Worried about retirement? Consider a die with zero plan

My grandmother never realized she was practicing a die with zero philosophy.  She liked to give generous presents to her children and grandchildren on birthdays, gift-giving occasions—and whenever the mood struck her. I once asked her why she kept her loved ones so well-supplied in gifts, and she remarked, “Why should you be glad I’m dead?”

In other words, she didn’t see the point in holding onto the money that would come to her family anyway when she died. By spending her money on us while she was still alive, she enjoyed our delight in her generosity. She saw that as a better use of her money than letting it grow until it became our emotionally uncomfortable inheritance.

In many ways, Grandma embodied the die with zero financial planning philosophy popularized by Bill Perkins. This philosophy encourages people to enjoy their money while they live—ideally spending their final dollar just before kicking the bucket—because there’s no point in being the wealthiest person in the cemetery.

Considering the complexities of traditional financial planning—not to mention your understandable worries about running out of money in retirement—the die with zero philosophy may sound like a great way to live with low-grade anxiety during your golden years. But there’s a way to balance your impulse to save for the future with the joy of enjoying your money right now.

The problem with traditional planning

Every day without fail, you’ll find a brand new think piece about how painfully underfunded the average American retirement account is. That’s why financial media’s prevailing message about retirement planning is only slightly less hyperbolic than, “For the love of all that is holy, put some money in a 401(k) NOW before it’s too late!!!”

Unfortunately, this hyperfocus on building wealth makes it seem like even the largest of nest eggs is one unwary purchase away from leaving you destitute. The majority of retirees have built the life they want, but almost half are afraid to spend their money so they can live that life.

While this is not a problem that every retiree will face (see the depressing statistics about the size of the average American retirement account), it’s still a common issue for anyone who has internalized the “accumulate!” retirement planning message for decades.

Enter the die with zero financial philosophy.

What is Die with Zero?

Although hedge fund manager Bill Perkins coined the term (and wrote the eponymous book Die With Zero), the concept is hardly a new one. With the possible exception of some pharaohs and oligarchs, we all know we can’t take it with us when we go.

Instead, Perkins suggests that our highest goal should be to maximize positive life experiences using the three limited resources we are all afforded: health, time, and money.

Of course, our levels of health, time, and money are not in perfect balance throughout our lives, which is why Perkins recommends using each of these resources when we have them.

When you’re young, healthy, and have plenty of time, you can spend it enjoying low-cost but high-effort experiences, like backpacking through Europe. Once you’re older, time-crunched, and wealthier—but still enjoying good health—you can spend money to enjoy luxurious experiences that are lower-effort, like taking a cruise through the Greek Isles. And anytime your health is declining, you can spend time and money to help improve your health.

Die with zero financial planning

Die with zero is an appealing philosophy in part because it’s not just about money, retirement, or financial planning. It’s a framework for optimizing your life. Much of the die with zero model is about changing your view of money, health, and time throughout your life.

However, the die with zero philosophy includes a blueprint for financial planning. Specifically, Perkins recommends the following rules for handling your finances so that you can “die with zero”:

• Plan for different seasons of your life: Described by Perkins as “time-bucketing,” this strategy separates your life into 5- to 10-year chunks. For each time-bucket, you set experience goals you want to meet that will change as your time, health, and wealth change.
• Spend with intention: Rather than accumulate wealth that you’re afraid to spend, joyfully spend your money on memorable experiences that will make your life more meaningful.
• Give money away to children and charities when it’s the most impactful: This is an echo of my grandmother’s attitude. Rather than leaving a financial legacy to beloved family or charities when you die—when they may no longer need the money—give it away when the money can do the most good and while you’re alive to see the benefit.
• Recognize when you’ve hit your wealth peak: So much of retirement planning is about accumulation, which means it can be tough to know when you’ve reached “enough.” And then it can be even harder to feel comfortable spending down your nest egg. This philosophy suggests that you figure out when you’re done growing your wealth so you can let go of the drive to keep growing.

Balancing prudence with pleasure

“Eat, drink, and be merry, for tomorrow we die” may be an excellent motto for soldiers heading off to war, but it’s a little harder to justify as a responsible life maxim when you’re impulsively charging once-in-a-lifetime trips to Bali on your high-interest credit card.

Which is why it’s a good idea to fold the philosophy of the die with zero movement into traditional financial planning.

Focus on growing your nest egg, especially when you have the benefit of compound interest over time. But make sure you also invest some of your resources—time, health, and money—into making memories.

Plan ahead for potential health problems in old age, which may mean earmarking money for future medical expenses. But also let yourself be generous with money to your loved ones when they need it.

Continue to make smart and frugal financial decisions in retirement. But keep meeting the experience goals you set for yourself, too, so that you continue to have new adventures to look forward to.

Treating your finances with intentionality is the best way to enjoy yourself and your money—now and in retirement.

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