Is it a good idea to try and “Die with Zero?”
“It’s not about ‘what can I accomplish?’ but ‘what do I want to accomplish? Paradigm shift.”
I recently read the book “Die With Zero” by Bill Perkins with my XYPN “Mastermind” Group– six other female financial planners that I’ve connected with through XY Planning Network (the firm that helped me launch my own advisory practice!) We meet every week to discuss our practices and encourage each other as business owners.
We all cater to working with clients who are still “hard at work”-- not on the cusp of retirement or already retired, so the premise of this book was fascinating to us and we hoped would give us many ideas on how to advise our clients.
The essence of “Die with Zero” is that you should aim to use up all of your money before you die– investing or spending your dollars in positive experiences. By not waiting until retirement to splurge on life experiences, you would trade some amount of your future wealth for a “memory dividend” that would enrich you for the rest of your life. So the author literally means you should try to die with zero dollars in the bank– using up all of the financial rewards of your life’s work while you are here and when you can most enjoy it.
This concept is fairly revolutionary. Since the end of pensions (when companies fully paid for their employee’s retirements), Americans have been told they are on their own to save for retirement– so start early and save A LOT. The message has been “You need to build your own wealth so you can live the life of your dreams in retirement”. It is also largely seen as virtuous to build “generational wealth”, leaving a legacy behind to your children and other causes you care about.
And Americans have largely listened. They work hard (rarely using all their vacation time) and they are focused on building their wealth. Here is the average wealth of Americans by decade:
Notice that while wealth peaks in the 60s, it doesn’t decline by that much by the time you are in your 90s, and on average people are dying with more than $1 MM in the bank, (note that this is skewed by wealth inequality: the median wealth in the 90s age decade is a little under $300k).
My Overall Thoughts on the Book
Bill Perkins, the author, is a former hedge fund manager and Hollywood Film Producer. He definitely falls into the top 1% of wealth. This privilege of wealth definitely skews his advice, often overlooking how difficult it is for many people to get out of debt and save even a little bit of money.
In my opinion, his life experience examples were often out of touch. It seems to me his advice to essentially “spend more money today on experiences that you will be unable to take for health reasons in your later years” is a luxury that not everyone can afford. This encouragement to spend more and save less today assumes that you are already saving enough for a comfortable retirement and to cover long-term care expenses.
So, to the extent that you would have a lot of wealth left over when you die, then I believe it makes sense to either enjoy it now by spending on experiences or gifting now to your loved ones and causes you care about. He argues that you can make a bigger impact today— that your heirs and charities can benefit more from the money now vs. at your death. I also believe that there are certain worthy causes today that maybe can’t wait for your legacy gift (i.e. mitigating the negative impact of climate change on humans & other animals).
The cold, hard (and cheeky) truth: Your kids don't want your silver or fine china. They want cash. Preferably today. So they can spend it doing something fun with you, (but it probably won't happen at this table).
My personal take-aways
This book helped me realize that I was taking my health for granted and that I was living life a little too much on autopilot. I want to be more intentional with creating my bucket list of experiences and then taking action to make them happen at a point in my life when I can truly enjoy them. Perkins argues that health (as in, the ability to do physical activities) really peaks at age 40 and steadily declines through age 75-80. At that point, most people won’t be able to travel long distances or spend the whole day on their feet visiting sights. Retirement is not all about the “go-go” years— first it’s “go-go”, then it’s “slow-go”, then “no-go”.
As a result, I’ve created a bucket list with places to visit and people to see & spend time with. I’m looking forward to perhaps visiting New Orleans this Spring! And spending more time with my parents now that they are retired!
My Take-Aways as a Financial Advisor
It’s my belief that those who give professional financial advice need to encourage their clients to be intentional with how they will use their resources and wealth, both today and in the future. To care for your client holistically, you should help them choose their goals that are meaningful to them and in alignment with their values. This may include encouraging them to spend more now than saving it for later.
However, many financial advisors are conflicted in their business models and won’t proactively give this advice. If an advisor is paid based on how much money they manage for you (the % of assets model); why would they proactively give themselves a pay cut and encourage you to spend your money?*
Not all advisors will let this conflict get in the way of providing their best service and advice to clients. Like me, there are many who take their fiduciary duty seriously to look out for the best interests of clients.
To me, this includes asking my client(s) the following question:
Is your primary goal to maximize your wealth when you die?
Or would you prefer to try and “die with zero?”
Or is it some combination of both?
How would you answer this question?
*Since I offer investment management services to clients and get paid as a % of assets under management (AUM), I also face the exact same conflict (and disclose it in all my documents!). I’ve structured my AUM fee to steeply fall the more assets are under management. For example, for a client with $450,000 of AUM, I would make 0.8% a year, or $3,600; if their balance grows above $500,000, then the rate on the whole balance drops to 0.7%, and I would instead make $3,500, or $100 less in fees. Please see this page for more info on my full pricing.
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Stacy Dervin, CFA, CFP® provides fee-only financial planning and investment management services in Eugene, Oregon. Tailored Financial Planning (TFP) serves clients as a fiduciary and never earns a commission of any kind. As a financial advisor, Stacy is on a mission to help Gen X and Gen Y be truly proactive about their financial futures.
