FIRE glossary
Drawdown-to-Zero
A withdrawal strategy that spends your portfolio down to (near) nothing by the end of your life expectancy, instead of preserving it indefinitely at a fixed safe withdrawal rate.
The maths
Ember prices drawdown-to-zero as a present value of an annuity: the required pot funds a fixed real annual spend for exactly `life expectancy − retirement age` years at your assumed real return, with an option to leave a target legacy amount at the end instead of exactly zero.
Why the required pot is usually smaller
A safe-withdrawal-rate basis implicitly targets a pot that, in the constant-return model, never fully depletes — it's sized for an indefinite horizon. Drawdown-to-zero targets a pot that runs out on a known, finite horizon instead, which usually needs meaningfully less capital for the same annual spend. Ember also reports the IMPLIED withdrawal rate — spend divided by required pot — so you can see directly how much higher it runs than a standard 4% figure for your specific horizon and return assumption.
What it assumes away
The calculation uses one constant real return every year, not a sequence of actual market outcomes. Pairing a drawdown-to-zero plan with a Monte Carlo simulation or a historical backtest shows how sequence-of-returns risk affects a horizon-limited pot differently from an indefinite one — a bad early sequence is more dangerous the closer a plan is already running its pot toward zero on a fixed schedule, with less margin to absorb it.
Who tends to reach for this basis
Drawdown-to-zero suits someone who would rather spend their portfolio down deliberately than preserve it as a permanent, self-sustaining fund — the opposite instinct to the classic "never touch principal" mindset behind a perpetual safe withdrawal rate. It's a genuine philosophical choice about what the money is for, not just a maths trick for a smaller headline pot, and it's worth pairing with an honest view of your life-expectancy assumption before committing to it.
Worked example
Retiring at 55 with a 90-year life expectancy, $40,000/yr spend
Drawdown-to-zero required pot
US$654,968
implied withdrawal rate 6.11%
4% SWR required pot
US$1,000,000
Fixed illustrative inputs, not your data — for the exact maths behind your own numbers, use the free calculator or build a plan. Educational modelling, not financial advice.
Across borders
The estate side of "zero" isn't the same everywhere — how much of any leftover pot heirs actually keep depends on the inheritance and estate rules of the country you're resident in when you die. See /countries for the estate/inheritance picture in each covered jurisdiction.
Common questions
Isn't spending down to zero risky if I live longer than expected?
The pot targets your stated life expectancy exactly, so living meaningfully longer than that assumption means it can run out before you do. A conservative life-expectancy input, or a legacy floor, is the usual hedge.
How much higher is the implied withdrawal rate than 4%?
It depends on your specific horizon and real return assumption — the worked example on this page shows Ember's own comparison for one illustrative case.
Can I still leave something to heirs on this basis?
Yes — set a legacy target and the required pot grows to cover it (or a net-of-estate-tax legacy target, when estate-tax modelling is switched on).
Related terms
See drawdown-to-zero in your numbers
The free calculator gives a rough estimate; the full planner models your actual accounts, pensions, residency moves and taxes — with the maths behind every figure shown.