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

by Bill Perkins

Optimize Your Life 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.

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.

Many psychological studies have shown that spending money on experiences makes us happier than spending money on things. Unlike material possessions, which seem exciting at the beginning but then often depreciate quickly, experiences actually gain in value over time: They pay what I call a memory dividend,

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.

Invest in Experiences Rule No. 2: Start investing in experiences early.

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.

“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.

Recommendations 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 the people you’d like to have experiences with—and picture the memory dividends you stand to gain from having those experiences sooner rather than later. 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?

Why Die with Zero? Rule No. 3: Aim to die with zero.

People who are earning a high hourly rate or a high annual salary are sometimes even more tempted to keep on working and earning. Either way, they are squandering their life energy.

So even with rising life expectancies, millions of Americans are on track to have their hard-earned money outlive them. Yes, older people often save in anticipation of healthcare costs—but, as you’ll see shortly, people’s overall expenses decline with age, even counting the cost of healthcare.

So, clearly, people who, back in their working years, would have said they were saving up for retirement are not actually spending those retirement savings once they reach retirement. They are definitely not on track to die with zero.

senselessness of indefinitely delayed gratification.

And if you’re not aware of this fairly predictable pattern, you’re likely to (incorrectly) expect steady expenditures on experiences from the day you retire until the day you die. That’s one reason you might greatly oversave and underspend.

There’s a more general point I want to get across: For every single thing you might be worried about in your future, there is an insurance product to protect you. That doesn’t mean I recommend buying insurance for every single thing; obviously, insurance costs money. But the fact that insurance companies are willing to sell insurance for various risks shows that these risks can be quantified—and removed for those who don’t want to take those risks.

thinking of annuities as insurance makes them a lot more sensible than thinking of them as investments—because as investments they are not good at all. But that’s not their goal—their goal is to insure you against the risk of outliving your money.

how not to outspend your savings. But of course that’s just one half of the question of how to die with zero; the other half is how not to waste your life energy by underspending.

All your savings beyond that amount is money you must aggressively spend down on experiences that you enjoy. I say “aggressively” because your declining health and diminishing interests mean that your list of activities will narrow as you age, which means that your spending rate won’t remain constant:

Recommendation If you’re nervous about someday running out of money before you die, then spend some time looking to annuities as a possible solution.

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

Regardless of the amount you’re passing on, it takes a great deal of luck for it to arrive exactly when each of your recipients needs the money most. Much more likely, the money will arrive too late for it to have maximum impact on the recipient’s quality of life.

by giving the money to my kids and other people at a time when it can have the greatest impact on their lives, I’m making it their money, not mine.

your goal in life is not to maximize your income and wealth but to maximize your lifetime fulfillment,

Recommendations Consider at what ages you want to give money to your children, and how much you want to give. The same goes with giving money to charity. Discuss these issues with your spouse or partner. And do it today! Be sure to consult on these matters with an expert such as an estate planner or a lawyer as well.

Balance Your Life 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.

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

when time and money are no longer a problem, health is.

your capacity to enjoy life experiences is higher at some ages than others, then it makes sense to spend more of your money at certain ages than others! 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.

We’ve all been told—like so many hardworking, diligent ants—that we need to save up our money for our “golden years” of retirement. But ironically, the real golden years—the period of maximum potential enjoyment because we have the most health and wealth—mostly come before the traditional retirement age of 65. And those real golden years are the years during which we should be doing most of our spending, not delaying gratification.

Think about the three basics people need to have to get the most out of life: health, free time, and money.

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. I am constantly trading money back into time. I’ll never get more than 24 hours in a day, but I can do my utmost to free up as much of that finite time as I possibly can.

So your personal interest rate rises with age, but unfortunately we don’t always act as if it does. If this concept of a personal interest rate works for you, though, then keeping it in mind when you are considering buying an experience can help you decide whether it’s worth it to spend the money now or to save it for another time.

The older you get, the less willing you should be to delay an experience, even if someone pays you a lot of money to do so.

Recommendations Think about your current physical health: What life experiences can you have now that you might not be able to have later? Think of one way in which you can invest your time or your money to improve your health and thereby improve all of your future life experiences. Learn about how to improve your eating habits to improve your health. Of the many books on this subject, the one I know well and always recommend is Eat to Live, by Joel Fuhrman, M.D. Do more of the physical activities that you already enjoy (such as dancing or hiking) that will also improve your enjoyment of future experiences. If your ability to enjoy experiences is more constrained by time than by money or by health, think of one or two ways you can spend some money now to free up more of your time.

Being aware that your time is limited can clearly motivate you to make the most of the time you do have.

Time buckets are a simple tool for discovering what you want your life to look like in broad strokes. Here’s what I suggest you do. Draw a timeline of your life from now to the grave, then divide it into intervals of five or ten years. Each of those intervals—say, from age 30 to 40, or from 70 to 75—is a time bucket, which is just a random grouping of years. Then think about what key experiences—activities or events—you definitely want to have during your lifetime.

Recommendations If time-bucketing your whole life feels a bit overwhelming, just do the exercise with three time buckets covering the next 30 years. Know you can always add more to your list; just do it long before your age and health become a real factor. If you have children, think about your own version of the Heffalump movie: What one experience do you want to have more of with them in the next year or two, before that phase of their life and your life is over?

survival threshold = 0.7 × (cost to live one year) × (years left to live)

Most people forget those costs of acquiring more money, so they focus mainly on the gains. So, for example, $2.5 million does buy you a better quality of life than $2 million, all other things being equal—but all other things are usually not equal! That’s because for every additional day you spend working, you sacrifice an equivalent amount of free time, and during that time your health gradually declines, too.

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.

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.

decumulation doesn’t come naturally. Old habits die hard.

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. As a result, many people enter retirement with only a vague idea of what they’ll do with all that free time. Or they have some specific ideas—typically trips they want to take—but only for the first year or two. So after a while, they tend to find themselves adrift, feeling aimless and maybe even itching to go back to work, the one place they know they’ll have a built-in sense of purpose, belonging, and accomplishment. In the worst cases, this sense of aimlessness can even lead to anxiety and depression.

Recommendations Calculate your annual survival cost based on where you plan to live in retirement. Consult your doctor to get a read on your biological age and mortality; get all the objective tests you can afford that give you the status of your current health and eventual decline. Given your own health and history, think about when your enjoyment of those activities is likely to start declining in a noticeable way on an annual basis—and how the activities you love will be affected by this decline.

Be Bold—Not Foolish Rule No. 9: Take your biggest risks when you have little to lose.

When you face asymmetric risk, it makes total sense to be bold, to grab the opportunity at hand. At the extreme, when the downside is very low (or nonexistent, as in the “nothing to lose” case) and the upside is really high, it’s actually riskier not to make the bold move. The downside of not even taking a chance is emotional: potentially a lifetime of regret and wondering What if? The upside of taking a chance always includes emotional benefits—even if things don’t work out.