Die with Zero: Getting All You Can from Your Money and Your Life

by Bill Perkins

Rule No. 1: Maximize your positive life experiences.

Although we all have at least the potential to make more money in the future, we can never go back and recapture time that is now gone. So it makes no sense to let opportunities pass us by for fear of squandering our money. Squandering our lives should be a much greater worry.

What I am an advocate for is deciding what makes you happy and then converting your money into the experiences you choose.

course, it’s more complicated than just knowing what makes you happy and spending your money on those experiences at every moment. That’s because our ability to enjoy different kinds of experiences changes throughout our lifetimes.

As the title of one economics journal article put it, “What Good Is Wealth Without Health?” In other words, to get the most out of your time and money, timing matters. So to increase your overall lifetime fulfillment, it’s important to have each experience at the right age.

They just keep earning and earning, trying to maximize their wealth without giving nearly as much thought to maximizing what they get out of that wealth—including what they can give to their children, their friends, and the larger society now, instead of waiting until they die.

Right around this time, I came across an important and influential book: Your Money or Your Life, by Vicki Robins and Joe Dominguez. That book, which I’ve reread several times since—and which, about 25 years later, is now popular with a new generation of readers, many of whom are part of the FIRE movement (“financial independence, retire early”)—completely transformed my understanding of the value of my time and my life: I realized from reading that book that I was wasting valuable hours of my life.

As Americans, we’re steeped in the old-fashioned work ethic. But people in many other cultures understand that life is about much more than work. You get a sense of that from the amount of yearly paid vacation time people in many European countries take—six weeks or more in places like France and Germany!

Many psychological studies have shown that spending money on experiences makes us happier than spending money on things.

Some people’s fears are irrational: They have plenty of resources, so if they plan right, they won’t need to worry about running out of money. Those are the people I’m writing for—people who are saving too much for their own good.

Start actively thinking about the life experiences you’d like to have, and the number of times you’d like to have them. The experiences can be large or small, free or costly, charitable or hedonistic. But think about what you really want out of this life in terms of meaningful and memorable experiences.

Rule No. 2: Start investing in experiences early.

When I was in my early twenties, my roommate at the time, Jason Ruffo, decided to take about three months off from work to go on a backpacking trip to Europe.

When he came back a few months later, there was no discernible difference between his income and mine—but the pictures and stories of his experiences showed that he was infinitely richer for having gone.

His stories of the interesting cultures he’d seen and the connections he had made were so amazing, I felt pretty envious—and regretful that I hadn’t gone.

The main idea here is that your life is the sum of your experiences. This just means that everything you do in life—all the daily, weekly, monthly, annual, and once-in-a-lifetime experiences you have—adds up to who you are.

In the wise words of Carson, the butler of Downton Abbey, “The business of life is the acquisition of memories. In the end that’s all there is.”

That was when I realized that you retire on your memories. When you’re too frail to do much of anything else, you can still look back on the life you’ve lived and experience immense pride, joy, and the bittersweet feeling of nostalgia.

Think back to one of the best vacations you ever had, and let’s say it lasted a full week. Now think about how much time you spent showing pictures of that trip to your friends back home. Add to that all the times you and the people you traveled with reminisced about that trip, and all the times you’ve thought about it yourself or given advice to other people considering going on a similar trip. All those residual experiences from the original experience are the dividends I’m talking about—they’re your memory dividends, and they add up. In fact, some of these memories, upon repeat reflection, may actually bring more enjoyment than the original experience itself. So buying an experience doesn’t just buy you the experience itself—it also buys you the sum of all the dividends that experience will bring for the rest of your life.

Remember that “early” is right now. Of those experiences you thought about earlier, think about which ones would be appropriate to invest in today, this month, or this year. If you’re resisting having them now, consider the risk of not having them now.

Think about how you can actively enhance your memory dividends. Would it help you to take more photos of your experiences? To plan reunions with people you’ve shared good times with in the past? Compile a video or a photo album?

Rule No. 3: Aim to die with zero.

But no matter who you are—a captain of industry or an everyday working stiff—one thing is true: If you spend hours and hours of your life acquiring money and then die without spending all of that money, then you’ve needlessly wasted too many precious hours of your life. There is just no way to get those hours back. If you die with $1 million left, that’s $1 million of experiences you didn’t have. And if you die with $50,000 left, well, that’s $50,000 of experiences you didn’t have. No way is that optimal.

Dying with zero strikes me as such a clear and important goal that I want to go right to the next step: helping you figure out how to actually achieve that goal. But I’ve discussed these ideas with enough people to know that I can’t jump straight to the how: The same small set of questions and objections come up again and again, and I know I can’t ignore them. So I will first respond to these common “whatabouts”—and if you’re still with me about the value and feasibility of dying with zero, we’ll move on to some tools that can help you make that happen.

First of all, yes, you can certainly leave money to the people and causes you care about—but the truth is that those people and causes would be better off getting your wealth sooner rather than later. Why wait until after you die? Second, whatever amount you give to others immediately becomes their money, not yours. But when I talk about dying with zero, I am talking about your money. Whatever you’ve given your kids will remain theirs, so there is no need to plan to have money left over for them.

How do I know that people save too much for too late? I’ve seen the statistics. If you look at data on net worth by age, you find that most people keep accumulating wealth for decades, and most don’t start spending it down until very late in life.

Experts in retirement planning even have some lingo for this consumption pattern: go-go years, slow-go years, and no-go years. The idea is that when you’re first retired, you’re raring to have all those experiences you’ve been putting off until retirement, and you still (for the most part) have the health and energy to pursue those experiences. Those are your go-go years. Later on, typically in your seventies, you begin to slow down as you cross items off your bucket list and your health declines. And later still, in your eighties or beyond, you don’t have a whole lot of “go” left at all, no matter how much money you still have.

Rule No. 4: Use all available tools to

Knowing at least approximately when you’re going to die will help you make much better decisions about earning, saving, and spending. So I urge you: Go ahead and try a life expectancy calculator. You might be wondering which particular calculator to use. I posed this question to the Society of Actuaries, since they’re the real experts. They wouldn’t endorse a certain calculator but instead referred me to their own Web site (soa.org), which mainly provides tools for professional actuaries.

Rule No. 5: Give money to your children or to charity when it has the most impact.

What would you guess is the most common age for people to get an inheritance? Well, people at the Federal Reserve Board track such things, and here’s what they find: For any income group you look at, the age of “inheritance receipt” peaks at around 60. In other words, if you were betting on how old someone will be when they inherit money—assuming you know nothing else except that they stand to inherit—60 is your best bet. (That’s a natural result of the fact that the most common life span is 80 and the most common age gap between parents and children is 20, the report points out.)

The upshot of all this is that if you wait until you die to have your children inherit your money, you’re leaving the outcome to chance. I call it the three Rs—giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?).

The same holds for memories: Just as you’re trying to form memories of times with your kids, it makes sense to want your kids to form memories of you. Both sets of memories will yield a memory dividend—one stream of dividends for you and one for your kids. So how do you want your kids to remember you? That’s just another way of asking: What kinds of experiences do you want them to have with you?

I do believe firmly that your real legacy for your kids consists of the experiences you’ve shared with your children, especially when they’re growing up—the lessons and other memories you’ve imparted to them. But I don’t mean it in a schmaltzy, best-things-in-life-are-free way. In fact, the best things in life aren’t actually free, because everything you do takes away from something else you could be doing. Spending time with your family usually means not spending that time earning money—and the other way around. Instead, there are ways to think about experiences in a more quantitative way that will help you make better decisions about how to spend your time.

So how do you quantify such things—what is the value of a positive memory? Your first instinct might be to say that it’s impossible to say, or that memories are priceless. But let me put it another way: What is the value to you of a week at a cabin on a lake? Or of a day with a beloved relative? The price might be extremely high or fairly low, but the fact that you can even propose a ballpark price says that the value of an experience can be quantified. (In fact, you might recall doing that with “experience points” in an earlier chapter.)

My number one rule is: Maximize your life experiences. So spend your money while you’re alive—whether it’s on yourself, your loved ones, or charity. And beyond that, find the optimal times to spend money.

Rule No. 6: Don’t live your life on autopilot.

The idea that it’s rational for young people to be freer with their money is shared by many economists, even though it runs counter to the advice most of us grow up hearing.

Many economists, on the other hand, think that thrift among young people is generally a bad idea. When economist Steven Levitt, of Freakonomics fame, landed at the University of Chicago as a first-year professor, a senior colleague named José Scheinkman told him he should spend more and save less—the same advice that Scheinkman himself had gotten from Milton Friedman, the even more famous University of Chicago economist. “Your salary will only go up, your earning power will only go up,” Levitt recalls his older colleague telling him, in almost a perfect echo of what Joe Farrell told me. “And so you shouldn’t be saving now, you should be borrowing. You should be living today in much the way that you’ll be living in 10 or 15 years, and it’s crazy to actually be scrimping and saving, which is what at least someone like me who was brought up in a middle-class family was taught to do.” Levitt says this was one of the best pieces of financial advice he ever got.

That’s because I was going bananas—just spending money to spend money, instead of being selective.

My spending also jeopardized my future. I wasn’t just spending all my discretionary income; I was also cutting deep into my emergency safety stash. What if I lost my job? Besides unemployment insurance, I’d have no cushion to lean on—not even one month’s salary.

No, the key takeaway, I now realize, is to strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.

For example, some financial experts urge you to save “at least 10 percent” of your income each month or each paycheck. Other experts will suggest other numbers, like 20 percent—but again, they suggest you do this every month or week or paycheck, regardless of your age or financial situation. Let’s look at the 20 percent recommendation, which comes from a popular budgeting formula called the 50-30-20 rule.

According to this rule, you should budget 50 percent of your income for must-haves (like rent, groceries, and utilities), 30 percent for your personal wants (like travel, entertainment, and dining out), and the remaining 20 percent on building your savings and paying down your debt.

In fact, as Levitt suggests, it can even make sense to borrow money (spending more than you’re currently earning) when you expect to earn a lot more down the road.

But even when you do reach an age when it’s wise to start saving, there will not be one magic number, an ideal constant savings rate that will keep you in balance until you retire. To

To me, travel is the ultimate gauge of a person’s ability to extract enjoyment from money, because it takes time, money, and, above all, health.

Some researchers asked people of different ages what prevented them from taking a trip. They found that people under age 60 are most constrained by time and money, whereas people 75 and older are most constrained by health problems.

Whenever you shift in order to spend money, you are necessarily also shifting when you save. So, for example, instead of saving 20 percent of your income throughout your working years, some people would be better off saving almost nothing in their early twenties (as we’ve discussed), then gradually ramping up their saving rate during their late twenties and thirties as their income begins to rise. Then they should save even more than 20 percent in their forties—and then slow down their savings so that eventually (as I explain in the next chapter) they actually start outspending their earnings.

What happens in between these two extremes? I think of this period as the real golden years because it usually includes a good combination of health and wealth. For example, a 35-year-old is still healthy enough to do most of the things a 25-year-old can do but typically earns a lot more. A 40-year-old (and, even more so, a 50-year-old) generally has slightly worse health than a 30-year-old but still has a pretty high degree of health—and, generally, a higher income than either the 25-year-old or the 35-year-old. So people in these middle years—neither very young nor very old—typically have a different problem: They face a time crunch, especially if they have children at home. This time crunch is their biggest obstacle to having positive life experiences.