Is it possible to die with zero?

January 15, 2024

In mid-2021, the book "Die With Zero" came out and with its release, the Financial Independence community would be forever changed.

You see, before its release, many of us were aggressively saving our money, living far below our means, and boasting our impressive savings rate (which turns out only people in the Financial Independence find impressive).

Bill Perkins came on the scene and told us we were all insane (in so many words).

In his words:

This book is about making the most of your adventure before it ends. Since the reward of processing energy is the experiences that you get to choose, it stands to reason that the way to make the most of your life is to maximize the number of these life experiences—particularly positive ones.

This book was a wake-up call.

Because while our money is sitting in our respective accounts compounding, our health & our energy are doing the opposite.

The idea behind maximizing life experience and getting the most out of life we can is aptly summarized in the title of the book: Die With Zero.

In my time as an advisor, I have had many readers of this book, ask me how to accomplish this:

Is there a simulation I can run where I run out of money by my date of death?

What should my withdrawal rate be if I want to spend or give all of my money away while I'm alive?

My response is usually something along the lines of "I'd be happy to run this scenario for you! Just provide me with the date of your death."

Without very important variables like rate of return, inflation, and of course the day of your demise this scenario is not one we can perfectly accomplish.

That's not to say we shouldn't try.

This book has brought up a great counterpoint to relying on the "4% rule".

The 4% guideline in practice:

You spend 4% of your portfolio in your initial year of retirement.

You then adjust for inflation each year going forward.

Example) On a $1mm portfolio with a 3% inflation adjustment:

Year 1: $40,000
Year 2: $41,200
Year 3: $42,436

With the 4% Rule you are unlikely to run out of money based on a 30-year time horizon.

So what's the problem?

Only 10% of scenarios end with < 100% of your starting principal.

Over 2/3rds of the time you finish with over DOUBLE your initial balance.

Clearly, the 4% rule could land us somewhere very far from "dying with zero".

The solution is a dynamic withdrawal strategy and today I am going to walk you through two of these strategies.

To put it simply: these strategies allow you to spend more when the market does well rather than being stuck in a perpetual 4% withdrawal.

Important note: these are more advanced planning strategies. If these interest you, I encourage you to do more research on them and as always, consult with a professional before implementing.

The Ratcheting Rule

Created by Michael Kitces, this strategy adjusts in one direction (like a ratchet): increase spending if your portfolio grows.

First, start with a floor.

A floor might be a 4% withdrawal rate if you have a 30 year time horizon or 3.50% withdrawal rate if your time horizon is greater than 30 years, which often is the case for early retirees.

This floor never decreases but it has the option to increase.

In addition to starting with a floor, you will also start with a "rule" that allows you to increase your spending when certain conditions are met.

Let's walk through an example.

You have a $1 million portfolio and retire at 65, so you assume a 30-year time horizon. You start with a floor of 4% and you create this rule:

When your portfolio grows by 50%, spending can increase by 10%. Spending increases are limited to once every three years.

This is the rule Michael Kitces mentions in his study.

So, if/when your portfolio grows to $1.5 million (a 50% increase), you can increase your spending by 10%.

This is how this rule would have worked out using various start dates for retirement:

The 1966 retiree would have never received a spending increase. The 1973 retiree starts retirement with a bad market but eventually starts spending increases in the second half of retirement while the 1982 retiree benefits from a great market and receives a spending increase every three years in retirement.

Read more about Kitces work on the ratchet rule here:


This strategy was created by Jonathan Guyton and William Klinger.

With this rule, you create guardrails for your withdrawal rate and you only adjust if your withdrawal rate deviates outside of your guardrails.

For example, you have a $1 million portfolio and you start with a withdrawal rate of 4% and you have guardrails at 3% and 5%.

As long as your withdrawal rates stay between 3 and 5%, you are good.

But if the market does well and your portfolio grows, which causes your withdrawal rate to drop below 3%, you get a 10% spending raise.

On the other hand, if your portfolio drops in a bad market and your withdrawal rate jumps to over 5%, you get a 10% spending cut.

The downside of this approach is obvious: spending may be cut, which for some people is a difficult practice to implement.

This is a simplified explanation of this approach. Read more about it here: