In this episode of The Agent of Wealth Podcast, the Bautis Financial team discusses the seventh book assignment in their monthly Book Club, Die with Zero: Getting All You Can from Your Money and Your Life by Bill Perkins. Die with Zero presents a startling new and provocative philosophy and guide on how to get the most out of your money (and out of your life). It’s intended for those who place lifelong memorable experiences far ahead of simply making and accumulating money for one’s so-called Golden Years.
In this episode you will learn:
- What it means to “Die With Zero.”
- How experiences create memories that pay back in the form of dividends throughout your life.
- Strategies to employ that will help you “Die With Zero.”
- How to time-bucket your life.
- How to “Know Your Peak.”
- And more!
This is the seventh episode in the Bautis Financial Book Club series. Listen to the other episodes:
- Episode 75 – Bautis Financial Book Club: Atomic Habits by James Clear
- Episode 76 – Bautis Financial Book Club: The Infinite Game by Simon Sinek
- Episode 88 – Bautis Financial Book Club: Elon Musk – Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance
- Episode 100 – Bautis Financial Book Club: Animal Spirits by George Akerlof and Robert Shiller
- Episode 109 – Bautis Financial Book Club: Stacked: Your Super-Serious Guide to Modern Money Management
- Episode 125 – Bautis Financial Book Club: Think Again by Adam Grant
Die with Zero: Getting All You Can from Your Money and Your Life | Schedule an Introductory Call | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000
Disclosure: The transcript below has been lightly edited for clarity and content. It is not a direct transcription of the full conversation, which can be listened to above.
Welcome back to The Agent of Wealth Podcast, this is your host Marc Bautis. On today’s show, I brought on the Bautis Financial team, John Williams, Kyra Mackesy, and Kayla Waller. Today we’re going to discuss the book Die with Zero: Getting All You Can from Your Money and Your Life by Bill Perkins. This is another episode of our Bautis Financial Book Club, which we’ve been doing for about a year. What’s exciting is this is the first book that one of our listeners has recommended – thank you for that.
The title of this book, Die With Zero, can be quite striking. I know when I first heard it, I thought that sounded a little strange, and I wasn’t sure what it was going to be about. But it is a book about finances, specifically retirement, and the main focus is about how to get the most out of your life by putting your retirement money to work.
The author, Bill Perkins, outlines the book through a set of rules. The first rule, which is the first chapter, is “Optimizing Your Life.” The focus of that part is that you really want to maximize your positive real-world experiences.
Perkins says that, what happens too often is people will delay their gratification for too long (or even indefinitely) because they save money for experiences they never get the chance to enjoy. He says the main reason for this is that everyone’s health generally declines over time, but the way we approach things is that our life is infinite or that we’ll live forever.
Based on that, he asks the question: How do we make the most of our finite time on earth? He’s very analytical, so he looks at it as an equation. How do you maximize fulfillment while minimizing waste?
John, this is something that we help clients with when we work through their financial plans. We look at it from the question of: What’s important to you? How would you correlate our planning process to what you heard from Perkins in the first chapter of the book?
As you mentioned, we cover this with prospective clients and our current clients – this idea of reframing their thinking about the planning process by adding the bigger picture to it. Some people have never thought about their future from this larger angle, one that just forgets about the money. Obviously money is important, I’m not downplaying that, but what is really important to you?
Many times, people come to us with concerns about running out of money in retirement. These are very legit fears that drive them to reach out to us. In those cases, they don’t really have the opportunity to say, “How can I maximize what I get out of this money that I’ve worked so hard for?” But we really try to get that conversation going. At the end of the day, it’s really important for people to sit down and understand what they are trying to achieve, at the highest level.
Yeah. Perkins says it makes no sense to let opportunities pass by because you’re fearing squandering money. You really should be thinking about squandering your life and that should be the greater worry. But it’s different for everyone; the dollar amounts differ, what’s important differs…
He gave the example that he likes to travel and play in poker tournaments, so that’s what he spends his time and money doing. You really want to decide what makes you happy and convert your money into those experiences.
Kayla, if we start actively thinking about what life experiences you want to have, how often you want to have them, what does it mean to invest in an experience? An experience could mean a lot of things, what does Perkins use to classify his experiences?
What is a Memory Dividend?
In the book, Perkins shares a lot of little stories throughout. In the first chapter, he told a story about one of his friends who went on a trip to Europe when he was in his early 20s, but Perkins didn’t go because he was too focused on money and career at the time. He wanted to delay traveling until later. But he feels like he really missed out on the experience his friend got in Europe, because all of the memories his friend made paid dividends throughout his life – dividends like with investing. So the friend benefited from carrying those memories with him, from a young age, throughout his life.
I liked that whole concept of a memory dividend and how he compares it to a dividend of a stock. It compounds. It resonated with me because when I get together with friends or family we always recall stories of experiences that we’ve had together. Sometimes it’s the same story every year that we talk about.
In the book, Perkins says we can quantify the experiences by attaching a value to them. That value then compounds when you recall or retell the experience.
That made me think of how these social media companies highlight memories/posts from one year ago, two years ago… It’s kind of the same thing.
Yeah, you get those from Google Photos or Facebook, and so on.
Another point Perkins made is that the earlier you start investing in experiences, the more you’ll get out of them over your lifetime. I thought that was interesting too.
Alright, so now let’s talk a little bit about the title of the book, Die With Zero. Now, it doesn’t mean that Perkins wants people to run out of money before they die, but what is he trying to get to with the concept?
Like you were just saying, he wants people to start enjoying their lives now rather than waiting until they retire. Possessions make you happy for a little while, but experiences will yield dividends.
He shared a story about one of his friends who later became a millionaire, and he didn’t even enjoy the work he was doing. The guy just kept working and working and at the end of it, he wound up with a lot of money that he didn’t enjoy working for and didn’t do much with.
Yeah. He said in the book that if you die with a million dollars, that’s a million dollars of experiences that you didn’t have. It makes sense to generate those experiences by spending your money.
Now, John, how does someone actually do this? Is there a method or strategy that people can follow to “die with zero”?
How to “Die With Zero”
Well, it’s obviously at the heart of what we do for people, and there’s a lot that goes into making sure that you’re spending the right amounts and taking distributions properly and so on and so forth. Yeah, it’s really hard to explain that in detail, but I think at a high level, what you’re looking at is the planning process and shifting it back to, okay, let’s decide what we want to do first and then try to plan properly to get to that point.
I think it all starts with understanding that, hey, look, if you’re… And just using retirement, I mean, I know this whole idea and thought can start way before retirement, but looking at retirement by itself, if you look at that and say, “All right, I want to make sure that I’m…” You take this shift and the idea of dying with zero and start there and then plan around it as opposed to saying, “All right, let’s do anything and everything we possibly can to preserve our wealth and spend as little as possible. Oh, and by the way, if we think we can and we get around to it, let’s have some of these experiences.”
I think it just all starts with that. There’s tools that can be used. He talks a lot about annuities for those who have maybe looked at annuities or talked to annuities. I know everyone here on this call knows that the details around annuities can be quite lengthy and there’s a lot of different types. But at the end of the day, an annuity is an insurance product that helps with longevity risk. What we’re really talking about is longevity because at the end of the day, nobody knows when they’re going to die.
We know we’re going to die, but nobody knows when they’re going to die. The idea is, if we don’t know when we’re going to die, how long is our runway? How long do we have to be able to spend? Annuities as an insurance product, basically you’re paying a sum of money to an insurance company, they pool it together. Then the idea is that they will give you a payment on a monthly basis for the rest of your life. There are different options, but let’s say for the rest of your life.
Now, the idea is because person A versus person B, person A, let’s say they don’t live as long as they thought and they die at let’s say 65. Let’s say person B lives a lot longer than maybe they thought, person A unfortunately is going to be funding person B’s long life. A lot of insurance, if you really think about it, works that way. If you have car insurance, you might pay into car insurance your entire life, never have an accident and you don’t see a penny of that.
At the end of the day, if there is an accident, you want to make sure that you have enough money and it’s a great benefit to be able to just have that lump sum of money that’s available. Paying that annuity. The problem with the other side of the annuity is you do get that payment, but you give up access to the money. Once you pay that lump sum, that payment is there, but you don’t have access to the money.
You do lose control of the money, which is a really hard thing for some people to wrap their heads around and is an important part of the process and somebody knowing that. He also talks about not necessarily taking your entire life savings and putting it into an annuity, but maybe some of it. Again, this goes back to the planning process.
The other part is, as an advisor, we’ve seen this 4% rule. A good advisor is going to not just look at the 4% rule because it’s a very general way of looking at it. What basically that is, is taking 4% of your savings. The idea is as long as you take 4% of your total investable assets or spendable assets, you’ll have a 95% chance give or take over the next 30 years of not running out of money.
There’s different approaches to this, but a good advisor is going to make sure that you’re staying within almost like guardrails, that you’re not spending too much, not spending too little. I think the key takeaway really should be if you sit down with someone, make the decision, really, really give a lot of thought to what you want to do in your retirement or with your money and then plan around that.
Those are just a couple of tools. There’s a lot of other approaches, but I think the idea is that there are tools available to get you there and get you as close as possible.
I think the second area of pushback he says is around leaving money to kids or leaving money to charities. He even starts off that topic where he says, “If you cared about someone other than yourself, you wouldn’t die with zero. It’s a philosophy for selfish bastards.” That’s what he says. How does he address that?
He is pretty funny in this section too. He was pretty adamant about it and the idea that the key takeaway here I think is if you want to spend money on those kids, charity organizations, do it while you’re alive. You at least then have the joy of seeing your money do good work. He gave some examples of the idea that the inheritance that let’s say your kids might get from you after you die, chances are you’re going to die when you’re like let’s say 70s, 80s, whatever it may be.
Your kids are older then, and at that point, as they get older, the money is less and less meaningful to them even so. It might be common for someone to come to us who just wants help with an inheritance and they’re in their 50s and their kids are already at college. There might be stories like, “Oh, wow, this money would have been really useful 20/30 years ago, or even a portion of it.” I think the key takeaway is, again, it goes back to that planning process.
I think that really just sitting down and being like, “Hey, you know what? I do want to spend money while I’m alive on those that I love and my charities.” Then, okay, now we have something to work with, what does that look like? Then we can plan around those things. But if your inheritance plan is just to spend as little as possible and then just let it fall off at the end, I think the idea is that it’s backwards, the approach.
Yeah. He talks about how timing is everything. I think this was one of the parts of the book that while looking at things analytically and quantitatively, it’s tough and challenging, like you mentioned, he says the most common age that people receive an inheritance is 60 years old. Yet, I think he says 30 is the peak utility age to get maximum enjoyment out of that money. Then when someone’s 60, they’re just not able to get the same amount out that now.
What that would mean is what he’s saying is that give the money when it has the most impact, that’s obviously younger than when someone does. Now you’re in that challenge of going back to that mindset of, “Okay, if I give my money now, am I going to run out of it or am I going to need it back again when I’m 60, 70, 80 years old?” I think it sounds great, but it’s probably challenging to work out. Maybe that’s what it is.
Maybe it is a plan and look at it from that perspective and into the minute details of how best to, if that’s what someone wants to do, give away their money while someone can have maximum enjoyment out of it, it’s probably just going through the real details to make sure that there is enough for you and you can give away enough to get that maximum enjoyment out of it. It’s definitely challenging to do.
Now, moving on to Kyra. Perkins then goes more into the details… How should someone time-bucket their life?
How to Time-Bucket Your Life
“Time Buckets” are a tool for discovering what you want your life to look like.
Step 1: 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.
Step 2: Then think about what key experiences – activities or events – you definitely want to have during your lifetime. Write them down in a list.
Of course, you can’t know right now everything you’ll ever want to do, because new experiences and new people you meet tend to reveal unexpected additional interests. But you can revisit this exercise throughout your life.
Here are examples:
- Have a child
- Run the Boston marathon
- Hike the Himalayas
- Build a house
- File a patent
- Dine at a Michelin-star restaurant
- Attend the Super Bowl
- Take a cruise to Alaska
- Read 1,000 books
As you’re making your list, don’t worry about money. Because at this point, money is just a distraction from the overall goal, which is to envision what you want your life to be like.
Step 3: Start to drop each of your hoped-for pursuits into the specific time buckets, based on when you’d ideally have each experience.
The point of doing this exercise is this: Today’s the day to start actively and consciously thinking and planning for your years ahead.
Time buckets are a much more proactive approach to creating a Bucket List because, in effect, you’re looking ahead over several coming decades of your life and trying to plan out all the various activities, events and experiences you’d like to have. The more traditional Bucket List is usually put together by an older individual who, when confronted with their mortality, begins to scratch out a list of activities and pursuits they not only haven’t done yet but now feel compelled to do quickly, before time runs out.
Then the next chapter, “Know Your Peak,” talks a little bit more about how to make sure that you don’t miss the opportunity to spend your money while you still have time on your side, if you want me to hop into that.
Before you do that, I wanted to say that the time bucket chapter was my favorite chapter in the book. I love the approach that he takes because, like you said, a bucket list is usually created too late. I believe everyone should begin planning for their goals much earlier.
Now let’s move on to how to know your peak.
How to “Know Your Peak”
A person’s net worth changes throughout their lifetime, usually (slowly but surely) trending upward. Your peak is that one special point in your life when your net worth is the highest it will ever be.
Why should there be a peak? Because from the author’s perspective, the overarching goal everyone should have is to maximize their lifetime fulfillment – to convert your life energy to as many experience points as you can… your goal is to die with zero.
To determine your peak, remember that enjoying experiences requires a combination of money, free time and health. You need all three – money alone is never enough.
For example, 2.5 million does buy you a better quality of life than $2 million, all other things equal. But all other things are usually not equal! That’s because for every additional day you spend working, you sacrifice an equivalent amount of free time, and during that time your health gradually declines, too.
For most people, the optimal net worth peak occurs at some point between the ages of 45-60.
For most people, waiting until they are past this age range causes suboptimal fulfillment results, because they end up dying with more than zero, running out of time in which to have many fulfilling experiences.
In conclusion, in order to get the most out of your money and your life, you must deliberately determine the date of your peak.
Yeah. In the book, Perkins says that a third of all people’s net worth continues to increase over time as they retire. We see that a lot when we’re running projections or scenarios for clients – their net worth slopes upwards in retirement.
The other thing I took away from this chapter was, “No one’s ever on their deathbed and says, ‘Wow, I really wish I would’ve worked more in the office.'”
A takeaway for me is that I think people should approach the concept of retirement differently. We’re conditioned to stop at a certain age, sometimes it’s around social security, sometimes it’s just based on a stigma. But during the COVID pandemic we saw a slight shift, and a lot of people were retiring early. We’ll see if that trend continues.
Before we conclude the show, I want to get everyone’s opinion on the book as a whole. Kayla, I’ll start with you. What are your overall thoughts on the book? Do you find it to be applicable?
Yeah, I liked it overall. I like the message that you don’t need to wait until you retire, you should start enjoying things now. While it’s certainly not applicable to everybody, because not everyone has the net worth to be able to do it, it’s interesting to think about – especially for me, being so far out from retirement. So yeah, I did like it.
Okay. John, what about you?
Because this is what we do, I tried to take my advisor hat off when I was reading the book. Because as advisors, we want to protect our clients and make the right decisions for them. So we don’t plan for our clients to have $0 by the time they die, of course. So it’s a tough proposition.
With that said, I think there are some great exercises in this book that can push you in the direction of dying with zero – which can be important for people who find it challenging to get into that frame of mind. It’s really important to ask yourself:
- What are the things that are important to you?
- What do you want to do before you die?
- What experiences do you want to have?
And then getting the answers to those questions into an individual’s plan. That way, going back to what Kyra was talking about, we can make sure the person has the free time, health and money to achieve their goals.
I think that that’s a really important lesson.
Yeah. Kyra, what was your take?
I think this was an exciting way to think about retirement. At my age, retirement sounds scary. It’s like the elephant in the room. But thinking about all the experiences and activities that you can look forward to is exciting. I think one of my biggest takeaways from this book was the true value of having experiences.
Yeah, I agree. I think the concept is great. The other thing that I love is that it gets you to start thinking about retirement now, not when you’re five years out. The planner in me likes the approach, but I do think this will take a lot of planning.
Well, that just about wraps up today’s episode. Thanks John, Kyra and Kayla. And thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review of the show. We are currently accepting new clients, if you’d like to schedule a 1-on-1 consultation with our advisors, please do so below.