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

by Bill Perkins

Of course, some people already think about when to stop growing their savings in terms of a date. The most obvious dates are age 62 (the earliest date you can choose to start collecting Social Security benefits) and age 65 (when you become eligible for Medicare). And, depending on when you were born, you can start receiving your full Social Security benefits somewhere between 66 and 67.

experts recommend that middle-income retirees wait until they’re 70 to claim Social Security benefits, at which point they can receive more than 100 percent of their full benefits.

The actual retirement age is often lower, because people sometimes retire before they planned to—usually because of unexpected job loss or illness. Such involuntary retirement is not an insignificant consideration, since it appears to affect more than half of all retirees in recent years: According to a study of nearly 14,000 newly retired workers, 39 percent who retired in 2014 were forced to quit, and another 16 percent were “partially forced.” These numbers, if correct, show that many more Americans retire involuntarily than the official retirement statistics show. Age discrimination against older workers, combined with the stigma of involuntary job loss, apparently causes some workers to say they’ve retired when in fact they were merely forced out of their jobs and couldn’t find another.

Whatever the reason, the most common retirement age in the United States is actually 62, as is the median—again, the age at which Americans can start collecting Social Security benefits.

With more good years ahead in which to enjoy experiences, Anne should be aiming for a later peak than Betty—which means that Anne will need to keep adding to her savings longer than Betty does before she can start spending down her net worth on the way to zero.

Here’s what we see: For most people, the optimal net worth peak occurs at some point between the ages of 45 and 60.

But in general, most people hit their peak between the ages of 45 and 60. That’s what our simulations show: For most people, waiting until they are past this age range causes suboptimal fulfillment results, because they end up dying with more than zero, running out of time in which to have many fulfilling experiences.

What does all this mean for you? It means that unless you are an exception, you ought to start spending your wealth down much earlier than what is traditionally recommended. If you wait until you’re 65 or even 62 to dip into your nest egg, you will almost certainly end up working longer than necessary for money you will never get to spend. What a sad thought: to slave away at a job and never get the gold.

Another strategy for squeezing the most experiences out of your early golden years without quitting your job is to cut back on your work hours if you can.

Once you’ve finally determined your net worth peak, you must start spending down, or decumulating. This means you will be spending more in your real golden years, when you are in reasonably good shape in both health and wealth—between 45 and 60—than people usually do, because most people who save money for the future save for too late in life. Spending

The amount of money you’ll need in retirement is often a lot lower than what you’ve been advised to save. For example, if you’ve been told that during each year of retirement you will need 80 percent or more of your annual pre-retirement income, you will probably discover, after looking at the activities you’ve bucketed for your seventies, eighties, and beyond, that these really don’t cost that much—far less than 80 percent of your previous spending.

But even when you include money as a consideration, the curve won’t skew right—you will find that the vast majority of the experiences you want to have will have to happen within about 20 years of midlife, in either direction—in other words, roughly between 20 and 60.

One of the most important times to re-bucket your life is when you’re nearing your net worth peak. Many people at midlife have forgotten what used to bring them fulfillment and have been too busy taking care of careers and children to explore new interests, either.

So before you quit or scale back your job, really think through what you want to do once your work won’t be taking up much of your everyday time. Is there a long-dormant hobby you want to pick up again? A particular friendship you want to rekindle? A new skill you want to learn, or a club you want to

Your biggest fear ought to be wasting your life and time, not Am I going to have x number of dollars when I’m 80?

By aiming to die with zero, you will forever change your autopilot focus from earning and saving and maximizing your wealth to living the best life you possibly can.