Zero Out

Bill Perkins is an electrical engineer by training though he made his money as a successful energy trader on the New York Mercantile Exchange. He wrote a book with the same premise as one of my common jokes. I’m frequently given unsolicited advice that I need to invest in this or that annuity or some other financial product (by those who can earn a commission from selling me one) and also that I need to make and stick to a budget so as to live off income, and never diminish assets. I always dismiss the sales pitch, usually without explanation, but sometimes I’ll mention that I have no interest in preserving assets for another generation. “I have no kids,” I’ll say, “so while I definitely don’t want the last dollar to run out while I’m here, I’m perfectly okay with bouncing the check to the undertaker.” Bill Perkins has made a similar view a life philosophy: one more radical and deliberate than mine. He argues in Die with Zero that if you die rich you have not lived life to the fullest. Money buys experiences, both in the present and as memories in your future. Leftover money equals forgone experiences. It means you haven’t gotten full value out of your resources – or that you worked and saved for too long and should have retired earlier.

 
Perkins doesn’t turn Aesop’s fable of the grasshopper and the ant entirely on its head; saving for the winter is important. He notes, however, that the ant never had any fun or much of a life other than work. The grasshopper, he says, had a point too. The trick is finding the right balance between the two strategies. Perkins’ acknowledges that this advice applies only to those who have savings: anyone struggling just to get by doesn’t have the option to do much else. To those who do earn enough for more than just the bare necessities, however, he urges to remember that money is not an end in itself. It is to purchase the good things in life, now or in the future.
 
Perkins also urges us not to ignore the “now.” Awareness of what time it is in one’s life is important, for there are things one can do in one’s 20s (e.g. backpacking through Europe) that are less practical in one’s 70s or even 40s, given the responsibilities that tend to arise in that decade. Have your peak experiences (whether adventures or having kids) at the right time, which usually means earlier than most of us do it. We delay such things for fear of squandering money, but “squandering our lives should be a much greater worry.” He advocates multiple bucket lists: one per decade since we age out of some potential experiences as years pass. On the income side, there also are certain investments that are appropriate to different ages; a real estate investment with a long term potential for a capital gain, for example, might be fine at age 42 but at age 72? Exactly when will the 72-y.o. enjoy the benefits of that capital gain? Perkins offers practical advice on how best to allocate resources over a lifetime in order to enjoy that life.
 
Perkins feels his book is pertinent because so many of us fail to live our best lives. Median net worth in the US even after retirement rises steadily by age well into the 70s, which seems to him an indication that the retirees aren’t enjoying (and haven’t enjoyed) the fruits of their earnings. Perkins has a point. Possibly his book is not the best gift for a natural spendthrift, though in fairness he does not advocate going broke before you die. Yet, though the book is worth a read, I think he underrates the peace of mind that unspent savings can offer: that is a desirable experience, too. Besides, timing that “Zero” is a crapshoot. I for one might be here for longer than I expect, so despite my undertaker line, I am not willing to bet on an actuarial table in order to determine when to spend my last dollar.
 

Brook Benton – My Last Dollar