This past weekend I read a great book called "Die With Zero", Bill Perkins presents a radical new philosophy: spend your retirement money to get the most enjoyment while you are still alive to experience it.
Retirement is meant to be the golden years - a time to relax and finally enjoy the fruits of decades of labor. Yet too often, retirees fall into the trap of continuing to pinch pennies and overly restricting spending out of fear of running out of money.
They put off travel plans, skip restaurant meals, and resist splurging on their hobbies. The result is an unfulfilling retirement focused more on frugality than fulfillment.
Die With Zero - Retirement Spending Tips
Here are some tips inspired by "Die With Zero" on how to approach spending in retirement:
- Set a goal for how much you want to have spent by age 80 or 90. Don't just let the balance mindlessly grow.
- Identify your top 5 most meaningful lifetime experiences. Start saving up for them.
- Adopt an abundance rather than scarcity mindset. Don't fight over every dollar.
- Indulge in "small luxuries" that make daily life more enjoyable. You've earned these little treats!
- Consider taking bigger annual withdrawals from your portfolio than the standard 4% rule.
- Focus on enjoying mobility and freedom while your health still allows. Travel widely!
Don't die leaving a large inheritance just for the sake of leaving wealth behind. As Perkins succinctly states: "You can't take it with you. The money is going to somebody else if you don't spend it, so you might as well spend it on yourself."
At first glance, Perkins' approach seems irresponsible or extravagant. But when examined closely, his advice contains financial savvy along with a life-affirming outlook. Perkins doesn't advocate throwing all caution to the wind. Rather, he provides a practical framework on how to strategically spend your retirement savings to optimize enjoyment, memories, and fulfillment.
The Problem of Over-Saving in Retirement
Perkins notes that too many retirees become obsessed with penny-pinching and accumulating wealth. They operate in scarcity mode, afraid to "dip into principal" or touch their nest egg. Perkins calls this financial hoarding.
This over-saving often happens due to fear and uncertainty. Retirees worry about unknown future health care costs. They want to be able to leave an inheritance. Financial planners emphasize conservatism in withdrawals. While preparing for the future makes sense, taken too far it prevents enjoying the present.
Why Retirees Should Strategically Spend More
Instead of endlessly saving, Perkins advocates strategically spending more in retirement. His reasons include:
- You can't take it with you. Dying with millions in the bank is pointless if it wasn't used to enrich your life. You can't enjoy wealth after you're gone.
- Time is limited. Retirement years can pass quickly. It's uncertain how many healthy years you have left. Make the most of the present.
- Joy is precious. Money should serve life, not the other way around. Prioritize delight over dollars.
- Memories last. Spending on experiences creates meaningful, lifelong memories. Accumulating unused wealth does not.
- Your kids will be fine. Your children will make their own way in the world with or without receiving a large inheritance. Don't stint on your enjoyment out of notion they need the money.
How to Strategically Spend More in Retirement
Perkins doesn't advocate throwing all caution to the wind. He recommends a strategic approach to spending more in retirement:
- Live below your means. Don't inflate your lifestyle to unsustainable levels. But don't live bare bones either. Find the happy medium between extravagance and miserliness.
- Maintain an emergency fund. Keep cash on hand for large unexpected expenses in retirement like healthcare. Don't spend literally every last dollar.
- Invest in lifetime memories. Identify life experiences that will create meaningful memories - then save up for them. This could mean taking a dream vacation, learning a new skill, or reconnecting with nature.
- Balance small and big joys. Appreciate daily pleasures like going out for coffee but also budget for major bucket list goals.
- Give back. Consider donating a portion of your retirement funds to causes you care about. Philanthropy also creates meaning.
- Remember what money represents. See your savings as hours of your precious lifetime and limited health. Are you spending it wisely?
- Develop a spending plan. Track your retirement spending and make conscious decisions aligned with your priorities. Don't mindlessly fritter away funds.
- Communicate with heirs. Discuss your "die with zero" mindset with potential heirs so they understand and respect this approach.
Big Ticket Splurges to Consider
Perkins suggests some bigger ticket splurges retirees may want to save up for and strategically spend on, including:
Round the World Cruise
Book an around the world cruise hitting all the destinations on your bucket list. Make it a several month voyage so you can fully immerse in experiences. Cost: $15,000-$30,000+
Luxury RV Road Trip
Buy or rent a decked out RV and travel across the country seeking adventure. Take months to meander through national parks and small towns at your leisure. Cost: $30,000+
Family Reunion Vacation
Gather the whole extended family for a week-long reunion vacation at a beachfront resort or cabin retreat. Build memories while you still can with the youngest generations. Cost: $15,000+
Historical Tour of Europe
Spend a month touring Europe, visiting sites like the Colosseum in Rome, the Eiffel Tower in Paris, and Stonehenge in London. Absorb the history and culture. Cost: $15,000+
Summer House Rental
Rent a beautiful lakeside or beachfront house for the entire summer. Invite friends and family to come stay. Host weekly cookouts under the stars. Cost: $15,000+
As you can see, Perkins doesn't suggest squandering money carelessly. But he does advocate spending strategically on life enriching experiences.
Should You Fully "Die with Zero"?
Perkins' book is called "Die With Zero" - implying you should aim to fully spend your retirement savings by the time you pass away. However, actually downsizing to zero isn't realistic or advisable for most retirees.
While it's wise to loosen the purse strings, you still need to budget for unknown healthcare and housing costs later in retirement. And even Perkins notes completely stripping your estate can cause issues like being disinherited or limiting options for your surviving spouse.
Therefore, a modified approach may be more realistic:
- Aim to die with some assets still intact, but a reduced amount compared to what you started retirement with
- Focus on enjoying your health and freedom while you have it rather than endlessly preserving capital
- Loosen your budget enough to afford enriching experiences and build memories with family/friends
- When evaluating spending decisions, weigh if they will contribute to your fulfillment
The point isn't necessarily to retire broke. It's to retire fulfilled, with great memories that money facilitated. Don't let your savings sit idle purely for the sake of thriftiness.
Bill Perkins' book "Die With Zero" will jolt you out of a scarcity oriented, overly frugal retirement mindset. Yes, you need to budget wisely. But the real purpose of a nest egg is to fully live life and create meaningful memories during your final chapters.
Stop saving for the sake of saving. Use the resources you've accumulated to enrich the days you have left. Retirement done right will leave you not with zero in the bank, but zero regrets on your death bed.
To delve deeper into Bill Perkins' groundbreaking ideas and principles, click here to purchase "Die With Zero: Getting All You Can from Your Money and Your Life" on Amazon and embark on your journey to embracing life to the fullest extent.
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