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Why (and How) I Plan to Die With an Empty Bank Account

BNN Boomberg | Opinion - Farnoosh Torabi | Oct 3, 2020

bill perksin die with zero book - Why (and How) I Plan to Die With an Empty Bank Account(Bloomberg Opinion) -- If 2020 has taught us anything it’s that life is uncertain. Through this lens, I’ve started to abandon some conservative personal finance principles. This summer, for example, I went against the adage of “staying the course” with retirement and stuck my hand in my IRA to shed some stocks. I also bought a house in what can be considered a risky environment. To date, I have no regrets.

In my latest move away from what many financial experts preach, I’ve forgone the aspiration of leaving a financial legacy. The concept of bequeathing an inheritance just seems to make less sense today. Instead, I want to experience my legacy by spending most, if not all, of my money on meaningful experiences and investing in the people and causes I believe in — all before I leave Earth.

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This financial philosophy has grown increasingly popular with the ultra-wealthy. Laurene Powell Jobs, who inherited over $20 billion from her late husband, Apple co-founder Steve Jobs, vows to give away all her assets during her living years, contributing to social and economic causes that need financial support. Before that, Sting, Bill Gates and Warren Buffett all pledged to not leave their children much, if any, inheritance.

“With each year that passes … our ability to convert dollars into positive life experiences declines over time,” Perkins tells me. The “optimal utility of money,” as he calls it, is using money to have the maximum greatest experiences you can in your living years. It’s important because experiences are what actually drive fulfillment and happiness. “I’m more about saving your life than saving your money,” he says.

Of course, the challenge with this approach is to not die with less than zero, leaving debt behind for someone else. The philosophy doesn’t give my husband and me permission to overspend. Instead, it forces us to practice restraint and deliberation as we choose how to allocate our money while we’re alive.

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Nail down “enough.” Yes, we still need to save for retirement, but primarily with only our personal needs (and the needs of any remaining dependents) in mind. Instead of accumulating for its own sake, we’re determined to have a specific monetary goal.

In his book, Perkins, who first made his fortune in finance, calls this your personal “survival number.” It’s the amount you need to support yourself with regards to health, shelter and food when you no longer have much income.

Survival Number, Optimize Spending

Your survival number is more bare-bones than the standard retirement savings recommendation of needing between eight and ten times your salary or living off of 80% of your pre-retirement income. Maybe that figure can be closer to 40% or 50%, especially if you downsize earlier or live in a more affordable place.

Optimize spending. After determining what’s “enough,” Perkins advises mapping out the expenses and experiences that are critical to your fulfillment and the impact you want to have on the world. For us, that’s putting money toward supporting our kids’ education and well-being, traveling and giving back.

Before aiming to die with zero, I wanted my family to be able to spend an entire month each summer living in a foreign country. Now, this dream looks all the more worthwhile as the type of enriching experience I value. And, depending on what happens with travel post-Covid, it can be more achievable, since I won’t be putting it off just to have a bit more saved for retirement.

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The idea of leaving non-profits money in our will also feels a bit detrimental to the causes we want to support. Why not give sooner if we can? To that end, I’ve automated some of my giving plans similar to how we contribute for retirement.

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