Rent for life, die with zero: spending your money on purpose

Saving for decades creates a habit that is hard to switch off. Many people who reach independence keep saving, and end life with most of their capital. The idea of dying with zero, popularised by Bill Perkins in his 2020 book, asks a different question: what is all that money for?

The arithmetic of spending down

Say you have CHF 1,000,000 at 65 and want it to last to 95, 30 years. Compare three approaches.

Spending down gives you about CHF 10,000 a year more, from the same pot. The gap is the cost of insisting on leaving most of it untouched. A fixed rule is built for safety, not for use.

The risk that stops people

The reason not to go to zero is simple: you do not know the date. If you plan to 95 and live to 100, the money runs out, and then you depend on the AHV alone. A good plan separates the money that must never run out from the money you can spend.

Spend down in layers

1. Layer one: lifelong income. The AHV and any pension fund annuity cover the essentials for life. See the three pillars.
2. Layer two: the pot. Spend it on purpose over a fixed horizon, with a withdrawal that rises as the horizon shortens. Check the rate each year. See the 4% rule and why 3.5% is safer.
3. Layer three: the reserve. Keep a separate amount for care costs, a late-life spike or a long life. It can be your home or part of the pot.

At 85, review the plan. If you are healthy and the pot is large, you can spend more. If not, you have the reserve.

Renting and "rent for life"

A home is both a place to live and a store of capital. Renting instead of owning keeps the capital liquid and invested, so it can be spent. The risk is rent rising faster than your income. In Switzerland tenants have strong protections, which helps. The comparison is in rent or buy.

Dealing with risk

The main danger of spending down is a bad start. See sequence risk. You can reduce it by spending down more slowly in the early years, holding a buffer, or taking a lifelong annuity for part of the pot.

Giving earlier

If you want to leave something, giving while you are alive often helps more than leaving it at death. A gift to your children at 40 can pay for a deposit when they need it, while the same sum at 70 arrives late. Speak to an adviser about the legal and tax side before you act.

For the mindset behind all this, read you need less than you think.

Next step

Open the calculator, plan until 95, and see what you can spend.