Buy, Borrow, Die: I Reviewed a Real $6.1M Retirement Plan

The buy, borrow, die strategy is a tax approach wealthy families have used for decades: own appreciating assets, borrow against them instead of selling, and let heirs inherit at a stepped up basis. A viewer recently sent me his own version. He is 44, has about $6.1 million, and plans to retire in May 2028 by living off loans and Roth conversions without selling a share of his concentrated tech portfolio.

This article covers how buy, borrow, die works, why people use box spreads for the borrowing, and where this real plan is strong and where I pushed back.

How the buy, borrow, die strategy works

1. Buy. You acquire appreciating assets such as stocks, real estate, a business, or employer stock.
2. Borrow. Instead of selling and triggering capital gains tax, you borrow against the assets and spend the proceeds. Loan proceeds are not taxable income.
3. Die. Your heirs receive the assets at a stepped up basis, sell, pay off the loans, and keep what is left, often with little to no capital gains tax owed.

The strategy depends on three things. Your assets need to appreciate, your cost of borrowing needs to stay below your portfolio's growth rate, and you need to die holding the assets. If one leg breaks, the strategy starts to wobble.

Why box spreads are used to borrow against a portfolio

A box spread is a combination of four options contracts on a broad market index, usually the S&P 500. The cash flows mimic a loan: you receive cash today and owe a known fixed amount on a known future date. The implied rate is roughly the Treasury rate plus a small spread, and it can be 2 to 4 percentage points cheaper than a margin loan.

The cost is treated as a Section 1256 contract, split 60% long term and 40% short term capital gains, which can be more tax efficient than ordinary interest treatment. Box spreads require a margin enabled account, options trading approval, and active management of rolls as contracts expire. Mess up the execution and you can overpay, or your broker can force close the position at a bad time.

The $6.1 million early retirement plan

His main holdings are roughly:

• $2.1 million in a taxable brokerage account concentrated in five large tech names, about half of it unrealized gains
• $3.5 million in an IRA, mostly a single semiconductor ETF and one large cap tech stock
• $220,000 in a 401(k) and $150,000 in cash

He wants to keep every position and run a Roth conversion ladder of roughly $200,000 a year while working, scaling up to $500,000 a year once he retires. He plans to pay each year's conversion tax with an SPX box spread loan against the brokerage account. By year 6 of retirement, the first conversions clear the 5 year waiting period, he starts drawing tax free from the Roth, and the loan rides with him until death.

What works about the plan

• Tax efficiency. Borrowing instead of selling could defer or avoid potentially $150,000 to $200,000 of capital gains tax.
• Low borrowing cost. At roughly 4% on a box spread versus 7% on a margin loan, a balance averaging $500,000 saves about $15,000 a year.
• A sound Roth ladder. Ramping conversions once his W2 income drops to zero lets him fill the lower tax brackets.
• Cash buffer. He holds multiple years of living expenses in cash.

Risks of buy, borrow, die with a concentrated portfolio

• Concentration. His holdings have historically moved together with greater than 75% correlation, and he is borrowing against that same slice of tech. If big tech corrects 40% or 50%, his collateral drops while the loan balance stays the same.
• Sequence of returns risk in a new form. If the market drops 40% in year 2 of retirement, he may be forced to liquidate at the worst time, creating the tax event the plan was built to avoid.
• Key person risk. I think this is the biggest practical issue. Rolling box spreads, monitoring margin requirements, and sequencing conversions all depend on him. If something happens to him, his spouse inherits an operating manual she did not write.
• Behavior. In a spreadsheet a 40% drawdown is a number. In real life it is a paper loss of $2.4 million next to a loan balance that did not move. I have watched very smart people abandon airtight plans in month 3 of a serious bear market.

When buy, borrow, die makes sense

For families with significant appreciated assets, particularly business owners and tech employees with large concentrated positions, buy, borrow, die can meaningfully reduce lifetime taxes. It works best with diversified collateral, a multi year cash buffer, a clear plan for severe drawdowns, and a designated operator in place if you cannot run it yourself. Concentration on top of leverage is the most common way I have seen plans like this go sideways.

Common questions

Is money borrowed against stocks taxable income?

No. Loan proceeds are not taxable income.

What is a stepped up basis at death?

Your heirs' cost basis resets to the fair market value on the date of your death, so the unrealized gains essentially disappear for tax purposes.

Is a box spread loan cheaper than a margin loan?

It can be, by 2 to 4 percentage points, but it requires options approval and active management of rolls.

VDB Wealth is a registered investment adviser. Information presented is for educational purposes only and is not intended to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

There is a tax strategy that the wealthiest families in America have been quietly using for decades. It has been called everything from the loophole of the rich to a wealth cheat code. Recently it earned a much catchier name. Buy, Borrow, Die.

A few weeks ago, I got an email from a viewer. He is 44 years old, he has about 6.1 million dollars to his name, and he wants to retire in May of 2028. His plan is not a 60 40 portfolio. It is not a 4 percent withdrawal rule. He is going to live off loans, convert millions of dollars to a Roth IRA, and never sell a single share of his concentrated tech portfolio. On paper, the math works. In practice, there is a reason most advisors will not touch this.

Over the next 15 minutes, I am going to walk you through what buy, borrow, die actually is, why people use a niche options structure called a box spread to pull it off, and then we will dig into this real case study and break down where the numbers shine, where the emotions blow up the plan, and what I want every viewer to take away before they even consider trying this themselves.

Quick bio and roadmap

Quick intro. I am Andy VandenBerg. I run VDB Wealth, a boutique wealth management firm where we specialize in tax efficient planning for entrepreneurs, business owners, and high earning professionals who want more than cookie cutter advice.

Here is the roadmap for today. First, what buy, borrow, die actually is and why it matters. Second, why box spreads have become the go to tool to execute it cheaply. Third, the real anonymized case study. And fourth, the balanced view. The pros, the cons, the spreadsheet math, and the part most people ignore, which is the emotional side of running a leveraged strategy through a bear market.

Let's get into it.

What is buy, borrow, die

Let's start with the basics. At its core, buy, borrow, die is a three step strategy.

Step one. Buy. You acquire appreciating assets. Stocks, real estate, a business, a concentrated stock position from your employer. The more they appreciate over time, the better the strategy works.

Step two. Borrow. Instead of selling those assets and triggering capital gains tax, you borrow against them. That can be a margin loan, a securities backed line of credit, a home equity line, or in the case we will look at today, an options based loan. You spend the borrowed money to fund your lifestyle. And here is the key. Loan proceeds are not taxable income.

Step three. Die. When you pass away, your heirs receive the assets at what is called a stepped up basis. Their cost basis resets to the fair market value on the date of your death. All those decades of unrealized capital gains essentially disappear for tax purposes. Heirs sell, pay off the outstanding loans, and keep what is left, often with little to no capital gains tax owed.

Some quick context on why this matters today. For 2026, the federal estate tax exemption is 15 million dollars per person, or 30 million for a married couple, under the One Big Beautiful Bill Act passed last year. For the vast majority of families, that means the federal estate tax simply does not apply, and the step up in basis becomes the single biggest planning lever you have.

So why doesn't everyone do this? Because the strategy depends on three things continuing to work. Your assets need to appreciate. Your cost of borrowing needs to stay below your portfolio's growth rate. And you actually need to die holding the assets. If any one of those three legs breaks, the strategy starts to wobble. And if all three break, the strategy can be catastrophic.

Why box spreads

Okay. So if borrowing against your assets is the engine of this strategy, the natural question is how you do it cheaply. And that is where box spreads come in.

When you want to borrow against a brokerage account, you have a few common options. A standard margin loan from your broker. A securities backed line of credit, sometimes called an SBLOC. A HELOC against your home. Those typically charge somewhere between 5 and a half and 13 percent depending on prevailing rates and your provider. That is a lot of drag on a strategy that relies on cheap money.

A box spread is a combination of four options contracts on a broad market index, usually the S and P 500. When you structure them in a specific way, the net cash flows mimic a loan. You receive a chunk of cash today, and you owe a known fixed amount on a known future date. The difference between those two amounts is your effective interest cost.

Here is why sophisticated retail investors love this. As of early 2026, SPX box spread implied rates are running between roughly 3 and three quarters of a percent and 5 percent depending on duration. That is roughly the Treasury rate plus a small spread. Same brokerage, same collateral, the box spread can be 2 to 4 percentage points cheaper than a margin loan.

On top of that, the gain or loss on these options is treated as a Section 1256 contract for tax purposes. That means the cost gets split 60 percent long term and 40 percent short term capital gains, which can be materially more tax efficient than the ordinary interest treatment most other loans receive.

Lower rate, better tax treatment, similar collateral. For someone who is comfortable with options and willing to do the operational work, it is an elegant tool.

But it is absolutely not for everyone. Box spreads require a margin enabled brokerage account, options trading approval, and the ability to actively manage rolls as contracts expire. Mess up the execution and you can pay materially more than necessary. Or worse, your broker can force close the position at a bad time.

The case study setup

Now let's get into the case study. This is real, with names and identifying details removed. The numbers are exactly as they were presented to me.

We have a 44 year old engineer at a large tech company. Married, two teenage kids. His spouse is 50. He has been working in tech for years and he has built up a serious balance sheet. Roughly 6.1 million dollars in liquid investments.

Here is the breakdown. His taxable brokerage account holds 2.1 million dollars, heavily concentrated in five large tech names. Roughly half of that balance, about 1 million dollars, is unrealized capital gains. His IRA is 3.5 million dollars, with most of it concentrated in a single semiconductor ETF and one large cap tech stock. His 401(k) has 220 thousand dollars in an S and P 500 fund. He holds 150 thousand in cash, 70 thousand in a health savings account, and 70 thousand each in custodial accounts for his two kids. His home is worth 450 thousand with a small mortgage at 3 and a half percent.

His target retirement date is May of 2028. His target annual spending is 180 to 200 thousand dollars per year, including healthcare.

Here is the plan he sent me. He wants to keep all of his concentrated tech positions. He does not want to sell a single share. And he wants to execute a massive Roth conversion ladder over the next decade. Roughly 200 thousand dollars per year while he is still working, scaling up to 500 thousand per year once he retires.

Here is the elegant part. He does not want to sell stock to pay the conversion taxes, because that triggers capital gains. He does not want to use his cash, because he is stockpiling it as what he calls a cash tent for the early retirement years. Instead, he plans to use an SPX box spread loan against his taxable brokerage account to pay each year's tax bill. As the strategy runs, the loan grows.

By year six of retirement, his original 2026 Roth conversions clear the 5 year waiting period. He starts drawing tax free from the Roth for living expenses. The box spread loan stops expanding aggressively. The strategy quietly transitions from an early retirement bridge into a long term legacy plan, where the loan rides with him until death, and his heirs benefit from the step up in basis.

The pros, by the numbers

Now let's talk about what is working in his favor. By the numbers.

First, the tax efficiency is real. By using a box spread instead of selling stock, he could be saving 15 to 20 percent in long term capital gains taxes on every dollar he avoids realizing. On 2.1 million dollars of taxable assets with 50 percent embedded gains, that is potentially 150 to 200 thousand dollars of capital gains taxes deferred or avoided over the strategy's life.

Second, the borrowing cost is genuinely low. At roughly 4 percent on a box spread versus 7 percent on a margin loan, he saves around 3 percent per year on whatever balance he is carrying. If his loan balance averages 500 thousand dollars over the next decade, that is 15 thousand dollars a year of interest savings. Real money.

Third, the Roth conversion ladder is mechanically sound. Converting 200 thousand a year now, while he is in a high tax bracket but his ordinary income absorbs most of the cost, and then ramping to 500 thousand a year once he stops working and his W2 income drops to zero, lets him efficiently fill up the lower tax brackets. Over a decade, that is potentially millions of dollars moved from a taxable IRA into a tax free Roth IRA, while his market exposure stays exactly the same.

Fourth, he has built in real liquidity buffers. A cash tent of multiple years of living expenses. Accessible Roth contributions. Banked HSA receipts. His own modeling shows that he can survive a deep market drawdown without being forced to sell at the bottom. That is exactly the right defensive posture for a leveraged strategy.

On paper, this is a textbook execution of buy, borrow, die for an early retiree with a concentrated tech portfolio. The mechanics are correct. The numbers add up. If everything goes according to plan, he ends up with a multi million dollar Roth IRA, his original brokerage account largely intact for his kids, and minimal lifetime tax drag.

The cons, numbers and emotions

Now the harder conversation. Because here is where I have real concerns. And this is also where I push back on him.

First, concentration risk. Five tech stocks. A semiconductor ETF, a large cap tech name, three other tech holdings. These names have historically moved together with greater than 75 percent correlation. He is not just betting on tech. He is betting on the same slice of tech five different ways. And then he is borrowing against that same slice. If big tech corrects 40 or 50 percent, like it has before, his collateral value drops while his loan balance stays the same. Margin call risk goes up exactly when his portfolio is most vulnerable.

Second, sequence of returns risk in disguise. The classic version of sequence risk is selling stocks at the bottom of a bear market to fund retirement. He has technically solved that. But he has introduced a new version. If the market drops 40 percent in year two of retirement, he cannot roll his box spread at favorable rates against a smaller collateral pool. He may be forced to liquidate at the worst possible time, which would create the exact tax event he set this entire strategy up to avoid.

Third, key person risk. I think it is the single biggest practical issue. This strategy requires active, sophisticated management. Rolling box spreads as they expire. Monitoring margin maintenance requirements. Sequencing Roth conversions against shifting tax brackets. Navigating Section 1256 reporting at tax time. If something happens to him, his spouse needs someone who genuinely understands every moving piece. And the truth is, most advisors do not. That alone is a reason to have a designated operator in place before the strategy goes live, not after something goes wrong.

Now the emotional side, because this is where I see plans fall apart in real life.

In a spreadsheet, a 40 percent drawdown is just a number. In real life, it is a year of front page headlines about a tech crash. It is your friends asking if you are okay. It is your portfolio statement showing a paper loss of 2.4 million dollars while you are carrying a loan balance that did not move. Most people do not stay the course at that point. They sell. They unwind. They lock in the worst case outcome.

His plan also assumes his future self stays disciplined. That he keeps rolling loans through volatility. That he keeps converting to Roth when his portfolio is down 30 percent. That he keeps spending only from the cash tent and resists the urge to act. That kind of discipline is rare even among professional investors. I have watched very smart, very analytical people abandon airtight plans in month three of a serious bear market.

And then there is the family side. His spouse is 50, not a tech employee, and presumably not as conviction loaded on this specific strategy as he is. If something happens to him, she inherits not just the assets, but an operating manual she did not write. That is a lot to hand someone in the middle of grief.

Wrap up and call to action

So where does this leave us?

Buy, borrow, die is a real strategy with real benefits. For families with significant appreciated assets, particularly business owners and tech employees with large concentrated positions, it can meaningfully reduce lifetime taxes and pass more wealth to the next generation. Box spreads are a legitimate, low cost tool for executing it.

But the strategy is not a free lunch. It works best when you have diversified collateral, a multi year cash buffer, a clear plan for severe drawdowns, and a designated operator in place if you cannot run it yourself. The math is the easy part. The behavior is the hard part. And concentration on top of leverage is the single most common way I have seen plans like this go sideways.

If you are thinking about something like this for your own family, or you just want a second set of eyes on the architecture you have built, I would love to chat. Send me an email at contact at vdbwealth dot com, or head to vdbwealth dot com and book a no pressure conversation. I do this work for a living and I am happy to be a sounding board.

If you found this useful, hit the like button, subscribe so you do not miss the next one, and let me know in the comments which piece you want me to go deeper on. Box spread mechanics. Roth conversion ladders. Or the behavioral side of running a leveraged strategy. Thanks for watching, and I will see you in the next one.