Should you aim to ‘Die With Zero'?

For decades, the financial advice most of us have heard has been fairly consistent. Work hard, save diligently, aim to pay off your mortgage as soon as possible, build a decent pension and leave something behind for your loved ones.

But what if this isn’t actually the best way to live?

That's the question asked by entrepreneur Bill Perkins in his best-selling book Die With Zero. 

A challenge to traditional retirement planning

Perkins’ argument is simple. If you die with a large pile of money sitting untouched, you've effectively spent years working for wealth you never used. 

Perkins says that instead of focusing on building wealth for the future, we should aim to spend it while we're alive. The idea is to invest in memorable experiences rather than accumulating enough to leave some behind.

The ideas behind the philosophy

In his book, Perkins offers several frameworks to help readers think about when to save and when to spend. 

• Time-bucketing - planning experiences for different stages of life, recognising that some adventures are best enjoyed while you're young and healthy. 
• Memory dividends - the idea that experiences continue to pay emotional rewards long after they've happened, as you relive and share those memories. 
• The net worth curve - the idea that wealth should rise during working years before gradually being spent in retirement, rather than endlessly accumulating. 
• The fulfilment curve - weighing up whether spending money on an experience now will bring more happiness than delaying it until later, when your health, energy or interests may have changed.

A tempting idea - or a terrifying one?

The idea of dying with nothing left in the bank might sound either liberating or terrifying. 

Either way, Perkins’ philosophy has found plenty of supporters. Particularly among people reassessing their priorities after the COVID-19 pandemic. 

For those in their 50s, 60s and beyond, it also raises some challenging questions. 

• How do you balance enjoying life now with making sure you don't outlive your savings? 
• Is leaving an inheritance still important? 
• Can anyone really know how much money they'll need in later life?

It’s not about spending recklessly

The idea behind Die With Zero isn't about reckless spending or running up debt. Perkins argues that money’s simply a tool for creating fulfilling experiences. Once your essential needs are covered, the purpose of wealth should be to improve your life.

I found myself nodding along to much of Perkins' argument. Without realising it, I've often made decisions that fit his philosophy. 

In my early forties, I moved to Australia to live with a man I'd met on holiday. It wasn't the most sensible financial option. Sydney is even more expensive than London and I was paying for a home in each. I ended up staying for two years before returning to the UK single, with no regrets.

More recently, I spent six weeks walking 1,000km on the Camino Via de la Plata, from Seville to Santiago. Right now, at 52, I’m still fit and healthy enough for a self-supported 1,000km walk. But will that still be the case in 20 years’ time? 

Thinking about healthspan, not just lifespan

Die with Zero also encourages people to think about time in a different way. Many of us spend our working lives assuming retirement will provide unlimited freedom. But good health is never guaranteed. According to Perkins, people should think about their ‘healthspan’ as well as their lifespan. By that, he means making the most of the years when they have both financial resources and physical ability.

Adventurous holidays, physical hobbies or long-haul travel might be doable in your 50s, 60s and 70s, but not so practical in your 80s. 

All this prompts a difficult mental shift for a generation of savers.

What about leaving an inheritance?

Another issue raised in Die With Zero is attitudes towards leaving an inheritance. Perkins argues that if parents want to help their children financially, it's often more useful to do so while they're alive. As opposed to leaving them money decades later.

Many families are already adopting this approach and helping younger generations onto the property ladder or with education costs.

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The biggest danger: running out of money

The biggest risk of the Die With Zero philosophy is obvious.

None of us know how long we'll live - or what’s ahead. So spending our cash too soon could mean running out of money in retirement.

A healthy 65-year-old today could spend 30 years in retirement. Medical advances mean many people are living well into their 90s, while inflation continues to push up the cost of everyday living.

Planning to spend almost everything assumes you'll accurately predict both your lifespan and future spending needs - which is impossible.

Unexpected events can change financial circumstances. Markets fluctuate, pensions may not stretch as far as expected and care costs can be substantial. If you've spent too much in your 60s, rebuilding your finances in your 80s may not be an option.

Questions worth asking

Whether or not you embrace the philosophy of dying with zero, it raises useful questions for anyone approaching or enjoying retirement.

• Are you postponing experiences because you're worried about spending, even though your finances are healthy?
• Have you built up savings without a clear plan for using them?
• Would your children benefit more from modest financial help now than an inheritance much later?
• Are your financial decisions helping you live the life you want today as well as protecting tomorrow?

Getting the balance right

The title Die With Zero is intentionally provocative, but I don't think it should be taken literally. Few people should aim to spend every last penny, given the uncertainty over how long they'll live and what future care or living costs might arise. 

Yet Perkins makes a persuasive point when he says: "Most people don't run out of money. They run out of time to spend it on their lives." The real lesson isn't to die broke, but to strike a better balance between saving for tomorrow and making the most of today.

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Emma Lunn is a multi-award winning Freelance Journalist. She’s written about personal finance for 20 years, with a career spanning several recessions and their consequences. Her work has appeared in The Guardian, The Telegraph and MoneyWeek. Emma enjoys helping people learn to manage their money well, in both the short and long term.