A spur of the moment post.
This just popped up this morning. A friend forwarded a link to an article from Kiplinger’s. The story covered one of my favorite topics. Die with Zero! I thought you might enjoy my response.
Coming your way soon.
By the way, next Tuesday’s newsletter will be about my one-year odyssey with CREDIT CARD ARBITRAGE. This has been a very profitable endeavor. CCA is something you can do, too, if it’s of interest. Be looking for this…next Tuesday!
From a friend.
A good friend sent me this today.
“I thought you might find this article of interest:
The Die with Zero Rule of Retirement
I thought this paragraph in the article made a lot of sense:
“Perkins acknowledges that “Die with Zero” isn’t optimal for everyone. It’s best for those who have already built substantial savings and tend to be overly frugal despite having more than enough.”
My response:
Thanks for sharing this article. Few financial strategies are suitable for everyone. We both know that “Die with Zero” doesn’t really mean dying with ZERO. For those folks who enter the game at whatever point with zero, they have already missed the point of dying with zero, as outlined by Perkins!! Not everybody in life gets a trophy and most people understand that and think it’s OK.
For people with assets, the first portion should be reserved to cover retirement basics, such as food, shelter, medical care, etc., for the rest of their lives. The remaining assets that do not need to be used for retirement can then be spent on creating memories, i.e., enjoying your money.
I have always spent like a drunken sailor relative to others of similar means—houses, cars, vacations, etc. From an early age, I understood that working hard, earning money, and being smart with money weren’t of much value if the money wasn’t enjoyed.
I equate that lifestyle to what Perkins is saying with Die with Zero. However, since reading DwZ, I have taken things up a notch. I no longer worry about spending a little more for a hotel, restaurant, or whatever. I tip more. I understand that those little extras are not spending MY money. Those extras come from available money after all of our retirement money is accounted for.
It’s important to note that retirement money to cover all of the items required for retirement, food, shelter, medical care, etc., can be wrapped up long before someone actually retires.
If I didn’t spend the money I worked hard to earn then that unspent money would go to our kids. Our children are all fine people. We love ‘em to death. But, we don’t need to go without so our youngsters can get a bigger inheritance. Our kids tell us to spend our money and enjoy it while we can!
We have very large amounts of second-to-die life insurance designated for our kids. They will get that money guaranteed, tax-free, even if we spend every last penny of our traditional net worth. When I was forty, I paid about $35,000/year for ten years to fund those policies. Few people at that age could do that; if they could, they probably wouldn’t want to.
Paying those insurance premiums was an early form of the Die with Zero philosophy. I was spending money that few others would be willing to spend and creating a memory dividend of what that money would provide for our children.
Depending on how long Carol and I live, our kids might not get that insurance money until they are in their late 60s. However, they were all told about it in their 40s. With that knowledge, they can spend and enjoy the money they would have been saving for retirement now because they know that insurance money is their financial backstop that will come their way later in life.
When I think about all the people I know who are over 50, I see that almost no one is going broke. On the other hand, I know A LOT OF PEOPLE who are now too old to enjoy their money fully. I believe they have missed the boat.
No, they didn’t starve to death on a desert island when that boat sailed away. They just missed the opportunity to take the boat, which might have gotten them to a more positive place sooner. There’s no point in being the wealthiest person in the cemetery, now is there?
Best,
Randy…talk to you next Tuesday.