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

by Bill Perkins

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.

Sadly, that is how too many people spend their lives. To switch metaphors: They build a well, they get a pump, and as the pump pumps water into a cup, the cup quickly fills, so the water starts overflowing. They take a sip and they keep pumping. And at the end of their lives, after a lifetime of pumping, they see that they’re still thirsty. What a waste! Imagine the regret you would feel if you got to the end of your days only to realize you haven’t managed to live a life full of satisfying experiences.

What do all investments have in common? They are just mechanisms for generating future

income.

The payoff from an investment does not have to be financial. When you teach your daughter to swim or to ride a bike, it’s not because you think she’ll get a better-paying job with those new skills. Experiences are like that: When you spend time or money on experiences, they are not only enjoyable in the moment—they pay an ongoing dividend, the memory dividend

Experiences yield dividends because we humans have memory.

When you have an experience, you get that current, in-the-moment enjoyment, but you also form memories that you get to relive later.

So every time you remember the original experience, you get an additional experience from mentally and emotionally reliving the original experience.

The recollection may bring you just a tiny fraction of the enjoyment that the original experience did, but those memories add up to make you who you are. That’s why Jason, whose story I opened

but the number of actual experiences available to you diminishes as you age. Yes, you need money to survive in retirement, but the main thing you’ll be retiring on will be your memories—so make sure you invest enough in those.

Invest in your life’s experiences—and start early,

Once you’re in the habit of working for money to live, the thrill of making money exceeds the thrill of actually living.

And what about the very real possibility that you don’t know when you’ll die? Modigliani has a simple answer to that: To be safe but still avoid needlessly leaving money behind, just think of the maximum age to which anyone can live. So a rational person, in Modigliani’s view, will spread their wealth across all the years up to the oldest age to which they might live.

Myopia is often the problem of the fun-loving, free-spending grasshopper; inertia can strike the responsible ant as well—particularly later in life, when the dutiful saver must suddenly crack open the nest egg they’ve so diligently built up. Behavioral economists understand that just because something is rational to do—in this case, switching from saving to “dissaving”—that doesn’t mean people will do it easily. Inertia is a very powerful force. As economists Hersh Shefrin and Richard Thaler once put it, “It is hard to teach an old household new rules.”

Why didn’t retirees spend more of their money when they were young enough to enjoy it more fully? What were they waiting for?! There are a couple of answers to that question. The first is that people did have good intentions to spend the money, but

once they reached a certain age, they found that their wants and needs changed, or perhaps diminished. Experts in retirement planning even

have some lingo for this consumption pattern: go-go years, slow-go ye...

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 eig...

You might think that as people get older, they spend money more freely out of the sheer desire to make the most of it before it’s truly too late. But the opposite tends to happen. In general, spending among American households declines as people age. For example, the Consumer Expenditure Survey, conducted by the Bureau of Labor Statistics, found that in 2017, average annual spending for households headed by 55-to-64-year-olds was $65,000; average spending fell to $55,000 for those between 65 and 74; and spending fell again to $42,000 for those 75 and older.

This overall decline occurred despite a rise in healthcare expenses, because

most other expenses, such as clothing and entertainment...

There’s a big difference between living a life and just being kept alive, and I’d much rather spend on the former. So I will not work for years to save up for a few more months on a ventilator with a quality of life that’s close to zero—or, depending on the level of suffering, maybe even negative. So instead of engaging in “precautionary saving,” as economists call

We all die sooner or later, and I’d rather die when the time is right than sacrifice my better years just to squeeze out a few more days at the tail end.

Besides, it is much smarter to spend your healthcare money on the front end (to maintain your health and try to prevent disease) than to spend it at the end, when you...

For example, one popular rule of thumb for

retirement spending is the “4 percent rule,” whereby you withdraw 4 percent from your savings each year of retirement. Well, with annuities, your annual payouts will probably amount to more than 4 percent of what you put into the annuity—and, unlike the 4 percent withdrawals, those payouts are guaranteed to continue for the rest of your life.

Economists generally think that annuities are such a rational way to deal with longevity risk that many experts have long wondered why more people don’t buy annuities—a question economists call “the annuity puzzle.”

Money is just a means to an end: Having money helps you to achieve the more important goal of enjoying your life. But trying to maximize money actually gets in the way of achieving the more important goal.

I know it may sound morbid and it might make you uncomfortable, but I’ve actually started using an app called Final Countdown that counts down the days (and years, months, weeks, and so on) before my estimated death date, and I have been urging all my friends to do the same. Yes, I can see how this app could be unnerving, but the reminder of death gives a much-needed urgency to one’s life.

as your adult children age, every dollar you give them goes less far, and at some point that money becomes almost useless to them.

The 26-to-35 age range combines the best of all these considerations—old enough to be trusted with money, yet young enough to fully enjoy its benefits.

Whatever you give your heirs past their optimal age of receiving has less value to them.

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?

When you have to work just to enable your family to survive, of course it makes sense to work instead of hanging out with them. But once you get past the point of just working for basic needs and avoiding negative experiences, you can start to exchange your labor for positive life experiences. As far as your children are concerned, you can either work for more money to buy them experiences or spend your extra free time to give them the experience of time with you.

If you really think through the implications of saying that your legacy consists of experiences with your children, the conclusion you reach might be somewhat radical: That is, once you have enough money to take care of your family’s basic needs, then by going to work to earn more money, you might actually be depleting your kids’ inheritance because you are spending less time with them! And the richer you already are, the more likely this is to be true.

But you don’t have to be rich to give while living. The same principle applies

at any scale, whether you have billions, thousands, or hundreds. It doesn’t take much money to make a noticeable impact on people in the developing world: Through organizations like Save the Children and Compassion International, you can sponsor a child for less than $500 per year, helping the child grow up safe, healthy, and better educated—and starting a positive cycle for future generations.

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. When we’re around eight or nine years old, our parents tell us to save some of our birthday money instead of spending it all.

Many economists, on the other hand, think that thrift among young people is generally a bad idea.

“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.

Borrow modestly and responsibly. And when you have many years of rising income ahead of you, it really doesn’t make sense to save 20 percent of your income. That would mean forgoing memorable life experiences you could be having, and it also means working to pay for a richer future self—a suboptimal use of your life energy, that’s for sure.

For example, because $100,000 has more value in your fifties than it does in your eighties, and your goal is to maximize your enjoyment of your money and your life, it’s in your best interest to shift at least some of that money from your eighties into your fifties.

Suppose your work nets you $40 per hour, and suppose laundry

takes you two hours each week, because you’re slow and inefficient at this chore. A professional service that has better equipment and does laundry all day every day is much more efficient than you are and can turn a profit even while charging you $50 or less. Is it worth it to spend $50 per week on a service that picks up a week’s worth of your dirty laundry and delivers it clean and neatly folded the following week? Absolutely, because at $40 per hour, two hours of your time is worth $80. This is true even when you are not using that time to earn money; you can be using the time to take your kids to the park, or to read a book, or to meet a friend for lunch, or whatever you would enjoy more than doing the laundry.

The more money you have, the more you should be using this tactic, because your time is a lot more scarce and finite than your cash.

Draw a timeline of your life from now to the grave, then divide it into intervals of five or ten years.

Then think about what key experiences—activities or events—you definitely want to have during your lifetime. We all have dreams in life, but I have found that it’s extremely helpful to actually write them all down in a list. It doesn’t have to be a complete list;

once you have your list of items, start to drop each of your hoped-for pursuits into the specific buckets, based on when you’d ideally have each experience.

time buckets that some experiences are more flexible than others. For example, you can still enjoy visiting libraries, watching classic movies, reading novels, and playing chess well into your old age. Taking a cruise can be enjoyable at just about any age. Still, as you start filling up your time buckets, you’ll probably see that the experiences you want to have in life don’t fall evenly across the ages. Instead, they naturally cluster during certain periods—taking

As long as you’re still ignoring the money factor, and still focusing primarily on your health and your free time, that bell will probably skew to the left—because you’ll want to have most of your experiences (especially those with physically demanding activities) when you’re at peak health to enjoy them,