How Practical is 'Die With Zero' as a Retirement Savings Strategy?

By Chika


Last Updated: August 8, 2022


The modus operandi of the developed society has been to work hard, save our money and retire at the age of 65.

Vacations are used as short-term rewards for working hard while we await a blissful retirement. 

As such, we roll up our sleeves and dig deep into the trenches of the capitalist mode of work, hoping to get ahead of the rat race. This is why most people spend the most productive years of their life working for and accumulating money to spend in retirement.

The irony of living in the rat race is that you are never in the present, but always living in the future, overlooking the pleasures of the present as you chase a 'better tomorrow'. The reality is while you look past the present chasing an ever-elusive future, time quietly steals up on you, and passes on. 

The result? You are old and retired before you realize that you did not optimize your life. For those that have accumulated wealth, they may be confronted with the problem of 'Brewster's Millions': not being able to spend their fortune before they die. 

'Die with Zero' takes a contrasting view to the prevailing 'work, save and retire' thought pattern of modern-day society. It is hinged on the assumption that money should be used as a vehicle to enhance your life experiences, and not as a backup plan for an uncertain future.

But is it a practicable retirement strategy? 



What is Die with Zero?

Die with Zero is a phrase coined by Bill Perkins in his book authored by the same title.

The core of this idea revolves around not wasting much time working to accumulate resources you'll never use. For Perkins, a high-stakes poker player, and former hedge fund manager, the most important thing in life is how to optimize your time because once spent, you can't get time back.

It is possible to regain money lost, but you can never recapture time.

Money not used reflects a life experience lost. For example, if you die with $1 million in your account, that is $1 million worth of life experiences you didn't get. The same goes if the money was $100,000, $10,000, or $1000. 

Perkins proposes that once you have saved up enough to fund your retirement and leave an inheritance for your children and contribute to charity, your focus should shift to getting memorable life experiences, rather than clocking in longer hours.

Experiences keep on giving in the form of fulfillment from your memories. Over time, the ongoing memory dividend can sometimes add up to more experience points than the original experience provided.

This is a differing viewpoint from delaying gratification but borrows a leaf from the teachings of Stoics like Seneca who argued that time should be treated as a commodity because of its non-renewability. As such while preparing for retirement, it is expedient to use your money to enjoy the present. 



How 'Die with Zero' Works

So how does one calculate the amount of money needed to die with zero amount in your bank account? 

First, you have to estimate how many years you hope to live (which is not easy). Try using the average life expectancy of your country or area to estimate how many years you expect to live. 

Then your current living costs. This allows you to form a baseline of how much you need to save to maintain your standard of living or something close to it. This should be calculated annually and may include other costs like repairs and renovations, relocation, or travel costs. 

Thirdly, because inflation erodes the purchasing power of the dollar, you make adjustments for inflation in your calculations to reflect the true value of your savings needed, not nominal value. 

Hence from this, Perkins believed we can calculate how much we would need by using this: 

0.7 x annual living costs x amount of years left to live. 


Let's Calculate

Using data from the Bureau of Labor Statistics, average household expenditures in the United States is $61,334, while the average annual income is $74,949. This means Americans spend 82% of their income after taxes. Life expectancy in the United States is currently at 79.05 years.

Using this data we can estimate that the average 32-year-old American would need:

0.7 x $61,334 x 47.05 = $2,020,035.29 



Why Die with Zero is a Good Retirement Strategy

Many individuals think that to live well in retirement, they need a sizable sum of money. However, they discover after retiring that they can no longer take enjoyment in life. As a result, the objective of working hard to enjoy a happy retirement is unsuccessful.

44 percent of Americans say they would work for companionship and networking, and 64 percent say they want to continue working after retirement. This implies that money may fill the void left by people. Humans have an urge to interact with one another and partake in our favorite activities.

Before you reach retirement age, you can correct these memories by dying with zero. The main advantage of this is that, by the time you retire, you would have lived a fulfilled life with no regrets which would make your retirement more blissful.



Why Die with Zero may not be a Good Retirement Strategy

While there are benefits with Die with Zero, because it tends to look at life in its totality and not just for monetary values, it also has some disadvantages. 

Given the current state of the economy, Perkin's estimation may not be achievable. From our example above, the average American needs to save roughly $2 million to be able to fund this lifestyle.

This is aside from leaving an inheritance and charity donations. Given that the average savings of a 32-year-old American is $11,250, this means such a person would have to save for almost 180 years to save such an amount. 

Let's say the average American decides to invest all their savings to retire 10 years earlier (at 55) savings.

The S&P 500's historic annual returns have come in at around 10.5% annually. With an initial annual saving of 11,250, compounded by 23 years, (55-32), this would amount to $1,069,025.07, far below the target of roughly $2 million using the 'Die with Zero' calculation.

As such, dying with zero may not be a practicable retirement strategy. 



Key Takeaway

Your life is a sum of life experiences, not monetary accumulations.

Your life is shaped by your experiences. There is a saying: A traveler is wiser than an old man. This is because the traveler has accumulated experiences and memories from his journey, while the old man just lived his years. 

Money can be made or lost, but memories can never be extinguished. Once you're in the habit of working for money to live, the thrill of making money exceeds the thrill of actually living. The memories you accumulate determine how well your life was lived.

While you should not substitute experiences for the money trail, you should consider the fact that dying with zero may not be a practical retirement strategy for you. You don't have to overexert yourself to save to retire early or overindulge, so optimize your experiences in life. 

Rather, the key thing is making as much as you can from life with as little as you can afford. You have to find a balance between capturing experiences and meeting your daily needs based on your income. Or as Seneca says: 'don't waste your time preparing for life', or should we say retirement. 

Photo by Greta Hoffman


Leave a Reply

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


Subscribe for daily financial content

Daily articles, financial messages and affirmations to best help you navigate your financial future.