Die With Zero - Book

[Gumby]

We are self insuring for LTC, but even if I was certain I knew what that amount would be, I still feel no burning need to spend everything else. I guess I am just not subject to FOMO. (And we don't have children, so leaving a bequest is irrelevant).

 

[MarieIG]

To the extent possible, I believe in being happy with and appreciating the small things in life; although I don't object to a larger spend now and then. I see money as a tool, and my personality likes security. I don't feel the need to spend every penny, and I if I die with a pile, that would be the least of my worries.

We will self-insure for long-term care. When I go poof, my main concern is that DH is provided for - which includes long term care. I am toying with the idea of setting up a trust to set aside funds specifically for his care. DH is "The Giving Tree" and I do have concerns about him giving too much to family members, and not leaving enough funds for his own care.

We do have a special needs grandchild and I would also like to be able to leave funds to support her care.

While I would like to leave something for the kiddos, we did take care of their needs (within reason), gave them a good start, and assisted their respective launches.

 

[Taco]

I've not read the book but listened to the interview that Sengsational posted.

It seems to me that the title "Die with Zero", is provocative but doesn't really capture the key point. The book's subtitle is better: "Getting all you can from your money and your life."

The author did not really seemed at all focused on dying with zero, but rather trying to get the maximum fulfillment out of your life. How to balance your Wealth, Health, and Time to give you the best quality of life.

I really enjoyed the interview - it definitely made me think about my own life. Thanks Sengs for posting it.

 

[walkinwood]

+1 Thanks for posting the interview.

 

[Koolau]

The biggest problem I have with getting down to zero at the end is making sure we have enough for end of life care.

Perkins is saying that you simply insure for it, but buying commercial LTCI is a problem because the available products are simply not any good.

We're sorta belt and suspenders for the reason you mention. We want to look out for end of life care. We have LTC insurance AND are keeping part of our stash for end of life care.

Should we die with "too much" in our stash, we have charities designated for that. In the mean time, we are doing what we want and do not feel deprived. I've mentioned that we still do struggle with spending on things we don't perceive as an adequate value. (Classic example: We could afford 1st class air travel but have only recently moved all the way up to economy plus. It seems the very best value for the money and we can afford it.)

 

[pdxgal]

only 40% of people end up needing LTC at all. And of that 40%, 90 percent last less than 3 years. So the article says to figure out how much LTC costs in your area, and multiply by 3.1. https://www.marottaonmoney.com/how-to-self-insure-for-long-term-care-health-expenses-2022/

So you allocate the funds, say $300K, and that's your LTC self-insurance.

This is super helpful information, thanks for sharing. A good reality check. Certainly jives with the experience of the older members of my family in recent years.

One big caveat is that IIRC costs for LTC (outside the home) have been rising much faster than general inflation. Found one source claiming it's about 3x as much (https://insurancenewsnet.com/innarticle/LTC-Costs-Continue-Outpacing-Inflation-a-508990) . So when Marrota says "Assuming a 3% return over inflation..." he's being optimistic IMO. If average overall inflation is 2%, LTC inflation could be more like 6%, so one's investment return would need to be in the range of 9-10% annually to have the 300K LTC nest egg keep pace. It's do-able, but not without a fair amount of volatility risk (unless fixed income yields get to that point). You'd hate for your nest egg to be down in a bear market when you need the money. An alternative would be to have a larger LTC nest egg and invest more conservatively. Then there's the question in my mind of whether many LTC facilities will even continue to exist in 30 years, given demographic and labor trends. There are no easy answers.

 

[Sunset]

This is super helpful information, thanks for sharing. A good reality check. Certainly jives with the experience of the older members of my family in recent years.

One big caveat is that IIRC costs for LTC (outside the home) have been rising much faster than general inflation. Found one source claiming it's about 3x as much (https://insurancenewsnet.com/innarticle/LTC-Costs-Continue-Outpacing-Inflation-a-508990) . So when Marrota says "Assuming a 3% return over inflation..." he's being optimistic IMO. If average overall inflation is 2%, LTC inflation could be more like 6%, so one's investment return would need to be in the range of 9-10% annually to have the 300K LTC nest egg keep pace. It's do-able, but not without a fair amount of volatility risk (unless fixed income yields get to that point). You'd hate for your nest egg to be down in a bear market when you need the money. An alternative would be to have a larger LTC nest egg and invest more conservatively. Then there's the question in my mind of whether many LTC facilities will even continue to exist in 30 years, given demographic and labor trends. There are no easy answers.

I'm not following you here, if the LTC inflation is 6% , then the $300K has to earn 6% to keep up, if it's in an IRA.
By being in an IRA, when withdrawn to pay for the LTC, it would largely be deducted and be mostly tax free.

 

[Smilinggirl]

....Then there's the question in my mind of whether many LTC facilities will even continue to exist in 30 years, given demographic and labor trends. There are no easy answers.

This is an interesting point. Although there have been no new LTC facilities built where I live in years, the over 55 communities seem to be expanding. I'm somewhat stunned by the cost of the homes though since while they're nice enough, they cost as much as a stick built single family home on a good sized piece of land.

 

[levindb]

As we budget for our later years, the amounts currently planned for travel, entertainment, and food/alcohol can be transferred to the LTC column, as these items would normally be provided in the LTC facility. Travel may only be from the bed to the bathroom, but it is still travel.
Therefore, you may need less ADDITIONAL funds for LTC than what the talking heads are suggesting.

 

[sengsational]

Travel may only be from the bed to the bathroom, but it is still travel.

Spending model ideas can keep you busy a for a very long time. In the link below, the section "Spending Strategies" is a two minute read, but has 5 papers to explore, if you want to go down the rabbit hole.

https://i-orp.com/Plans/help/ORPHelp.html#rrplan

 

[athena53]

As we budget for our later years, the amounts currently planned for travel, entertainment, and food/alcohol can be transferred to the LTC column, as these items would normally be provided in the LTC facility. Travel may only be from the bed to the bathroom, but it is still travel.
Therefore, you may need less ADDITIONAL funds for LTC than what the talking heads are suggesting.

Yeah, that's my plan. I'm single and intend to stay that way so if I go into LTC facility, just selling my house would free up about $300K in equity at today's prices and I still have $54K left on the mortgage, which will likely be paid off by then. Travel, home maintenance, food, etc. will be 99% covered or nonexistent, charitable can be cut back, not sure what will happen with taxes. I'll have investment income and RMDs but also hefty deductions for the portion of LTC that involves skilled nursing.

 

[dixonge]

I have a couple of thoughts after listening to an interview with Bill over the last few days

First thought, Bill is not a reliable source. He is not a working class stiff trying to retire early. His net worth is around $60 million. His perspective is skewed.

Second, I kept disagreeing with his take on what, exactly, constitutes the FIRE 'community' and/or recommendations. He seems to set up a bit of a straw man on several points. He generally painted FIRE as work all the time, spend almost nothing, and then hope you live long enough to enjoy it. I personally never did this, and I doubt the majority of FIRE folks did either. He then sets up his Die With Zero philosophy against this straw man. But really, his plan is just FIRE with a *much* higher risk profile. He dismisses end-of-life care costs as trivial to deal with. He dismisses most people's fears of catastrophy and seems to think any risk can be insured against, which seems to ignore the age at which most people would retire at, which is a much higher premium level than his, not to mention the rising premiums throughout life. He also seems to hand-wave away any risk of inflation.

I have not done a quote-by-quote analysis, this is just my take on him after digesting the interview, which I think is this same one here on YouTube:

 

[walkinwood]

As with any of these authors, you have to take what makes sense to you & disregard the rest.

I agree - a lot of his "give it away" while young only applies if you have a LOT of money and have no risk of running out.

On the other hand, his idea of linking the things you want to do to your age is wise (active things while you're young, more sedentary things for later). It is something that most of us do without thinking of it too much, but even on this forum, we sometimes see posts of people struggling with this.

I have watched a couple of his interviews, but haven't read the book. I don't plan to die with zero. I hope I don't die with zero (or DW will be pissed). But we're having a great time living the life we've crafted for ourselves.

 

[SlowlySaving]

If inflation gets bad enough, I could get there.

LOL!! Good one!

 

[palomalou]

I was about to ask precisely the same question, since I have no idea the meaning of this post. OTOH, a lot of finance surprises me...

OK, surprise me. Does raising your spending to 4.5% improve your portfolio? That would surprise me!

IOW, can you flesh out that post a little? Maybe some examples?

-ERD50

 

[TickTock]

After reading all of this thread and the other one on the book, I checked Die With Zero out from the local library and read it twice. Interesting idea, horrible (IMO) title. I'd likely never have read it if I hadn't read these threads and it wasn't available in the library. That said, I'm glad I did read it.

Die With Zero, by William O. Perkins III (2020)

Central idea: Your life is the sum of your experiences (p. 13).
Therefore, maximize positive experiences over your lifetime.

1. Have as many positive experiences as early as possible.
2. Positive experiences gain in value over time.
3. Don’t save early in life, even consider going into debt for experiences – if you anticipate a rising income later in life.
4. Dying with zero maximizes your positive experiences.
5. There are no negative points in the system (p. 25). [Why?? It makes sense to me that negative experiences would produce negative points. This change could drastically alter the optimum solution to Perkin’s equation – if worrying about outliving one’s assets is a strongly negative experience then taking steps to prevent such an outcome make sense.]

Audience: People who are saving too much for their own good (p. 15).

Another big idea: Be intentional, not on autopilot. Perkins makes this point throughout the book (for example, Rule No. 6: Don’t live your life on autopilot (p. 103). I agree with it, but it’s no more or less relevant to dying with zero than to any other aspect of life.

Criticisms

1. On saving nothing or LAYM when young – I think that it would be difficult to change that lifestyle to a LBYM mindset later in life.
2. Thinks too highly of insurance; for example - worried about health-care costs? Buy LTCI.
3. Asymmetry in dying with zero and going to zero first. To be fair, Perkins acknowledges dying with zero is an impossible task and that you don’t want to go to zero first.
4. Misunderstanding of 4% rule and annuities – (p. 67 example) omits inflation-adjustment of 4% rule and states that annuity (he’s discussing a SPIA) annual payout will probably be >4%, without mentioning that it’s on a constant basis and without mentioning that the annuity money is surrendered at the start, while any money left over in a 4% portfolio can be passed on. Then again, Perkins doesn’t much value traditional after-death inheritances.
5. Chapter 5 (What About The Kids?) The central idea here is give (to kids/charities/whomever) while still alive in order to provide the best positive impact to the recipient(s). While not disagreeing with this idea, there’s a lot of financial ground between practicing that to a moderate extent and dying with zero. I absolutely disagree with Perkin’s contention that “...dead people can’t give money away – they can’t do anything.” (pp, 78-79)
6. Perkins thinks the FIRE movement is doing everything on the cheap, watching every penny, and saving as much as possible for the future (p. 104). While that is a subset of the FIRE movement which does seem to capture the most space in the popular press, I suspect that most folks here took a LBYM, invest, longer-term route to FIRE.

Praise

1. Perkins recognizes that everyone is different and has different values for each experience. He encourages everyone to optimize their own life based on their values.
2. Time-bucketing – figuring out when in your life are the best times to have your experiences.
3. Time/health/money triangle and how that affects your experiences
4. Over-saving is – or can be – a waste. This is the core idea behind the BTD thread.

Conclusion
So, am I going to do anything different after reading and considering the book? Yes. Try to be more mindful (in all areas of life, not just financial) and put more consideration into BTD. DW and I are LBYM, financially conservative and we’re comfortable with that, so we’re part of the target audience. But no drastic financial moves.

 

[LateToFIRE]

Thanks - very good summary. I had bought the book, read the book, and was really sorry I bought it. Like too many self-help personal finance books these days, it drones on and on beating each point to death. Wish I'd seen your summary first.

 

[Music Lover]

Thanks - very good summary. I had bought the book, read the book, and was really sorry I bought it. Like too many self-help personal finance books these days, it drones on and on beating each point to death. Wish I'd seen your summary first.

I'm sure that a lot of books of that type can be reduced to just a few pages. But no one would buy a 20 page book.

 

[target2019]

As health declines I'm glad I read this book a few years ago. It helped me frame our spending, and subsequent enjoyment of extended events with our family.

There's more to life than what any one author says, but certain ideas can come to you at just the right time and take you to the next level.

 

[HI Bill]

I read the book and found the "Get a life Tree" helpful in thinking about ER, and what my priorities would be. Most of us here would rather end up with a few $ on the pile than risk running out, so I'll continue following my VPW retirement method in an attempt to live live to its fullest and use the nest egg to the best of our abilities when we're younger. With Robbie as an inspiration, we've been 'blowing that dough' on fun stuff for the past few years when we were unable to travel, and hope to shift the spending to travel this year!

 

[Sunset]

After reading all of this thread and the other one on the book, I checked Die With Zero out from the local library and read it twice. Interesting idea, horrible (IMO) title. I'd likely never have read it if I hadn't read these threads and it wasn't available in the library. That said, I'm glad I did read it.

Die With Zero, by William O. Perkins III (2020)

........

Thanks for the great summary...

Saves me reading the book, as I'm already far too along to blow $$ while young..

The title certainly is misleading, although I have known 2 people who planned and attempted to die with zero.

• One didn't die, and had to pay off his debts.
• The other got to zero, still alive and depended upon a relative's charity to scrape by...

They didn't read the book.