Over the next twenty years, an estimated $90 trillion could pass from older generations to heirs, in something called the “Great Wealth Transfer.” It’s an enormous shift for those who follow trending estate and retirement planning news.

However, if you ask the hedge fund manager and best-selling author Bill Perkins, what’s truly transferred here is not just money, but also trillions of unlived experiences. In one of his best books, “Die with Zero: Getting All You Can From Your Money and Your Life,” Perkins argued that life is much better spent maximizing experiences rather than maximizing just wealth.

After all, wealth is really not the most valuable asset. Living life is. So to no one’s surprise, the book’s popularity nudged many people to reconsider their approach to retirement, embracing something known as the “Die with Zero” rule. The main goal is to live a super fulfilling life within the limited time we have. However, is this philosophy all that practical, or is it more idealistic than realistic?

What’s the “Die with Zero” rule?

News coverage often highlights the concerning downfall of retirement savings. It’s true since many Americans can’t save enough anymore. More than half of them worry about running out of money after they retire, and the rising inflation and longer lifespans don’t help look at the big picture.

Some financial experts even question whether the traditional guideline of stashing away 80% of your income is enough these days.

However, Perkins decided to highlight yet another issue, one that gets far less attention: people hoard wealth at the expense of living the best out of their lives. As a matter of fact, a recent study discovered that many retirees hesitate to spend their savings, preferring to secure their untouched nest eggs.

They also tend to be more comfortable spending Social Security and pension income than actually withdrawing from their retirement accounts. For instance, households with married 65-year-olds withdrew only 2.1% of their savings on an annual basis, which is far below the standard withdrawal recommendations.

Financial advisers constantly notice this hesitation firsthand. Moreover, Loren Sherman, the founder of Integrity Wealth Management, pointed out that retirees should constantly ask themselves “What is all this for?” Many of them have a hard time shifting from saving mode to actually enjoying the fruits of their labor, while also not getting attached to seeing a number increase.”

Perkins also believes this mindset can lead people to miss out on new experiences. Instead of accumulating beautiful memories, they just accumulate money until it’s too late to enjoy it. The “Die with Zero” rule encourages a completely different approach:

Make a habit out of spending your money intentionally, whether it’s simply on something you desire, your loved ones, or even on charity. The logic behind this is quite simple: if you die with money left over, it basically represents potential years you already spent working for free, since it’s wealth you will never even use.

With that being said, the goal isn’t to hit zero too soon and end up in financial distress. As Ryan Theisen, financial advisor at Advance Capital Management, explained, “Retirees should keep in mind that the money they saved while working is meant to last for a lifetime, if not more, so it’s fairly important to be responsible with your spending.”

Instead, the rule we propose focuses on making sure that, at the end of the day, you have made full use of all the resources you had, spending them on valuable time and meaningful memories.

How to follow the “Die with Zero” strategy

The “Die with Zero” rule implies timing your spending as best as you can, by balancing wealth, money, and time. As we all know, each of them is abundant at different stages of life. When you’re young, for instance, you have plenty of time and health, but not so much money.

In middle age, you have more money and health but less free time. Later on, you have time and money but declining health. The whole point is to spend strategically. For example, prioritizing physically challenging experiences when you’re young and using money to “buy time” in middle age, like outsourcing chores to have more leisure time.

For instance, a major part of the “Die with Zero” philosophy is giving while you’re still alive. Perkins noted that adult children often need plenty of financial help in their 20s, since buying a first home or starting a family requires immediate aid, not when they inherit wealth decades later.

On a similar note, donating to charity during your lifetime gives you the opportunity to witness the impact of your giving, rather than leaving it in your will.

Another efficient tool Perkins suggested is time bucketing: dividing your life into five-to-ten-year intervals and setting experience goals for each and every stage. This will help you prioritize meaningful activities, while also being able to enjoy them.

The criticism of “Die with Zero”

At first, it doesn’t apply to those struggling to retire at all, unfortunately. Considering that one survey showed that U.S. households marked an estimated median retirement savings of $64,000, Americans still think they need around $1.46 million in savings to retire according to their desires.

Longevity risk, which is the main threat when it comes to outliving savings, is yet another fair concern. Medical emergencies, disability, or unexpected expenses can all derail even the best-laid plans. After all, the last thing anyone wants is to outlive their money, right?

In the book, Perkins suggested annuities as one efficient way to mitigate this risk, by efficiently providing guaranteed income for a lifetime. But they are fairly complex, they come with lots of costs and restrictions, which seem to be at odds with the “Die with Zero” emphasis on financial flexibility and using wealth for focusing on life experiences.

Overspending is another dangerous pitfall. Sherman warned that withdrawing way too much, too soon, could mean missing out on additional compounding. A spend-heavy mindset can leave many seniors vulnerable, especially if their financial situations take a turn for the worse.

Should you try out this rule?

Perkins also acknowledges that the “Die with Zero” rule isn’t as optimal for all of us. In fact, it’s more recommended for those who have already built substantial savings and tend to be overly frugal, despite having more than they need, anyway.

Therefore, for most of us, following the rule can prove to be a bit unrealistic. But adopting certain aspects of it, such as spending more on experiences, gifting money earlier and breaking free from useless frugality, could definitely help lead to a more fulfilling retirement.

Then again, psychology plays a very significant role here, too. Behavioral science shows that people tend to feel the loss more intensely than the joy of equivalent gains, a weird bias that makes shifting from saving to spending even more difficult.

An objective opinion can definitely help counter this mindset. Perkins wrote plenty about the benefit of working with a financial advisor, a point that was also sustained by Theisen: “An advisor can help create a game plan that lets individuals maximize spending while also maintaining a healthy savings account for rainy days.”

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