Die with Zero

Advice books often annoy me, and one about finances seemed to have even higher potential to annoy me. But I had seen this book referenced in multiple places and so I was curious enough.

Overall, it's a fine read. There are points where I plainly disagree with the author, occasionally unstated assumptions enter the text, and there is the usual helping of dubious science here and there. But overall it was not too bad and I was able to read the book, take away the insights that work for me, and just ignore the rest.

This book got me to think about retirement in a new way, both in saving for it and not saving for it.

The book's premise is, as the title says, that you should aim to die with exactly zero dollars in assets. It is an intentionally goading goal, inviting the reader to argue "but what about..." and then addresses the concerns.

My takeaways are:

1. Experiences are more valuable than things.

I'll accept that axiomatically.

1. Earlier Experiences Are More Valuable

One of the ideas that Thinking Fast And Slow presents is that our "remembering self" is much more important than our "experiencing self." This book applies that concept to when you experience something. If you take a big trip when you are 30 and you live to 90, you'll spend 60 years enjoying the memories. On the other hand, if you wait until you are 70 and have retired, you'll only have 20 years to enjoy those memories.

From a value standpoint, you get 40 extra years of value from the earlier trip's memories. So it's better to take the trip now.

1. Our World Shrinks As We Get Older

Many of us have the idea that, once we retire, we can finally get around to taking all those trips we want. The problem is that our bodies aren't as ready to move by then and, the book posits, we're more likely to want to stay in our familiar comfort zones. The big trip may not even be an option when we retire, and if it is it might be the option we don't choose.

Those 3 points combine to say we should be enjoying more of our money sooner in life. Treat yo self.

1. Give Inheritance When Your Descendants Are Around 30

Perkins argues that one of the big pushbacks he gets is giving an inheritance. He opened my eyes is that the average recipient of an inheritance is around 65. Imagine an inheritance of $250,000 at 65. That's huge and great, but is it literally life-changing? That works out to maybe $10,000/year of retirement income - great but still mostly the same.

Now if that inheritance had been given at 30, it would be a lot smaller. Maybe $25,000? But that $25,000 is a down payment on a house, which is life changing. Or paying off student loans. An early, smaller inheritance is much more meaningful. It also ties into point 2, in that you get to see the value of your gift for years to come.

1. Insurance Eases "But I Don't Know When I'll Die"

The other big pushback he highlights is that someone can't aim to die with zero because they need to save money for healthcare, especially if they need full-time nursing. Perkins points to annuities (you pay a lump sum and get a monthly payment for as long as you live) and long term care insurance. By buying those, you shift the risk to the insurance company.

These financial instruments made it seem like dying with zero is actually possible. Not using insurance for these is self-insuring, which is notoriously expensive.

That's my take on the main points of the book, however there were a lot of bits in between that gave me pause.

Reading this in my 40's, it's frustrating to spend so many pages on "if you don't live life to your fullest in your 20's you will have thrown your life." I paraphrase, but I don't want to hear how much I missed out on. I may just not be the intended audience.

The focus on early experiences may be fine for readers on the younger side of midlife, but also seems to forget how little money people in their 20's often have. On top of that, I recall Perkins saying that young adults should not save for the future because they can do that later. I think it's very much rose colored glasses about how one's 20's are, especially trying to establish a career. I want to point to the airplane diagram for survivor bias, in that the author may have had more luck than most.

Going back to the intended audience, I don't really think anyone wants to hear about the time an investment banker rented a tropical island for a private concert with Natalie Merchant. I get the point that he was trying to make that we should spend until it hurts to enjoy things, but that is so beyond the means of so many people that I can't believe this was used to relate a lesson.

The book contains a valuable mix of financial advice and philosophy on life, but it comes mixed with alienating content from an investment banker.

I'm not a fast reader, but how the author presented the topic really resonated with me and I blew through it in 4 days.

The book says this - Life is short. Don't "over-index" on investing and saving for your future self. Invest your money in getting memorable experiences (whatever is important to you - parasailing, spending time with your kid/parent, or throwing a lavish party with your loved ones).

I like the concept of giving away money to your loved things (kids, charity or whatever your love) and dying with the bare minimum thing in your savings account. In principle, this is a good take - live life fully with zest and don't succumb to your work or habits. I also understand this comes only from a place of privilege (social, economic and emotional status). But still, this advice is good.

But I'm not too fond of all the things about metrics like emotional dividends, index on what is essential and other numbers.