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

by Bill Perkins

Maybe you’ve heard the classic Aesop fable of the Ant and the Grasshopper: The industrious ant worked all summer long storing food for the winter, while the carefree grasshopper fiddled and played all summer. So when winter came, the ant was able to survive, while the grasshopper was in dire straits. The moral of the fable? There’s a time for work and a time for play.

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

memory dividend,

Back in the 1950s, an economist named Franco Modigliani, who went on to win the Nobel Prize, posited something that came to be known as the Life-Cycle Hypothesis (LCH)—an idea about how people manage their spending and saving to try to get the most from their money across their life span. He basically said that making the most of your money in the course of your life requires that, as another economist put it, “wealth will decline to zero by the date of death.”

The source of your money doesn’t change the calculus on maximizing your life.

One helpful tool is the Living to 100 calculator (https://www.livingto100.com), designed by a doctor and researcher who studies exceptional longevity.

At this point in life, the only person with less ability to extract enjoyment from money is the one in the morgue or the grave.

Eat to Live, by Joel Fuhrman, M.D.

What’s the takeaway here? Being aware that your time is limited can clearly motivate you to make the most of the time you do have.

Calculate your annual survival cost based on where you plan to live in retirement.