5 Takeaways from Die With Zero
“If you don’t want to squander your life energy, you should aim to spend all your money before you die.”
Introduction
I hate to break it to you, but your humble blogger won’t be around forever.
No, even in a best-case scenario, I only have maybe 50 years left to teach you the art of living. I don’t know your situation, but personally, I have always struggled with planning my finances out over the duration of my life.
As a single dude with no kids and no plans for kids, I feel that most conventional financial wisdom does not apply to me the way it does to others. Even the assumption many have that everyone wants to own a home.
I have no interest in owning a home, and maintaining one sounds terrible from what I hear from my friends.
Retirement planning is similar. I am always a little skeptical when I plug my savings and investment numbers into a retirement calculator. I feel that the built-in assumptions might not apply to me. I am also more skeptical generally as I get older, and since much investment advice is produced by firms that profit from it, I take it with a grain of salt.
So I have had my eye out for non-traditional finance books and resources that I may be able to learn from.
I came across Die With Zero: Getting All You Can from Your Money and Your Life, by Bill Perkins, in a recommendation from Paul Millerd’s newsletter. It has some interesting insights that have me thinking a little differently. It also gives me some reassurance that my suspicions were not off the mark.
Here are 5 takeaways:
1. Squandering our lives should be a much greater concern than squandering our money.
“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 book argues that many people are over saving. Money is a tool to give us a great life. If we are over-saving, we are wasting life resources on work. Unused money is unused life experience. Our goal should be life experiences, not money. Therefore, in a perfect world, we would die with zero savings (though he stresses dying with exactly zero is impossible.)
2. Life experiences compound like interest.
“When you have an experience, you get that current, in-the-moment enjoyment, but you also form memories that you get to relive later. This is a big part of being present as a living human being: For better or worse, you re-experience that experience, often more than once.”
This resonates with me. There are some experiences I’ve had, like my first trip to Thailand, that I’ve revisited hundreds of times since I went. It made an enormous impact on my life.
Understanding this concept, we can see how enjoying life experiences earlier actually makes them more valuable. We get to relive them more times. Why would we wait until we’re retired in our sixties to do the things we want to do?
3. We should plan our lives based on when our health will allow us to have the experiences we want.
I won’t be able to surf much when I am sixty. I hope to be in good enough health to travel then, but that’s not a guarantee.
The book has an exercise where it asks you to create life buckets for 5-10 year periods over how long you plan to live. In each bucket, place the experiences you would like to have. Realistically, what experiences will I be having when I am in my 70s? Reading? Writing? Hiking? Golf? Woodwork? These don’t cost what a surf trip to Portugal costs.
Thinking about this immediately raises my suspicions about all of the retirement planning calculators I’ve used. They recommend you plan to spend 70-80 percent of your pre-retirement income each year after you have retired. I am skeptical I need that much money to make water color paintings in my garage.
“Across ages, whether looking at retirees in their sixties or those in their nineties, the median ratio of household spending to household income hovers around 1: 1. This means that people’s spending continues to closely track their income—so as people’s incomes decline, their spending does, too. This is another way of seeing that retirees aren’t really drawing down all the money they’ve saved up.”
4. We should spend more of our money when we can most enjoy life experiences.
If I am healthy now, I should invest in my experiences now. I’ll get more out of the money than I will later. A dollar traveling now allows me to go somewhere and surf or hike or stay up late partying. A dollar traveling when I am sixty allows me to fly somewhere exotic and read, bird watch, etc.
“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.”
5. If you have kids, you should give them money earlier rather than later so they can enjoy more life experiences
He devotes a lot to this topic. The most common age for people to get an inheritance is 60. That’s past the window of peak health, meaning you are robbing your kids of life experience by waiting so long to give them the money.
If you have kids, the selfless thing to do is give them the money when they are younger and can best put it to use. The same applies to philanthropy and charitable giving.
Conclusion
I read this book through the lens of a single dude, but the insights apply to most people. It led me to start playing around with calculators and think about how much money I really need in my 60s and 70s, and how close I might already be to reaching that goal.
The author makes the point at the end that we should fear wasting our lives and time more than running out of money. Dying with Zero sounds like a worthy pursuit to me.
“If you live your life with fear and avoidance, my bet is you will either fritter your money away or play it so safe that you will leave many, many years of your hard-earned money behind—so you’ll be working many years as a slave to your own fears.”