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

by Bill Perkins

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.

You want to achieve the optimal balance between enjoying the present and providing for a good future.

A person’s ability to extract enjoyment from their money begins to decline with age.

Money = (1 / age) * enjoyment Extracting enjoyment from money declines with age

Travel is a good example: 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.

The less healthy you are, the less you’re able to cope with long flights, airport layovers, irregular sleep, and other travel-related stressors.

Many of us have this mental disconnect with reality, and the disconnect helps perpetuate the myth of endless go-go years in retirement, as if we’ll always be able to do what we enjoy doing.

Our bodies inevitably decline

The better your health in a given year, the more you will be able to enjoy your experiences that year. So, yes, you will decline—but you have a say in the shape of the decline!

Decline is inevitable. How you declinee is up to you

This was my conclusion: The utility, or usefulness, of money declines with age.

Utility of money declines with age. What age is optimal?

Money is nearly worthless at the very beginning and the very end of life.

There you have it: It makes sense to spend more of your money at some ages than others, so it makes sense to adjust your balance of spending to saving over the years accordingly.

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.

The golden years come long before retirement

There is a time to work (and save) and a time to play, and the optimal life requires planning for both survival and thriving.

Think about the three basics people need to have to get the most out of life: health, free time, and money. The problem is that these things rarely all come together at once.

2024-11 I have all of these right now

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.

improved health improves everything in your life, makes every experience more enjoyable, at every age.

How fast your body’s health declines depends on how in shape (or not) you are now. So if you are 2 percent from optimal health now, you may be 20 percent from optimal health 10 or 15 years from now. Basically, there is a compounding effect to being in poor health.

As I’ve stated before, movement is life, and your experiences will be greatly diminished when your movement becomes painful or limited.

People of all ages should be spending more time and money on their health.

Preventive steps like eating right and strengthening muscles helps you keep your health as high as possible for as long as possible—and makes every experience more enjoyable.

investing in your health is investing in every single subsequent experience!

Health is wealth and longevity is paramount

Laundry is just one example; the same logic applies to any undesirable chore, like housecleaning. To me this kind of outsourcing always seemed like a no-brainer—so

Spend money to not spend time on unpleasant chores

Here’s how I see it: If you pay to get out of doing tasks you don’t enjoy, you are simultaneously reducing the number of negative life experiences and increasing the number of positive life experiences (for which you now have more time). How can that not make you happier with your life?

You know how I’ve proposed that your ability to extract enjoyment from money declines with age? Well, the corollary to that is that the older you are, the more someone should have to pay you to delay an experience. How much they should pay you is what I call your personal interest rate—which rises with your age. This idea immediately hits home for people in finance, who are used to thinking about interest rates and the time value of money.

unless you’re putting it under your mattress, you’re investing it in something (like the stock market) that promises a return above the rate of inflation. This inflation-adjusted interest rate is called the “real interest.”

Real interest rate is what we are interested in

But in general, I think you’ll find that if you ask yourself, Would I rather? you will naturally choose to delay when you’re younger and to avoid delays when you are older.

Delay when younger. Go when older

Rule No. 7: Think of your life as distinct seasons.

Just realizing that they don’t last forever, that everything eventually fades and dies, can make you appreciate everything more in the here and now.

We die a million deaths

Likewise, in real life, you can safely delay some experiences for a future period—if you don’t take certain trips or pursue certain physical activities in your twenties, you might still be able to take them in your thirties—but this ability to transfer physical experiences from one time period to another is limited.

Experiences fit into certain time periods

Sometimes people realize their mistake just before the window of opportunity closes—like when one’s children are getting ready to leave the nest—and

Dad

Her patients’ number one regret was wishing they’d had the courage to live a life true to themselves—as opposed to the life that others expected of them.

This hits home. Live true to yourself instead of adhereing to expectations placed by others

Along those lines, the second regret—and actually the top regret among Ware’s male patients—was this: “I wish I had not worked so hard.”

Work is not the be all end all

Whether they did more or just managed to squeeze more enjoyment out of whatever they did on a daily basis, the mere act of deliberately thinking about their time as limited definitely helped.

Intentionally spending time

Unlike some other topics in this book, the idea of having a finite number of phases with a finite number of days in each has nothing to do with money. Yes, the specific experiences you can have in each time period do have to do with money, but the reality and implications of these finite periods do not.

Time buckets are proactive and let you plan your life; a bucket list, on the other hand, is a much more reactive effort in a sudden race against time.

Time buckets v bucket list. Planned v unplanned

Rule No. 8: Know when to stop growing your wealth.

Look, many of us are inclined to delay gratification and save for the future. And the ability to delay gratification serves us well. Being able to get to work on time, paying everyday bills, taking care of our kids, putting food on the table—these are the essentials in life. But actually delaying gratification is helpful only to a point.

Delayed gratification is finite in its ability to serve

your overarching goal is to maximize your lifetime fulfillment—to convert your life energy to as many experience points as you can.

The goal is to COLLECT EXPERIENCES

But there’s an even more important reason for a net worth peak: your goal is to die with zero.

There must be a peak net worth if the goal is to die with zero

You can’t leave the timing of the peak to chance—to get the most out of your money and your life, you must deliberately determine the date of your peak.

Be deliberate about your peak net worth

The threshold I’m talking about—how much you need to save at a bare minimum—is a number.

The savings threshold is a number that accounts for having enough savvings for retirement, but the date must be planned

But for everybody, the survival threshold is based on both your annual cost of living and the number of years you expect to live from the present day.

Threshold = annual cost of living * years of life

This fixed annual withdrawal is an annuity (much like the annuities you can buy from an insurance company), and there’s a technical formula (called the present value formula for an annuity) for calculating how much you’d need to start with to generate a given annuity.

Present value formula for an annuity

So let’s capture all of this in one basic formula for calculating your survival threshold: survival threshold = 0.7 × (cost to live one year) × (years left to live)

Survival threhold formula

Again, when you think of your net worth peak this way, the peak is not a number (a specific dollar amount) but a specific date (tied to your biological age). Those are two very different ways of thinking about your financial goals.

Amount v date

these experts give more personalized advice—basing the recommended number on your actual cost of living, your life expectancy, and projected interest rates (such as a typical annual 4.5 percent rate of return after inflation). Some advisers even take into account the fact that your retirement spending won’t be constant from the start of retirement until its end—thus

This is how to reverse engineer the formula

you need to recall that enjoying experiences requires a combination of money, free time, and health. You need all three—money

Here’s the bottom line: More money doesn’t equal more experience points.

More money does not translate to more XP

Your ability to enjoy experiences depends on both your economic ability (the wealth curve shown here) and your physical ability (the health curve). Continuing to build wealth doesn’t necessarily buy you more experiences, because your declining health limits your enjoyment of certain experiences no matter how much money you have.

Put another way, if your net worth peak is a date, what is that all-important date? Well, it’s tied to your biological age, which is just a measure of your overall health. If you take two 50-year-olds (that’s their chronological age), one might have the biological age of a 40-year-old while the other has the biological age of a 65-year-old.

Biological v chronological age

For most people, the optimal net worth peak occurs at some point between the ages of 45 and 60.

Net worth peak between 45 - 60