Spend vs. Borrow — Finance Calculators

Common inputs — same deposits, same withdrawals, two ways to manage

Annual earning ($)

Annual spending ($)

Saving years

Asset growth rate (%/yr)

Annual cash need after that ($)

Simulation horizon (total years)

Scenario A — spend down assets

Every cashout is taken out of the portfolio: while saving, only the leftover (earning − cashout need) is invested; afterwards the yearly cashout is withdrawn directly from assets. No extra inputs.

Scenario B — leverage against assets

Asset Cost ($/yr, from assets, during all years)

Loan interest rate (%/yr, never repaid, compounds)

Insurance benefit ($)

Cash needs are borrowed, so assets are never touched except for the premium. The loan compounds and is never repaid; "out of money" means the loan catches up with the assets (net worth ≤ 0).

Different Outputs

Scenario A — spend down assets

Scenario B — leverage against assets

Assets, loan, and net worth over time

A net worth B net worth B assets B loan

End-of-year balances

Year	A net worth	B assets	B loan	B net worth

Simplified model: all cash flows (savings, premium, cashout, borrowing) happen at the beginning of each year and then grow/accrue for that year; constant rates, loan always available with no loan-to-value cap, and the insurance death benefit is collateral only (not counted in net worth). Real policy loans have borrowing limits and variable rates.