How to Die With Zero (A Book Summary)

I came across an intriguing book with an interesting premise: Our life goal should be to Die With Zero. In this post I’ll go over some of the key points, and explain what it really means to die with zero.

We’re Living Suboptimally

The author of Die with Zero, Bill Perkins, in his book says that many of us are living suboptimally. And he makes a good point.

Most people accumulate wealth and increase their net worth following the traditional trajectory (represented by the grey line below). 

However, Perkins recommends that we should be increasing our net worth following the optimal path (black line). Why?

The figure shows several things happening here.

The traditional wealth accumulator, let’s call him Frank, saves and invests. He turns down opportunities for great experiences in his 20s, 30s, or 40s, thinking that he will just do them when he retires. He finds that when he’s retired, he no longer has the health, energy, or even the desire to do the things he wanted to do when he was younger. Furthermore, he can pay for health insurance, he’s collecting social security and pension/retirement account payments. Since he only has enough energy to do Tai-Chi in the park, his wealth continues to accumulate since his living expenses remain low. He dies with millions, if not hundreds of thousands of dollars to his name.

The optimal wealth accumulator, let’s call her Olivia, does things a little differently. She works and saves, but she also spends big on life experiences: kayaking in Cozumel, night marketing in Taiwan, and camel riding in Abu Dhabi, just to name a few. She retires with less money than Frank, but collects many more life experiences and memory dividends (I’ll explain later). She gives generously to her children when they are in their teens, twenties, and early adulthood. She dies with zero, or close to zero. 

Why we’re living suboptimally

You, like Frank, are living suboptimally because you’re accumulating wealth out of fear. Fear that you will run out of money. 

If you’re like most people, here is a list of some of your fears and why they are irrational:

Fear that you will not have enough money for basic living expenses during retirement

Why it’s irrational: 

• With less energy and more health problems in old age, you might just be sitting at the park feedings ducks, not travelling the world like Carmen Sandiego
• Therefore, you are likely going to be spending a lot less money during retirement

Fear that medical costs will be dramatically more expensive during retirement

Why it’s irrational:

• Medical insurance will cover most if not all of your medical costs
• Say your costs aren’t covered, is it even worth it to spend hundreds of thousands of dollars to extend your life a few weeks? 

“…People are willing to spend tens or even hundreds of thousands of dollars to prolong life for just a few more weeks. Think about it: That’s money that they spent years or decades working hard for. 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!”

– Bill Perkins, Author of Die with Zero

Fear that you will outlive your savings

Why it’s irrational:

• You can use a life expectancy tool online to estimate your life expectancy
• You can purchase an annuity if it provides you the peace of mind that you need

When Frank dies, let’s say he dies with $295,000 to his name, the average inheritance according to Mass Mutual. 

Let’s say he was making US median earnings of $50,232 for someone between 55 to 64 years old. 

in simple terms (ignoring compounding), dividing $295k by $50k means that he worked an extra 6 years of his life to make money he never got to use!

But his kids will get his inheritance! Right?

Yes, but leaving an inheritance upon death is still suboptimal. When Frank dies at 80, his kids receive his leftover money when they are well into their 40s or 50s. They are already established with careers and savings, and the money at that point has less utility in their lives than it did 20 or 30 years ago. 

“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.” – Bill Perkins, Author of Die with Zero

How to Live Optimally

Olivia is living optimally because she did the things in her 20s, 30s, 40s, and even 50s that there’s no way she could have done after retirement. Was she going to hike Machu Picchu in her 70s? Probably not. But she did it in her 20s and she has no regrets.

Spending $3000 on that trip to Machu Picchu sounds expensive right? What if she put that in the stock market instead? She could have close to $6000 9 years later, and have taken TWO trips right?

Yes, but opportunities change. Circumstances change. Your relationships change. The health of you and your loved ones change. 

Frank, on the other hand, always wanted to hike Machu Picchu, but was climbing the corporate ladder when his friends went in their 20s. Now Frank is in his mid-30s and is working as partner at a big law firm with bigger responsibilities. He suffered a minor knee injury during a marathon which limits his hiking abilities. His friends from his 20s suddenly have kids and can’t take a trip to Machu Picchu if they tried. That once in a lifetime opportunity to visit Machu Picchu with friends is gone.

One of my greatest regrets is hardly any different from Frank’s story.

In my early/mid-20s, my friends went to Kenya to pay a visit to another friend, who was working there at the time. I declined the trip when I heard how expensive it was going to be. $5000?? Are you crazy?? I’m just a broke 20-something year old and I need that money to start saving for a home or retirement!

My friends came back with amazing stories, awesome safari pictures, and wonderful memories. My friend moved back home from Kenya, so the opportunity to check it out with a knowledgeable local tour guide (and free housing) has passed. 

If you were to ask me today if I would take the trip or have $10,000 ten years later, I would certainly rather have taken the trip.

“The business of life is the acquisition of memories. In the end that’s all there is.” – Bill Perkins, Author of Die with Zero

Back to Olivia…

Yes the $3000 trip was “expensive”, but rather than collecting money dividends, she’ll collect “memory dividends” for the rest of her life. She can look back at pictures and feel a sense of nostalgia. When she’s reminiscing with friends. When she sees a documentary about Peru. When she visits her favorite Peruvian restaurant. She collects these memory dividends like compound interest. One year later. Three years later. For the rest of her life.

Not only does she collect memory dividends, she also uses her money optimally by giving to her family while she is alive.

Rather than wait upon her death to leave a large inheritance, she provides to her family while she’s alive. The Disneyland trip that was too expensive for Frank, is one that will provide memory dividends to Olivia and her children. While Frank was putting in overtime at the office, Olivia took a few days off to take the kids on a fishing trip. 

Key Takeaways

• Aim to die with zero, or close to it.
• Don’t live on autopilot and indefinitely delay gratification.
• Continuing to build wealth doesn’t necessarily buy you more experiences because of your declining health and change in interests.
• Maximize your lifetime fulfillment, which comes from memorable life experiences and your lasting memories (memory dividends) from those experiences.
• Strive for the optimal balance between enjoying the present and providing for a good future.
• Give money to your family/charities when they can best use it.
• Spend more earlier in your life and plan accordingly to die with (or close to) zero.