Die with Zero – Book Notes

Olivier Chabot|July 16, 2023|Advice To Myself, Book Notes, Health, Learning, Money, Notes, Psychology

Reading Time: 25 minutes

Die with Zero: Getting All You Can from Your Money and Your Life by Bill Perkins
My rating: 5 of 5 stars

This book is for people who make more money than the bare minimum. It’s also a great counterargument to the extreme delayed gratification financial advice.

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Buy The Book!

People are more afraid of running out of money than wasting their life, and that’s got to switch.
BILL PERKINS – DIE WITH ZERO

TLDR – Main Takeaways

Optimizing fulfillment over a lifetime is the goal. We want to maximize the area under the entire curve. Not just for retirement. It takes hard work and planning. It’s easy to get lost in work and forget that money is supposed to increase our ability to enjoy life.
Certain things can only be experienced at certain stages of your life. It makes sense to borrow from your future, likely wealthier, self. It doesn’t make much sense to save too aggressively when you’re young and broke. The 10% rule and the pay yourself first principles might be overly simplistic. According to his app, I should be spending roughly 15K per year on experiences right now.
- “Each age tends to have a different balance of health, money, and free time. Because fulfillment requires reasonable amounts of all three, it’s a good idea at every age to trade an abundance of one (such as money) to attain more of the other two (such as buying more health or free time).”
Your ability to squeeze the juice of life is contingent on your health. Investing in your long-term health has one of the highest returns on investment when it comes to experience points.
Given my Time Bucket exercise, it’s likely going to be very cheap to be an old man. An intentional effort is going to be required to spend my money from my fifties through my seventies.
I’m at a high risk of saving way too much.
- Ontario Teacher’s Pension Plan, Canada Pension Plan, Old age security, TFSA & RRSP
- “Retirees on a pension—meaning that they had a guaranteed source of ongoing income after retirement—spent down much less of their assets (only 4 percent) during the first 18 years after retirement than did non-pensioners (who had spent down 34 percent).”
Distribute your inheritance while the people you care about need it (25-35 age range). Donate now instead of waiting till you’re dead, so they reap the return on investment.
- Three Random R’s: Random amount of money. Random people. Random time.
You are the worst insurance broker. Trying to save for just in case disasters is a bad idea. That’s what insurance companies are for.
- Buy life insurance for mortality risk.
- Buy annuities for longevity risk.
Stringing positive experiences one after another doesn’t guarantee fulfillment. Invest in experiences with people you love. Perform an 80/20 analysis of your calendar on a yearly basis.

Book Notes

Rule No. 1: Maximize your positive life experiences.

Living as if your life were infinite is the opposite of taking the long view: It’s terribly shortsighted.
BILL PERKINS – DIE WITH ZERO

The time-sensitivity of experiences

“For example, some experiences can be enjoyed only at certain times…”
- “So to increase your overall lifetime fulfillment, it’s important to have each experience at the right age.”
- Time Buckets: Notion Template

The 10% Rule is broken

“So why should I save this random percentage of my modest income for the future? I should enjoy that measly $1,000 right now!”
“we need to basically transfer money from years of abundance into the leaner years. That’s one use of savings accounts. But in my case, I had been using my savings account totally backwards—I was taking money away from my starving younger self to give to my future wealthier self!”
Die with zero: Spend Curve App to crunch the numbers.
“But this book focuses on managing what is under your control through the decisions you make—so realize that a few factors are in your control, and one of the biggest is how much time at each age you devote to earning money versus having enjoyable experiences.”

Rule No. 2: Invest in experiences early.

Memory dividends

“Unlike material possessions, which seem exciting at the beginning but then often depreciate quickly, experiences actually gain in value over time: They pay what I call a memory dividend…”
“That was when I realized that you retire on your memories. When you’re too frail to do much of anything else, you can still look back on the life you’ve lived and experience immense pride, joy, and the bittersweet feeling of nostalgia.”
“So every time you remember the original experience, you get an additional experience from mentally and emotionally reliving the original experience. The recollection may bring you just a tiny fraction of the enjoyment that the original experience did, but those memories add up to make you who you are.”
“The memory dividend is so powerful and valuable that tech companies are monetizing it and creating billions in wealth. Anyone who’s used Facebook or Google Photos has seen the occasional “On this day 3 years ago” message, with accompanying photos from that day. Through this feature, the companies tap into your memory dividend, sparking good feelings and a desire to reach out to those included in the photos.”
“Before Facebook and the like, it used to be our friends and family who’d spark the “remember when” conversation—but now FB plays that role and cashes in financially on that all-important memory dividend.”
“Some of these memories, upon repeat reflection, may actually bring more enjoyment than the original experience itself.”
“So buying an experience doesn’t just buy you the experience itself—it also buys you the sum of all the dividends that experience will bring for the rest of your life.”
“Like so many people who invest in real estate, Paulie was thinking only about return on equity—not about return on experience.”
“Since the whole point of money is to have experiences, investing money to get a return with which to have experiences is a roundabout way of having experiences. Why go through all that when you can just invest directly in experiences—and get a return on experiences? Not only that, but the number of actual experiences available to you diminishes as you age. Yes, you need money to survive in retirement, but the main thing you’ll be retiring on will be your memories—so make sure you invest enough in those.”
“Once you start thinking about the memory dividend, something becomes really clear: It pays to invest early.”
“Think about how you can actively enhance your memory dividends. Would it help you to take more photos of your experiences? To plan reunions with people you’ve shared good times with in the past? Compile a video or a photo album?”
- We could start playing a slideshow of our albums on Google photos on a digital frame in our apartment.

Rule No. 3: Aim to die with zero.

Once you’re in the habit of working for money to live, the thrill of making money exceeds the thrill of actually living.
Bill Perkins – DIE WITH ZERO

“Now, the vast majority of people can only dream of retiring by the relatively young age of 38—yet for John, that retirement age was actually a few years too late. Why? Two reasons. First, he’ll never get those years back that he spent just focusing on making money. He’ll never be 30 again, and his children will never again be babies. Second, he made so much money that he now faces the Brewster’s Millions problem: It’s actually hard to spend his fortune fast enough. He already lives in a magnificent house and these days does pretty much what he wants. One reason he can’t use up his money is his kids: Much as he’d enjoy having the über-popular pop band Maroon 5 play private concerts in his backyard every Saturday, for example, he doesn’t do anything of the sort, because he doesn’t want to spoil his children.”
“But no matter who you are—a captain of industry or an everyday working stiff—one thing is true: 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.”
“So a rational person, in Modigliani’s view, will spread their wealth across all the years up to the oldest age to which they might live. Some people do try to live in this rational, utility-maximizing way, but many do not. Either they save too much or they save too little. Optimizing across your whole life takes a lot of thought and planning; it’s easier to live for short-term rewards (myopia) and to stay on autopilot (inertia) than to do what will be good for you in the long term.”

Saving too much

“And I’m not saying you shouldn’t save for the future. What I’m saying is that people who save tend to save too much for too late in their lives. They are depriving themselves now just to care for a much, much older future self—a future self that may never live long enough to enjoy that money.”
“If you look at data on net worth by age, you find that most people keep accumulating wealth for decades, and most don’t start spending it down until very late in life.”
“Americans’ median net worth keeps rising at least until their mid-seventies.”
“That’s crazy—people in their seventies are still saving for the future! In fact, even in their mid-seventies, people in this upper half of the population don’t start dipping into their savings.”
“People’s overall expenses decline with age, even counting the cost of healthcare.”
“On the whole, people are very slow to spend down (“decumulate”) their assets. Across ages, whether looking at retirees in their sixties or those in their nineties, the median ratio of household spending to household income hovers around 1:1. This means that people’s spending continues to closely track their income—so as people’s incomes decline, their spending does, too. This is another way of seeing that retirees aren’t really drawing down all the money they’ve saved up.”
“At the high end, retirees who had $500,000 or more right before retirement had spent down a median of only 11.8 percent of that money 20 years later or by the time they died. That’s more than 88 percent left over—which means that a person retiring at 65 with half a million dollars still has more than $440,000 left at age 85!”
“At the lower end, retirees with less than $200,000 saved up for retirement spent a higher percentage (as you might expect, since they had less to spend overall)—but even this group’s median members had spent down only one-quarter of their assets 18 years after retirement.”
“One-third of all retirees actually increased their assets after retirement! Instead of slowly or quickly decumulating, they continued to accumulate wealth.”
“Retirees on a pension—meaning that they had a guaranteed source of ongoing income after retirement—spent down much less of their assets (only 4 percent) during the first 18 years after retirement than did non-pensioners (who had spent down 34 percent).”
“Pensioners could dip more deeply into their savings than anyone, since their guaranteed income for life assures them they will never starve. But, interestingly, pensioners spend down the lowest percentage of their wealth, probably because, as the data shows, that they had more wealth to begin with.”

The source of money

“The source of your money doesn’t change the calculus on maximizing your life.”
“Once it’s given to you it becomes yours. And once it’s yours, it now represents hours of your life, which you can exchange for whatever will help you live the best life you can.”

But I like my work!

“Because even if you enjoyed every minute of the work that brought you that money, failing to spend that money is still a waste.”

The diminishing value of money as you age

“So I gave her a $10,000 check. It feels like a dumb gift now, and if I knew then what I know now, I would have given her an actual memorable experience instead, such as a trip to visit relatives in another state. But back then, I was of the mind that people know best what to give themselves. I would have wanted someone to just give me the money, so that’s exactly what I did for my grandma.”

Rule No. 4: Use all available tools to help you die with zero.

Make “maximize total life enjoyment” your mantra, using it to guide every decision—including what to focus on with your financial adviser.
BILL PERKINS – DIE WITH ZERO

Annuities & Life Insurance

“The possibility that you will live longer than you expect is called longevity risk. Nobody wants to die early—the possibility of that is called mortality risk—but nobody wants to die after their money runs out either.”
Probability distribution: https://www.longevityillustrator.org/
Detailed questionnaire: https://www.livingto100.com
Bucket list timer: https://finalcountdownapp.com/
“So that’s life insurance—it helps you deal with mortality risk, and 60 percent of Americans own at least some life insurance.”
“These products are called income annuities (or simply annuities). 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).”
“Well, buying an annuity means you give the insurance company a lump sum—say, $500,000 at age 60—and in return you get a guaranteed monthly payout (for example, $2,400 each month) for the rest of your life, however long that happens to be.”
“For example, one popular rule of thumb for retirement spending is the “4 percent rule,” whereby you withdraw 4 percent from your savings each year of retirement. Well, with annuities, your annual payouts will probably amount to more than 4 percent of what you put into the annuity—and, unlike the 4 percent withdrawals, those payouts are guaranteed to continue for the rest of your life.”
“In the extreme case—if you die the day after you buy the annuity—you won’t see any more of the money you put in, and it will instead go to monthly payments to the lucky stranger (another annuity buyer) who lives into her nineties.”

You’re the worst insurance broker!

This ability to pool risk across a large number of people is what gives insurance companies their edge over you as an individual. It’s why people are willing to pay money to buy insurance of all kinds, instead of trying to protect themselves from risk on their own. You are not a good insurance agent.
BILL PERKINS – DIE WITH ZERO

“To put it bluntly, no amount of savings available to most people will cover the costliest healthcare you might possibly need. For example, cancer treatments can easily cost half a million dollars a year. Or, if your out-of-pocket medical expenses amount to $50,000 per night (as they did for my father’s hospital stay at the end of his life), does it really matter whether you’ve saved $10,000 or $50,000 or even $250,000? No, it doesn’t, because the extra $50,000 will buy you one extra night, a night that might well have taken you a year’s worth of work to earn!”
“There’s a more general point I want to get across: For every single thing you might be worried about in your future, there is an insurance product to protect you. That doesn’t mean I recommend buying insurance for every single thing; obviously, insurance costs money. But the fact that insurance companies are willing to sell insurance for various risks shows that these risks can be quantified—and removed for those who don’t want to take those risks.”
“Without an annuity, on the other hand, you are forced to self-insure—to be your own insurance agent. That’s not a great idea, because unlike the insurance agents who work for big insurance companies, you don’t have the ability to pool risk and cancel out errors on both sides. So, to feel financially secure until the end of your days, you will have to leave a large cushion to cover the worst-case scenario: You will have to oversave, which means that more likely than not you will end up dying with considerable money left over. You’ll have worked for years earning money that you never got to enjoy.”

Rule No. 5: Give money to your children or to charity when it has the most impact.

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 – DIE WITH ZERO

Inheritances

“Give your children whatever you have allocated for them before you die. Why wait until you’re gone?”
“What would you guess is the most common age for people to get an inheritance? Well, people at the Federal Reserve Board track such things, and here’s what they find: For any income group you look at, the age of “inheritance receipt” peaks at around 60.”
“I call it the three Rs—giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?).”
“The vast majority—between 80 and 90 percent, depending on the year—of households that received some type of wealth transfer in the years 1989 through 2007 received an inheritance. (I’d prefer the percentage to be zero, but realistically I would be happy to see it at 20 percent, since some people die early.)”
“The 26-to-35 age range combines the best of all these considerations—old enough to be trusted with money, yet young enough to fully enjoy its benefits.”
“My stepson is older—29—so he’s already received 90 percent of his “inheritance,” in the form of money he used to buy a house.”
“A while ago I realized I had money in my will for people who are older than me—my mom and my sister and my brother. That made me think: What about now? Do I want to give anything now, when they can enjoy those gifts more than later? My answer was yes, so I gave them that amount.”
“If you want to give money to your children and future grandchildren, start to do it now. (For children who are currently too young, set up a trust.) As for the rest, spend it on making the best life you possibly can for yourself.””

Working for your kids

“But once you get past the point of just working for basic needs and avoiding negative experiences, you can start to exchange your labor for positive life experiences. As far as your children are concerned, you can either work for more money to buy them experiences or spend your extra free time to give them the experience of time with you.”
“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!”

Donate now!

“But I do know that her delay was inefficient, because her charities certainly could have put the money to use earlier, benefiting many more people sooner.”
“Economists have also tried quantifying the return on investment in education, finding that, worldwide, the social returns to schooling at the secondary and higher education levels are above 10 percent (per year). What other investment can yield such a reliably high rate of return?”
“For example, in 1999, foundations took in more than $90 billion but distributed less than $25 billion. That is why one analysis concludes that “donors should ask not just how, but how soon, their gifts will be used.” I couldn’t agree more.”
“He started giving his money away (anonymously) early, and by the time he was in his eighties he had given away more than $8 billion of his wealth. He had chosen to live frugally, like legal secretary Sylvia Bloom—but unlike Bloom, he didn’t wait until his death for that money to go to charitable causes. He’s now in his eighties, and by choice he and his wife live in a rented apartment. His net worth is now down to about $2 million—still plenty to sustain him for the rest of his life, but a tiny fraction of the money he gave away over the years. Feeney has been an inspiration to many wealthy people, including Bill Gates and Warren Buffett. But you don’t have to be rich to give while living.”
“Through organizations like Save the Children and Compassion International, you can sponsor a child for less than $500 per year, helping the child grow up safe, healthy, and better educated—and starting a positive cycle for future generations.”
“If you don’t have as much money to give away as you’d like, you still probably have time to give.”

Rule No. 6: Don’t live your life on autopilot.

And so you shouldn’t be saving now, you should be borrowing. You should be living today in much the way that you’ll be living in 10 or 15 years, and it’s crazy to actually be scrimping and saving, which is what at least someone like me who was brought up in a middle-class family was taught to do.” Levitt says this was one of the best pieces of financial advice he ever got.
BILL PERKINS – DIE WITH ZERO

Spending-to-saving ratio

The spending-to-saving ratio should be higher when you’re young and old.
“Joe Farrell didn’t just make this advice up. The idea that it’s rational for young people to be freer with their money is shared by many economists, even though it runs counter to the advice most of us grow up hearing.”
“Basically, if there was a more expensive version of something, I’d go for it without thinking about getting the maximum value. In effect, I just went from autopilot-save to autopilot-spend.”
“To my way of thinking, no way can the same ratio of spending to saving be right for everyone—and, more important, no way should your savings percentage be the same when you’re 22 as when you’re 42 or 52.”
“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.”

The ability to enjoy wealth declines with age

“Travel is the ultimate gauge of a person’s ability to extract enjoyment from money, because it takes time, money, and, above all, health.”
“Some researchers asked people of different ages what prevented them from taking a trip. They found that people under age 60 are most constrained by time and money, whereas people 75 and older are most constrained by health problems. In other words, when time and money are no longer a problem, health is.”
“Friends who are around my age agree: At a certain point, your memories of having played football are a lot more pleasant than playing football.”
“That’s a good thing, because the better you’re able to maintain your health during your lifetime, the higher your lifetime fulfillment score will be.”

Each age tends to have a different balance of health, money, and free time. Because fulfillment requires reasonable amounts of all three, it’s a good idea at every age to trade an abundance of one (such as money) to attain more of the other two (such as buying more health or free time).
BILL PERKINS – DIE WITH ZERO

The three-factor model

“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.”

Rule No. 7: Think of your life as distinct seasons.

Many deaths

“Likewise, but for reasons of my own inevitable aging, there will eventually be a last time I ever go wave-running, and a last time I play in a poker tournament, and a last time I’ll be able to board a plane and fly somewhere exotic.”
“That is what I mean when I say that we die many deaths in the course of our lives: The teenager in you dies, the college student in you dies, the single unattached you dies, the version of you that’s a parent of an infant dies, and so on. Once each of these mini-deaths occurs, there’s no going back. Maybe “dies” is a bit harsh, but you get the idea: We all keep moving forward, progressing from one stage or phase of our lives to the next. So much death and doom, I know—but the upside is that we have many lives to live and to enjoy and to maximize!”
- “In fact, if you listen to people tell their stories, most people’s lives are actually lived as a series of two-to-four-year seasons strung together.” – Designing Your Life Book

Regret minimization

“Because of this eventual finality of all of life’s passing phases, you can delay some experiences for only so long before the window of opportunity on these experiences shuts forever.”
“An Australian woman named Bronnie Ware, whose work as a palliative caregiver put her at the bedsides of patients with just weeks left to live, talked with her patients about what they wished they had done differently in their lives, and found five key regrets coming up more often than any others. As she describes in a popular online article and in a subsequent book, the two most common regrets are ones that are most relevant to my message.”
- “Her patients’ number one regret was wishing they’d had the courage to live a life true to themselves—as opposed to the life that others expected of them. … As the old saying goes, “No one ever regrets not having spent more time in the office.” Along those lines, the second regret—and actually the top regret among Ware’s male patients—was this: “I wish I had not worked so hard.””
- “And when people say they regret working so hard, they are not talking about the hard work of raising children; they are talking about working to make a living to pay the bills and, as a result, missing “their children’s youth and their partner’s companionship.””
“Being aware that your time is limited can clearly motivate you to make the most of the time you do have.”
“…it’s also that most people just have the sense that there’s no time urgency near home; they act as if they will always be able to visit that museum or that nearby beach or that friend some other time. As a result, we spend many of our evenings watching TV, and we fritter away our weekends.”

Time Buckets: Notion template

“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. We all have dreams in life, but I have found that it’s extremely helpful to actually write them all down in a list.”
“For example, you might want to have a child, run the Boston Marathon, hike the Himalayas, build a house, file a patent, start a business, volunteer for Doctors Without Borders, dine at a Michelin-star restaurant, attend the Sundance Film Festival, go skiing 50 times, go to the opera, take a cruise to Alaska, read 20 classic novels, attend the Super Bowl, compete in a Scrabble tournament, visit Yellowstone, see autumn in Vermont, take your kids to Disneyland three times, and so on.”
“Then, once you have your list of items, start to drop each of your hoped-for pursuits into the specific buckets, based on when you’d ideally have each experience.”
“Remember, we’ve been focusing only on two key components of your time buckets: your physical health and your life’s dreams. We deliberately pushed financial concerns off to the side, because it’s always too easy to blow off our dreams by simply saying, “Sounds really nice, but let’s face it . . . I can’t afford that.” Focusing on money distracts from the hard truth that time and health are fleeting.”
Now, you might notice as you fill up your time buckets that some experiences are more flexible than others. For example, you can still enjoy visiting libraries, watching classic movies, reading novels, and playing chess well into your old age. Taking a cruise can be enjoyable at just about any age. Still, as you start filling up your time buckets, you’ll probably see that the experiences you want to have in life don’t fall evenly across the ages. Instead, they naturally cluster during certain periods—taking on roughly the shape of the right side of a bell curve (see figure below).
“Experiences Clustered in Your Twenties vs More Traditionally Distributed Around Midlife Without the constraint of money, most of your experiences would optimally occur in your twenties and thirties, when your health is highest. But in reality, most people’s spending is clustered around midlife instead.”
“If you have children, think about your own version of the Heffalump movie: What one experience do you want to have more of with them in the next year or two, before that phase of their life and your life is over?”
- Connects with Tim Ferris’ 80/20 calendar review
“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. One of the most important times to re-bucket your life is when you’re nearing your net worth peak.”
- Add a reminder in Google Calendar that repeats every 10 years to revisit your Time Buckets.

Rule No. 8: Know when to stop growing your wealth.

But a number should not be most people’s main goal. One reason is that, psychologically, no number will ever feel like enough.
BILL PERKINS – DIE WITH ZERO

Financial Independence Number

“Being able to get to work on time, paying everyday bills, taking care of our kids, putting food on the table—these are the essentials in life.”
“The threshold I’m talking about—how much you need to save at a bare minimum—is a number. But as you’ll see in a moment, that number may well be lower than what dutiful savers are already on track to save. That’s because the threshold is based on avoiding the worst-case scenario (that is, running out of money before you die); it’s the amount of money you need to have saved up just to survive without any other income. Once you meet this threshold, you don’t need to work for money—and you can start carefully dipping into your savings.”
“But for everybody, the survival threshold is based on both your annual cost of living and the number of years you expect to live from the present day.”
“The amount of money you’ll need in retirement is often a lot lower than what you’ve been advised to save. For example, if you’ve been told that during each year of retirement you will need 80 percent or more of your annual pre-retirement income, you will probably discover, after looking at the activities you’ve bucketed for your seventies, eighties, and beyond, that these really don’t cost that much—far less than 80 percent of your previous spending. (Recall the research on the no-go years from chapter 3.)”
“Calculate your annual survival cost based on where you plan to live in retirement.”
“Consult your doctor to get a read on your biological age and mortality; get all the objective tests you can afford that give you the status of your current health and eventual decline.”
“Let’s also assume for this example that you are 55 years old and that, having looked at a life expectancy calculator, you expect to live until you’re 80. So your money will have to last you another 25 years (that is, years left to live = 25). How much do you need in your nest egg today to have a survival amount for the rest of your life? Well, to get a very rough answer—not the final answer—you would just multiply your annual cost of survival, the cost to live one year, by the number of years you’ll be spending that amount, years left to live: (cost to live one year) × (years left to live) = $12,000 × 25 = $300,000 Again, this is not the final answer. The real amount you need to save up is actually much lower than $300,000. Why? Because your nest egg doesn’t just sit there while you dip into it year after year. Assuming you’ve invested it in a typical stock/bond portfolio, your money is usually earning interest, working to bring in income even when you are no longer working. Therefore, whatever interest it’s earning above inflation (whether that interest is 2 percent or 5 percent or whatever) is helping to offset the cost of your withdrawals.”
- “Before you start thinking about spending down your money, you must make sure you have enough to live on for the rest of your life. That’s an important caveat, because plenty of people aren’t saving enough for retirement.”
- “Time for another disclaimer: Always bear in mind that even a stock/bond portfolio does not always earn interest above inflation.”
- Project example from my grade 11 math class.

Peak Date

“You should find that one special point in your life when your net worth is the highest it will ever be. I call that point your net worth peak, or just “your peak.””
“Thinking of your peak as a date—and not as a number—is good advice only for people who have reached a certain savings threshold.”
Once you’ve taken care of your worries about mere survival, you can then start thinking about your net worth peak as a date rather than a number.
“Some advisers even take into account the fact that your retirement spending won’t be constant from the start of retirement until its end—thus they tell you that you will need more money at the start of retirement (your go-go years) than when you’re 10 or 20 years in.”
“For most people, the optimal net worth peak occurs at some point between the ages of 45 and 60.”
“Accumulation of Net Worth Traditionally, people continue to increase their net worth until they stop working, and are afraid to dip much into their principal even after retirement. But to make the most of your hard-earned money, you must crack open your nest egg earlier (starting to spend down your savings sometime between 45 and 60 for most people) so that you end, theoretically, with zero.”

Excuses

““What, do you really expect me to quit a job I love just because I’ve hit some magical date?” And my answer is no. If you want to keep working, be my guest. Just be sure to ramp up your spending accordingly so that you don’t end up dying with lots of money left over. That would be a waste no matter how much you enjoyed your job.”
“Look, if all you want is to have a pile of money at the end, well, I guess that’s your choice. But bear in mind that I have never seen somebody’s total net worth posted on their tombstone.”
“How do you know what your tastes are if you really haven’t done much except work and raise kids?”
“Another strategy for squeezing the most experiences out of your early golden years without quitting your job is to cut back on your work hours if you can. If you’re lucky enough to be working for an employer that offers a formal “phased retirement” program, definitely look into it.”

How to spend your money. It’s harder than you might think.

If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending It Right – Dan Gilbert
“The people you share experiences with truly affect the quality of the experience—and nowhere is that more true than at a once-in-a-lifetime event. So I knew that if I wanted to have this kind of unique birthday bash, I was going to have to step up and pay for a lot of my guests to attend.”
“Invest in experiences that yield long-lasting memories, always bear in mind that everyone’s health declines with age, give your money to your children before you die instead of saving for their inheritance, and learn to balance current enjoyment with later gratification.”
“For starters, he and his wife could put their heads together and list their three favorite musical groups. Why not fly out to see them in some destination locale for a weekend? Or he could join TED as a patron member, which costs several hundred thousand dollars and gives you special access to the main TED conference, where he could meet living intellectual legends in many fields. After one trip to TED and talking to these amazing people, he could find 13 different purposes and directions he could go in!”
“Here’s the bottom line: More money doesn’t equal more experience points.”
“Declining Utility of Money with Age Your ability to enjoy experiences depends on both your economic ability (the wealth curve shown here) and your physical ability (the health curve). Continuing to build wealth doesn’t necessarily buy you more experiences, because your declining health limits your enjoyment of certain experiences no matter how much money you have.”
“So, for example, $2.5 million does buy you a better quality of life than $2 million, all other things being 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.”
“In sum, from my perspective, the years you spend earning that extra $500,000 do not make up for (let alone surpass) the number of experience points you lost by working for more money instead of enjoying those five years of free time.”
- Connects with the fisherman story.

Rule No. 9: Take your biggest risks when you have little to lose.