Another "die with zero" question (poll)

[Early_Runner]

Is "die with zero", the same as "hoping to not run out before I die"?

If they're the same, then that's me.

 

[Koolau]

^^^^^

You'll probably have to read the book - I have not. The "concept" doesn't appeal to me, but I can see how it would to some people.

In any case, enjoy the ride!!

 

[Luvtoride]

I think many here are missing the point of the book. The recommendations are to USE (enjoy) the resources that we have worked our whole lives to accumulate to have experiences (some of which we have probably delayed) while we can and have:
- The time (in retirement)
- The health (while it lasts)
- The money (spend it on the things that matter to us…we can afford it)

Decide what’s important to you and do those things while we can, before we regret NOT doing them. If leaving a larger legacy is your goal, then Die with Zero is NOT for you.

 

[Lorenzo]

Is "die with zero", the same as "hoping to not run out before I die"?

If they're the same, then that's me.

By my definition as the OP of this thread, yes, I think that's the gist of it: If you do not have a desire to leave anything on the table for others when you pass, and if there are things for which you believe you could use your money during your lifetime that you find meaningful in some way, then use every tool at your disposal to do it, even if it means watching as your balance heads downward toward that projected end-of-life date.

You'll probably have to read the book - I have not. The "concept" doesn't appeal to me, but I can see how it would to some people.

I don't have the power to micro-manage this thread, but I did note in my original post that none of this is intended to have anything to do with the definition of "die with zero" in the book of that name: "Note: None of this is intended to reflect on anything in the book Die With Zero by Bill Perkins." I'm sure there is wisdom in that book, and I will get around to reading it, but I was simply borrowing the phrase as shorthand for the act of trying as hard as possible to maximize meaningful spending without running out of money--the classic retiree's dilemma.

 

[sengsational]

Is "die with zero", the same as "hoping to not run out before I die"?

If they're the same, then that's me.

That would be a "no".

The whole idea is to remove hope/fear and enjoy life to the fullest.

You arrange your finances such that you're guaranteed to make it. If you "fear" a protracted bear market, then buy an annuity or put money in treasuries. If you "fear" a protracted stay in an expensive nursing home, then buy LTCI (as discussed, far from perfect solution, expensive, but maybe could take your fear down from an 8 to a 2). Nothing is certain (zombie apocalypse, anyone?), but put your rational brain hat on and insure for the most likely bad things, then move on and live your life.

What a lot of retirees do is imagine the worst and conclude that they need to sit on every dime because models indicate that "if 10 of these 12 bad things happen, I'll run out of money and be a burden, and I don't want to be a burden". But the chances of 10 of 12 bad things is about 0.01%, so it's not a smart move to sit on every dime if that's preventing you from getting out there and getting experiences that you'd otherwise like to do. If you've convinced yourself that sitting on the couch even though you're physically able to get out and do fun and interesting things is the best use of your time, then sure, sit home. And in the following decades you can spin an exciting tale about how many crossword puzzles you used to do per week. Or you can get real experiences. If getting those experiences happens to pry a few bucks out of your wallet, so be it.

Perkins says if you need to part with some money in order to gain experiences while you still can (are healthy), then do so. That's an investment that pays dividends (memories) that you can ponder if you're stuck immobile in the later years.

 

[sengsational]

...none of this is intended to have anything to do with the definition of "die with zero" in the book of that name: "Note: None of this is intended to reflect on anything in the book Die With Zero by Bill Perkins."

Not a great thread title, then. Many alternatives that didn't match a popular retirement book title would have been better.

 

[Early_Runner]

That would be a "no".

The whole idea is to remove hope/fear and enjoy life to the fullest.

You arrange your finances such that you're guaranteed to make it. If you "fear" a protracted bear market, then buy an annuity or put money in treasuries. If you "fear" a protracted stay in an expensive nursing home, then buy LTCI . . .

What a lot of retirees do is imagine the worst and conclude that they need to sit on every dime . . .

Just trying to understand "die with zero". . . Are you saying that self-insuring in order to "remove ... fear" is not a "die with zero" way of doing things? I suppose that would make sense, because your "insurance" would still be there when you die, and I suppose that is not "zero".

 

[sengsational]

Just trying to understand "die with zero". . . Are you saying that self-insuring in order to "remove ... fear" is not a "die with zero" way of doing things? I suppose that would make sense, because your "insurance" would still be there when you die, and I suppose that is not "zero".

You got it.

The problem with self-insuring is that you will probably have a huge pile of money that goes unused by the retiree. Sure, it goes to the heirs, but if the heirs are the kids, they're probably too old to really get good mileage out of the money. That's why Perkins is a proponent of giving to your kids while you're alive, when you kids are younger, and can use the money to make their lives more satisfying.

 

[Lorenzo]

I have been thinking more about this thread since it was resurrected last week. I have been pondering why almost none of us who are retired and who might otherwise like to spend more have actually experienced seeing their balances headed downward toward that projected end-of-life date. It seems to me that we here represent just a relatively few of the retirement cohorts simulated by FIRECalc, and those cohorts have done exceptionally well, historically speaking. Yes, I know I'm in Captain Obvious territory, but it does me good to see myself putting it into words.

First, we have what to me is a surprising number of people with pensions. Most workers do not anymore, pensions having been phased out by many private companies and replaced by IRAs starting in the '70s and then 401ks. The retired cohorts on this forum seem to include some who got in on the tail end of the private company pension era. There are also quite a few former government and military retirees. To hang with a single company or the government/military long enough to qualify for a pension is an achievement by today's standard career strategy of hopping around from one company to another. The retirees here are a disciplined bunch.

The earliest retirees here retired in, what, maybe around 2000? The Class of 2000 has done fine, as have all the cohorts between then and now. FIRECalc also simulates grim cohorts like the Class of 1966. We here are spending more or less around the classic 4% because that is the historical average safe withdrawal rate, and I get the impression we here are a conservative bunch. After all, most here are not just R but RE, and that took discipline--discipline that's hard to shake, even if the numbers may support a higher spending rate. The dotcom bubble of 2000 and the Great Recession of 2008 were mere blips, historically speaking, but many of us here are apparently not ready to discount the possibility of a 1929 style crash. If we were, we would exclude what we consider anomalous eras from our simulations. I do not have an opinion whether all that came before, say, the 1930s is poor data to use to plan our retirement savings and spending. I know articles have been written about it.

There are probably others out there who do not participate on this forum who spend more freely and are indeed seeing, or at some point in the next 20 or 30 years will see, the line on the graph bending toward their 90th or 100th birthday date. When I started this thread, I had just returned from a get-together in which someone had remarked they were thinking of retiring, and someone else who was already retired was apparently suggesting a 10 percent withdrawal rate could be sustainable. Yes, that person said, they were in fact spending down their savings, but they were confident they could steer the ship with enough precision that it would just last their lifetime.

 

[Luvtoride]

You got it.

The problem with self-insuring is that you will probably have a huge pile of money that goes unused by the retiree. Sure, it goes to the heirs, but if the heirs are the kids, they're probably too old to really get good mileage out of the money. That's why Perkins is a proponent of giving to your kids while you're alive, when you kids are younger, and can use the money to make their lives more satisfying.

Exactly!

 

[Lorenzo]

Not a great thread title, then. Many alternatives that didn't match a popular retirement book title would have been better.

You're right, perhaps not the best choice of thread title. I had in mind the many quips to the effect of spending down the stash to one's last day with such precision that, by one such quip, "the check to the undertaker bounces." I felt "dying with zero" was more succint.

 

[RetiredHappy]

We spend and splurge on more than my frugal half of my brain says we should. But on the other hand, the growing portfolio (and my husband) ask me "Why are you concerned? We don't have a spending problem." I do know that if I survive my spouse I would likely go to a 1% withdrawal because I like to see the pile growing larger. Not only do I want to leave an estate, I have a bit of not wanting to spend on unnecessary stuff mentality.

 

[Koolau]

I have been thinking more about this thread since it was resurrected last week. I have been pondering why almost none of us who are retired and who might otherwise like to spend more have actually experienced seeing their balances headed downward toward that projected end-of-life date. It seems to me that we here represent just a relatively few of the retirement cohorts simulated by FIRECalc, and those cohorts have done exceptionally well, historically speaking. Yes, I know I'm in Captain Obvious territory, but it does me good to see myself putting it into words.

Yeah, I think most on ER Forum are fairly unique. We saved (over saved in many cases) and many do, indeed, have pensions (and most Social Security). So for this "bunch" our stash should never go down - only up - as long as the markets continue to cooperate. Of course, that's not guaranteed and in fact the markets are all but guaranteed to go down at some point.

One other thing that ER types seem to experience is a natural tendency to cut back spending when 1) Inflation rages 2) Markets drop 3) Taxes increase 4) "Bad News" hits the front page.

So, we (as a group) are almost insulated from the stuff that perturbs the inputs to FIRECalc results. We've mostly instituted back-ups (to our back-ups, in some cases) that prevent our stashes from going down significantly.

We are indeed unique IMHO. YMMV

 

[Koolau]

You're right, perhaps not the best choice of thread title. I had in mind the many quips to the effect of spending down the stash to one's last day with such precision that, by one such quip, "the check to the undertaker bounces." I felt "dying with zero" was more succint.

Heh, heh, this group is more of the "pre-plan and pre-pay the funeral expenses" bunch rather than "bounce the last check" bunch. YMMV

 

[SecondCor521]

I have been thinking more about this thread since it was resurrected last week. I have been pondering why almost none of us who are retired and who might otherwise like to spend more have actually experienced seeing their balances headed downward toward that projected end-of-life date.

Lots of reasons for this.

First, people here plan for the worst (4%) but will get average (6.5%) on average.

Second, we tend to think safer is better. So we do 4% but we forgo the inflation adjustment, or we do 3.5%, or we ignore SS, or we work a year or two longer, or we plan for a longer lifespan. I think many of us who do this do multiple safety factors.

Third, I think there is a sense of disbelief that is hard to shake. My Mom flew in commercial airplanes and still thought they were too heavy to get off the ground. Many people look at the math and say, "There's no way I'll end up with $50M at age 90" or "No way SS will be here and pay that much."

Fourth, a decent number of people plan to try to spend more in retirement. "Oh, well we live on $40K now, but we'll put $20K of travel in the budget." But old habits are hard to break. I'm sitting here at 56 with the money and time and health, and after 30 years of not traveling it's hard to pull the trigger simply because I'm not used to it.

Fifth, modeling is hard and in some ways it's easier to just cover up all the planning and analysis with a lower withdrawal rate. "I'll just use 2%, which will cover LTC, if SS isn't there, the widow/widower situation, planning mistakes, and I can avoid learning about complicated tax minimization strategies."

It has helped me a little bit to watch the general population of this board over the past decade or two. I've seen people go from getting ready to retire, to wondering if they have enough, to guessing they do, to retiring, to being nervous for a while, to being comfortable, to thinking more about giving to their kids or charity, to goodness gracious there's a pile of oobleck money growing ridiculously and it's work to get rid of it.

 

[TheWizard]

...I'm sure there is wisdom in that book, and I will get around to reading it, but I was simply borrowing the phrase as shorthand for the act of trying as hard as possible to maximize meaningful spending without running out of money--the classic retiree's dilemma.

Probably the best way to do that safely is an adaptation of the 4% rule or the RMD withdrawal percentages which increase each year as you age.

Point being: you need to SPEND all that money each year, not just move the proceeds from tax-deferred to taxable account.

DWZ is not my plan, of course. I'm fine with what I'm doing presently...

 

[Lorenzo]

Well stated, @SecondCor521 . I suspect we could come up with a sixth, seventh, and more reason. I do get a sense that a common thread through all these reasons is the makeup of the members here, compared with the general population out there, as evidenced by that random guy with the 10% withdrawal rate I overheard at the get-together I mentioned.

 

[Lorenzo]

Probably the best way to do that safely is an adaptation of the 4% rule or the RMD withdrawal percentages which increase each year as you age.

Point being: you need to SPEND all that money each year, not just move the proceeds from tax-deferred to taxable account.

DWZ is not my plan, of course. I'm fine with what I'm doing presently...

The variable withdrawal rate strategies are definitely a tool for those who wish to maximize lifetime spending. (I will refrain from using the term "die with zero").

 

[Diogenes]

The fundamental question most retirees seek an answer to is how to to spend enough to enjoy one's retirement yet not so much that one runs out of money before they die.

The even more fundamental question is whether money is a means to and end, or an end in itself.

I want to spend on things that give me enjoyment.

To do so wisely, requires maturity.

Example: I yearn to leverage my money to reshape the world around me. That takes billions.... billions that I'll never achieve. Settling for second-best doesn't feel productive or encouraging. Hence, I'll ceaselessly be dissatisfied and groping/grasping/scrambling for more money. There is no serenity, and no real capacity to indulge one's desires, because those desires are unrealistic or downright idiotic. At least they are, for me.

I would think watching your balance go down so much over the years would cause me anxiety as well.

Exactly. The anguished sense of loss, when markets fall, is bad enough. But at least that's public loss. We're all in it together! If instead one sustains a private loss, seeing one's wealth decline, or at least not keep up with inflation, then that's very traumatic indeed.

The whole idea is to remove hope/fear and enjoy life to the fullest.

That's unfortunately much easier said than done. For people who are antsy, neurotic and simultaneously ego-driven, the capacity to relax-and-enjoy is meager, even if finances permit. If magically I had 10X more money, I'd only worry more, about (a) losing it, and (b) paying more in capital gains taxes.

 

[sengsational]

That's unfortunately much easier said than done.

Absolutely true. That's why we support each other trying to get there.

 

[Koolau]

Lots of reasons for this.

First, people here plan for the worst (4%) but will get average (6.5%) on average.

Second, we tend to think safer is better. So we do 4% but we forgo the inflation adjustment, or we do 3.5%, or we ignore SS, or we work a year or two longer, or we plan for a longer lifespan. I think many of us who do this do multiple safety factors.

Third, I think there is a sense of disbelief that is hard to shake. My Mom flew in commercial airplanes and still thought they were too heavy to get off the ground. Many people look at the math and say, "There's no way I'll end up with $50M at age 90" or "No way SS will be here and pay that much."

Fourth, a decent number of people plan to try to spend more in retirement. "Oh, well we live on $40K now, but we'll put $20K of travel in the budget." But old habits are hard to break. I'm sitting here at 56 with the money and time and health, and after 30 years of not traveling it's hard to pull the trigger simply because I'm not used to it.

Fifth, modeling is hard and in some ways it's easier to just cover up all the planning and analysis with a lower withdrawal rate. "I'll just use 2%, which will cover LTC, if SS isn't there, the widow/widower situation, planning mistakes, and I can avoid learning about complicated tax minimization strategies."

It has helped me a little bit to watch the general population of this board over the past decade or two. I've seen people go from getting ready to retire, to wondering if they have enough, to guessing they do, to retiring, to being nervous for a while, to being comfortable, to thinking more about giving to their kids or charity, to goodness gracious there's a pile of oobleck money growing ridiculously and it's work to get rid of it.

Excellent summary! Thanks for the post.

 

[Lorenzo]

The even more fundamental question is whether money is a means to and end, or an end in itself.

Example: I yearn to leverage my money to reshape the world around me. That takes billions.... billions that I'll never achieve. Settling for second-best doesn't feel productive or encouraging. Hence, I'll ceaselessly be dissatisfied and groping/grasping/scrambling for more money. There is no serenity, and no real capacity to indulge one's desires, because those desires are unrealistic or downright idiotic. At least they are, for me.

Thanks for the philosophical angles, "Diogenes"! Your perspectives are always interesting.

 

[street]

Neither poll option fit my view. I have no intention or desire to die with 0$. No way would that fit for me being a saver frugal person and my hope is to share as much as I can with loved ones and charities for their cause. I would consider myself very selfish to not help make a difference for someone at the end.

 

[Lorenzo]

Neither poll option fit my view. I have no intention or desire to die with 0$. No way would that fit for me being a saver frugal person and my hope is to share as much as I can with loved ones and charities for their cause. I would consider myself very selfish to not help make a difference for someone at the end.

In early posts in this thread, I confusingly implied the only way to "die with zero" is to spend on oneself, when what I really meant was depleting one's savings by spending on whatever is meaningful--and that "spending" includes gifting. Someone pointed out that in the book Die With Zero the author suggests giving more money away to loved ones and charities during your lifetime rather than "at the end." I can see the logic. For loved ones, they can use it to their advantage while they are relatively youthful. For charities, you might have the benefit of seeing your largesse at work. I don't believe "die with zero"--that is, depleting or nearly depleting your savings during your lifetime--is inconsistent with a goal of making a difference in the world for others. You'd just do more of it during your lifetime and less of it upon your death.

 

[audreyh1]

I have been thinking more about this thread since it was resurrected last week. I have been pondering why almost none of us who are retired and who might otherwise like to spend more have actually experienced seeing their balances headed downward toward that projected end-of-life date. It seems to me that we here represent just a relatively few of the retirement cohorts simulated by FIRECalc, and those cohorts have done exceptionally well, historically speaking. Yes, I know I'm in Captain Obvious territory, but it does me good to see myself putting it into words.

First, we have what to me is a surprising number of people with pensions. Most workers do not anymore, pensions having been phased out by many private companies and replaced by IRAs starting in the '70s and then 401ks. The retired cohorts on this forum seem to include some who got in on the tail end of the private company pension era. There are also quite a few former government and military retirees. To hang with a single company or the government/military long enough to qualify for a pension is an achievement by today's standard career strategy of hopping around from one company to another. The retirees here are a disciplined bunch.

The earliest retirees here retired in, what, maybe around 2000? The Class of 2000 has done fine, as have all the cohorts between then and now. FIRECalc also simulates grim cohorts like the Class of 1966. We here are spending more or less around the classic 4% because that is the historical average safe withdrawal rate, and I get the impression we here are a conservative bunch. After all, most here are not just R but RE, and that took discipline--discipline that's hard to shake, even if the numbers may support a higher spending rate. The dotcom bubble of 2000 and the Great Recession of 2008 were mere blips, historically speaking, but many of us here are apparently not ready to discount the possibility of a 1929 style crash. If we were, we would exclude what we consider anomalous eras from our simulations. I do not have an opinion whether all that came before, say, the 1930s is poor data to use to plan our retirement savings and spending. I know articles have been written about it.

There are probably others out there who do not participate on this forum who spend more freely and are indeed seeing, or at some point in the next 20 or 30 years will see, the line on the graph bending toward their 90th or 100th birthday date. When I started this thread, I had just returned from a get-together in which someone had remarked they were thinking of retiring, and someone else who was already retired was apparently suggesting a 10 percent withdrawal rate could be sustainable. Yes, that person said, they were in fact spending down their savings, but they were confident they could steer the ship with enough precision that it would just last their lifetime.

Even those without pensions. We’ve had a series of long bull markets since 2009 and it’s floating all boats. We still could go through a protracted bear/stagnant market period that wipes out a good chunk of those gains. You never know.