Die With Zero by Bill Perkins

Optimize Your Life

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.

In other words, to 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.

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

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

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.

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

That’s why Jason, whose story I opened this chapter with, wouldn’t erase his backpacking trip through Europe for anything. It’s also why people keep photo albums—and why, if their house is on fire, they usually grab their albums before trying to save just about any other possession. In that moment of crisis, people quickly realize that, whereas material objects can be replaced, memories are priceless.

Making deliberate choices about how to spend your money and your time is the essence of making the most of your life energy.

Why Die with Zero?

There’s a big difference between living a life and just being kept alive, and I’d much rather spend on the former.

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.

How to Spend Your Money (Without Actually Hitting Zero Before You Die)

We are solving for your total life enjoyment.

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: If you want to die with zero and make the most of whatever health you have at every point in your lifetime, you will need to spend more in your fifties than in your sixties, and more in your sixties than in your seventies, let alone your eighties and nineties!

They gave up years of their life while healthy and vibrant to buy a few extra weeks of life when they are sick and immobile. If that’s not irrational, I don’t know what is!

What About the Kids?

I call it the three Rs—giving random amounts of money at a random time to random people(because who knows which of your heirs will still be alive by the time you die?).

If you’re trying to maximize the impact of the money you give—instead of just maximizing the absolute dollar amount you give—then you should aim to give the money as close to their peak as you can.

your goal in life is not to maximize your income and wealth but to maximize your lifetime fulfillment, which comes from experiences and your lasting memories of those experiences. And just as you’re trying to maximize your own fulfillment, you’re trying to maximize your children’s fulfillment too.

Just as you’re trying to form memories of times with your kids, it makes sense to want your kids to form memories of you. Both sets of memories will yield a memory dividend—one stream of dividends for you and one for your kids. 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?

We also know that the positive effects of loving, attentive parents last well past young adulthood, thanks to a study of more than 7,000 middle-aged adults. Researchers asked these adults a bunch of questions about their memories of their mother and father—questions like“How much time and attention did she/ he give you when you needed it?” and“How much did she/ he teach you about life?” and “How would you rate your relationship with your mother/ father during the years you were growing up?”

the researchers were able to conclude that those adults who had memories of higher parental affection ended up with better health and lower levels of depression. The word“experience” may not evoke images of a child being taught about life, or of simply being given time and attention—but all those are indeed experiences, too, and they’re indispensable, paying off in sometimes surprising ways. I don’t know anybody who wouldn’t want that kind of experience and that kind of memory dividend for their children.

If you give generously when you’re alive, then I can consider you selfless. If you’re dead, you just don’t have that choice. So by definition, you cannot be generous when you’re dead.

People who were needy during her lifetime did not benefit from her largesse. Here was a person who, by her own choice to consume very little of her growing wealth, routinely lived far below her means.

She chose to keep taking the subway to work and to keep living in a rent-controlled apartment(which, incidentally, could have gone to a needier person). Let’s assume that she was saving specifically so that her money could go to these charities. So why didn’t she give it to her beloved charities earlier, when she clearly could have?

Your Legacy Is Now

My number one rule is: Maximize your life experiences. So spend your money while you’re alive—whether it’s on yourself, your loved ones, or charity. And beyond that, find the optimal times to spend money.

Balance Your Life

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.

“That might be true for many people, but I’m in better shape than I was 20 years ago!” Well, to me that just says that you weren’t taking great care of your health earlier—because if you were, you definitely would have been in better shape 20 years ago. All other things being equal, a 20-year-old is healthier and stronger than a 40-year-old, and a 55-year-old is healthier and stronger than a 75-year-old. Those are just physical facts of life.

So, for example, instead of saving 20 percent of your income throughout your working years, some people would be better off saving almost nothing in their early twenties(as we’ve discussed), then gradually ramping up their saving rate during their late twenties and thirties as their income begins to rise. Then they should save even more than 20 percent in their forties—and then slow down their savings so that eventually(as I explain in the next chapter) they actually start outspending their earnings.

Small changes in health can lead to a negative compounding that has enormous impacts on your lifetime fulfillment and experience points.

Better health doesn’t just give you a better retirement years from now—investing in your health is investing in every single subsequent experience!

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).

Start to Time-Bucket Your Life

That is what I mean when I say that we die many deaths in the course of our lives: The teenager in you dies, the college student in you dies, the single unattached you dies, the version of you that’s a parent of an infant dies, and so on. Once each of these mini-deaths occurs, there’s no going back. Maybe“dies” is a bit harsh, but you get the idea: We all keep moving forward, progressing from one stage or phase of our lives to the next.

Because of this eventual finality of all of life’s passing phases, you can delay some experiences for only so long before the window of opportunity on these experiences shuts forever.

“No one ever regrets not having spent more time in the office.”

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

Know Your Peak

Invest in experiences that yield long-lasting memories, always bear in mind that everyone’s health declines with age, give your money to your children before you die instead of saving for their inheritance, and learn to balance current enjoyment with later gratification. But even though I’m a big believer in these principles, my 45th birthday party gave me pause: I had to talk myself over the psychological hurdle of spending a fortune on a single, weeklong party, no matter how memorable it would be. I had to tell myself again and again that I was never going to turn 45 again and asked myself when—short of my funeral, someday way in the future—I was ever going to be able to get all these key people in my life together again. Once I got over that psychological hurdle, though, I was all in, and I went all out, creating the best party my money could buy.

And, at the extreme, indefinitely delayed gratification means no gratification. So at what point is it better not to delay?

(To be precise, you need to start with $ 213,210.12 if you want your money to last 25 years at 3 percent interest and a $ 12,000 annual withdrawal.) With each withdrawal, your initial amount does shrink—it just doesn’t shrink as much as you might think, because the interest earns you back part of what you need. This is why you need only a portion of the annual cost of survival times the number of years: Interest will earn you the rest.

So what is that fraction? As a simple rule of thumb, I suggest 70 percent. In our example above, the fraction is actually just over 71 percent(because $ 213,210.12 is 0.7107 times $ 300,000). If the interest rate were higher, the fraction you’d need in savings would be lower. For example, if your interest rate is 5 percent, and everything else remains the same, you need only $ 173,426.50—or a little less than 58 percent. And, of course, if the interest rate is zero, you’d need all of the money(the full $ 300,000) to come from savings alone. But 70 percent covers you in most cases, and it’s a nice, simple number. 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)

But a number should not be most people’s main goal. One reason is that, psychologically, no number will ever feel like enough. For example, let’s say the number you come up with(based on calculations like the kind financial advisers recommend) is $ 2 million. To reach that goal, you can easily justify working longer by telling and convincing yourself that you will be able to enjoy an even higher quality of life if you save up $ 2.5 million. And by that logic, you can provide for an even higher quality of life by saving $ 3 million. So where does it end?

To understand why you should think in terms of a date, not a number, you need to recall that enjoying experiences requires a combination of money, free time, and health. You need all three—money alone is never enough.

In sum, from my perspective, the years you spend earning that extra $ 500,000 do not make up for(let alone surpass) the number of experience points you lost by working for more money instead of enjoying those five years of free time.

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.

“What, do you really expect me to quit a job I love just because I’ve hit some magical date?” And my answer is no. If you want to keep working, be my guest. Just be sure to ramp up your spending accordingly so that you don’t end up dying with lots of money left over. That would be a waste no matter how much you enjoyed your job.

So continue working and earning more money—but be sure to spend it now! If you want to give money to your high school or college, do it now. If you want to give money to your children and future grandchildren, start to do it now.(For children who are currently too young, set up a trust.) As for the rest, spend it on making the best life you possibly can for yourself.”

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.

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 join? What adventures do you really want to have—and when do you want to have them? Put those in the appropriate buckets and start making new memories.

Be Bold—Not Foolish

asymmetric risk: when the upside of possible success is much greater than the downside of possible failure.

they are willing to pay $ 70,000 for the comfort of not having to move.

whatever level of risk you’re comfortable with, whatever bold moves you might contemplate for your life, you’re generally better off making those moves earlier in your life. Again, that’s when you have a higher upside and a lower downside.

don’t underestimate the risk of inaction. Staying the course instead of making bold moves feels safe, but consider what you stand to lose: the life you could have lived if you had mustered the courage to be bolder. You’re gaining a certain kind of security, but you are also losing experience points.

Conclusion: An Impossible Task, a Worthy Goal

Remember: In the end, the business of life is the acquisition of memories. So what are you waiting for?

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