Die With Zero

It makes sense to delay gratification to some extent, because that pays off in the long run. But the sad truth is that too many people delay gratification for too long, or indefinitely. They put off what they want to do until it’s too late, saving money for experiences they will never enjoy.

Our ability to enjoy different kinds of experiences changes throughout our lifetimes.

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. And that’s true no matter what you enjoy or how much money you have.

Our incomes might vary from one month or one year to another, but that doesn’t mean our spending should reflect those variations—we would be better off if we evened out those variations.

Experiences don’t have to cost a lot of money, and they can even be free, but worthwhile experiences do usually cost some money.

All living things, including humans, are energy-processing units. We process food so we can power our bodies. Processing energy lets us not only survive on earth but also live a potentially fulfilling life: With that energy, we can move about the world. Movement is life, and as we move we get continuous feedback—which leads to discovery, wonder, joy, and all the other experiences you can have throughout life’s great adventure. When you are no longer able to process energy, you will be declared dead and your adventure will be over.

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.

Think about the enjoyment you get from each experience in terms of points, like the points you’d earn in a game. Peak experiences will bring you many experience points. Small pleasures will get only a few points.

The payoff from an investment does not have to be financial. When you teach your daughter to swim or to ride a bike, it’s not because you think she’ll get a better-paying job with those new skills. Experiences are like that: When you spend time or money on experiences, they are not only enjoyable in the moment—they pay an ongoing dividend, the memory dividend.

If you spend hours and hours of your life acquiring money and then die without spending all of that money, then you’ve needlessly wasted too many precious hours of your life. There is just no way to get those hours back. If you die with $1 million left, that’s $1 million of experiences you didn’t have. And if you die with $50,000 left, well, that’s $50,000 of experiences you didn’t have.

It is much smarter to spend your healthcare money on the front end (to maintain your health and try to prevent disease) than to spend it at the end, when you get a lot less bang for every buck you spend.

Knowing at least approximately when you’re going to die will help you make much better decisions about earning, saving, and spending. So I urge you: Go ahead and try a life expectancy calculator.

Annuities are essentially the opposite of life insurance: When you buy life insurance, you’re spending money to protect your survivors against the risk that you’ll die too young, whereas buying annuities protects you against the risk of dying too old (outliving your savings).

We keep putting off wonderful experiences, as if in our final month we can easily squeeze in all those experiences that we had put off all our lives. Needless to say, that’s not possible—so it’s totally irrational.

Give your children whatever you have allocated for them before you die. Why wait until you’re gone?

If you’re really putting your kids first, as you claim you are, don’t wait until you’re dead to show your generosity. (I like to say that dead people can’t give money away—they can’t do anything.) Putting your kids first means you give to them much earlier, and you make a deliberate plan to make sure that what you have for your children reaches them when it will make the most impact.

If your goal is to maximize what you get out of your life, it makes sense to want to maximize what your kids get out of their lives, too. So if you want to make the most of your gifts to your kids, you have to consider each recipient’s age. By applying this line of thinking, you will be taking money that is nonproductive in terms of life enjoyment and turning it into money that is maximally useful.

If you really think through the implications of saying that your legacy consists of experiences with your children, the conclusion you reach might be somewhat radical: That is, once you have enough money to take care of your family’s basic needs, then by going to work to earn more money, you might actually be depleting your kids’ inheritance because you are spending less time with them! And the richer you already are, the more likely this is to be true.

When it comes to giving money to your kids, the optimal time, as I suggested earlier in the chapter, is when they’re between 26 and 35—not too late to make a big impact and not so soon that they might squander the money.

When I say it makes sense to borrow money when you’re young, I’m not saying you should be racking up credit card debt—such high-interest loans are a bad idea for almost everyone. Borrow modestly and responsibly. And when you have many years of rising income ahead of you, it really doesn’t make sense to save 20 percent of your income. That would mean forgoing memorable life experiences you could be having, and it also means working to pay for a richer future self—a suboptimal use of your life energy, that’s for sure.

Travel is the ultimate gauge of a person’s ability to extract enjoyment from money, because it takes time, money, and, above all, health.

When we’re infants, we get very little enjoyment out of money. Babies are expensive to take care of, true, but it’s not like they get a lot of enjoyment from spending money. When you’re a baby, there’s no greater happiness than Mom and the crib. In a way, the amount of utility that babies get from money is very similar to what the elderly get. Money is nearly worthless at the very beginning and the very end of life.

If your capacity to enjoy life experiences is higher at some ages than others, then it makes sense to spend more of your money at certain ages than others! For example, because $100,000 has more value in your fifties than it does in your eighties, and your goal is to maximize your enjoyment of your money and your life, it’s in your best interest to shift at least some of that money from your eighties into your fifties. For the same reason, it’s in your best interest to shift some of it to your twenties, thirties, and forties, as well. Making these kinds of conscious financial shifts essentially creates a lifetime spending plan that takes into account the changing utility of money.

In our three-pronged model—where fulfillment from a single experience is a function of health, money, and free time—health is the single biggest factor (or multiplier) affecting the size of a person’s lifetime fulfillment curve: Our simulations show that even a small permanent reduction in health at some point in a person’s life amounts to a large reduction in the person’s lifetime fulfillment score.

People of all ages should be spending more time and money on their health. No age group spends more on health than the elderly, whose healthcare spending aims to treat degenerative diseases, manage pain, and prolong life. But earlier investments in health would actually yield greater lifetime fulfillment. Preventive steps like eating right and strengthening muscles helps you keep your health as high as possible for as long as possible—and makes every experience more enjoyable.

The other big opportunity I see for creating a more balanced life is to exchange money for free time—a tactic that usually has the most impact in one’s middle years, when you have more money than time. The classic example is laundry, a time-consuming weekly chore that most people dread doing and that, in many places, can be done inexpensively by an outside service that specializes in it.

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). How can that not make you happier with your life?

Draw a timeline of your life from now to the grave, then divide it into intervals of five or ten years. Each of those intervals—say, from age 30 to 40, or from 70 to 75—is a time bucket, which is just a random grouping of years. Then think about what key experiences—activities or events—you definitely want to have during your lifetime.

New experiences and new people you meet tend to reveal unexpected additional interests that you’ll want to pursue. Life is all about discovery. And you will revisit this list later in life, too.

There’s an even more important reason for a net worth peak: your goal is to die with zero. If your net worth keeps climbing, rising from your sixties to your seventies and beyond, then there is no way you will die with zero. So, at some point you must actually start dipping into your lifetime savings; if you don’t, you will end up with unspent money, which means you haven’t acquired as many experience points as you could have.

You can’t leave the timing of the peak to chance—to get the most out of your money and your life, you must deliberately determine the date of your peak.

People so often talk about saving for retirement. But there are far fewer conversations about saving for excellent and memorable life experiences that need to happen much sooner than the typical retirement age.

As you go through life, your interests change and new people enter your life, so it’s a good idea to repeat the time-bucketing exercise every now and then, such as every five or ten years.

Your biggest fear ought to be wasting your life and time, not Am I going to have x number of dollars when I’m 80?

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.

By aiming to die with zero, you will forever change your autopilot focus from earning and saving and maximizing your wealth to living the best life you possibly can. That’s why dying with zero is a worthy goal—with this goal in mind, you are sure to get more out of your life than you otherwise would have.