in the savings value?

    No. Social Security is a form of pension/income stream. The Current Savings (P) should only include the lump sum you plan to draw down. Any reliable income stream should be deducted from your total spending needs before using this calculator.

  • What is the biggest risk of the Die With Zero strategy?

    The biggest risk is longevity risk—outliving your money. This calculator is a projection based on your estimated target years (N). The strategy requires periodic re-evaluation and adjustment as life expectancy estimates and market conditions change.

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