Could You Be Saving Too Much Money?


Could you be saving too much money? That is the premise of the book I just finished reading called, Die with Zero by Bill Perkins. I picked it up somewhat reluctantly because dying with zero money seems to go against everything I’ve learned about personal finances over the past two decades. And many of the clients I work with are behind on their savings and retirement goals. I dove into the book anyway, trying to keep an open mind. I’m glad I did!

Saved Money is Meant to Spent (Eventually)

I agreed with the author wholeheartedly on this point. We’ve been conditioned to see saving as good and virtuous, and spending as bad and irresponsible. This bothers me. A lot. I frequently say that spending and saving are two sides of the same coin. Saved money is meant to be spent, at least eventually!

We save for retirement so we have money to spend when we’re no longer working. We save for our kid’s education, so the money’s available when the college bill comes in the mail. We save for emergencies so the money’s there to take care of them when they occur. Saving just to have money for no purpose, is rather purposeless.

According to the author, the trick is to arrive at the grave as close to zero as possible.

You Might Want to Spend It Sooner Than You Think

I am a big fan of enjoying life while you’re working on your various long-term goals. In Die With Zero, Perkins advocates spending money earlier than most financial pros do. We think we should save until retirement hits, then flip the switch to spending.

Saving ➡️ RETIREMENT ➡️ Spending

There are two problems with this: 1.) People have a hard time switching gears from saving to spending with ease. If you’ve spent most of your adult life ingrained in the savings habit, you’re going to find it hard to do a complete 180 and feel safe spending your money down. I find it’s better to have a balance of saving and spending on meaningful experiences from the get-go.

 2.) Some life experiences are better when you’re younger. I felt internal resistance to this one, because, even though I’m 48, I still feel like I’m 33-ish. But let’s say you have a dream of surfing in Hawaii or snowboarding in Alaska. You’re going to have a better experience doing it when you’re 23 versus 53. When you’re young, you typically have an abundance of time and health, but a lack of money. As we age, our financial resources increase as our health and time dissipate. Certainly, there are things we can do to increase and maintain our health. But I think we can all agree that surfing or snowboarding can be done by most 18-year-olds, but very few 78-year-olds! And trips like this are easier to take before we settle down with serious responsibilities like having kids and a career.

The author of Die With Zero even advocates borrowing money for these experiences, which I have a hard time endorsing. Consumer debt causes stress and can become a lifelong habit, so I’d prefer a young person to work a second job or some overtime to fund a dream like this. 

Knowing Your “Expiration Date”

Maybe you’re seeing the logic in not over saving for your elder years. I mean, how much money do you need to sit comfortably in an easy chair and watch Days of Our Lives when you’re in your nineties? The big question mark in the formula is, “How long will I live?” None of us can answer this with 100% certainty. You could live as long as George Burns (100!) or you could be hit by a bus tomorrow.

Barring bus accidents and the like, you can get a reasonable estimate of your life span by using a Life Expectancy Calculator, like the one at Project Big Life. In less than three minutes, it stated mine as 90 years old (way short of my goal to live to be 120, as long as I can remember my name and wipe my bum.)

Whether it’s correct or not, isn’t really the point. Knowing that I might only have 42 years of life left helps me to be intentional with my spending and saving decisions. If there are things on my “Live List” (a better alternative to a bucket list) that are health-dependent, I should start pursuing them NOW rather than later! I want to get SCUBA certified within the next year or two, so I have plenty of time to enjoy the ocean while both my husband and I are in good health. Many people live on autopilot, working like crazy, thinking they’ll spend money and enjoy life “later.” But when later comes, they are too tired, old, and unhealthy to enjoy it!

Prioritize Buying “Memory Capital” 

Another book, Happy Money: The New Science of Smarter Spending by Elizabeth Dunn and Michael Norton demonstrates that people’s satisfaction with spending money on things decreases over time. However, people’s satisfaction with money spent on experiences increases over time. Why is that? Because you’re investing in “memory capital.” You’re buying memories with friends and family that you can relive in your mind or by telling the stories to other people. And you can enjoy that memory capital until the day you die! This is probably why our elderly relatives enjoy telling the same stories over and over again. They’re cherishing their memory capital!

Does this mean you shouldn’t spend money on material things? Of course not. Just be mindful of how much long-term enjoyment you’ll get out of them. You might want to give preference to buying things that facilitate memory creation. For example, I know a couple who bought a ski boat specifically to entice their high school and college-aged kids to spend quality time with them. They are regularly building memories with their kids at the lake, and are happy with their purchase.

Give Money to Charity and Your Kids Now, Not Later

A major point of resistance people have with the “Die with Zero,” philosophy is the kids. I mean, even the Bible says, “A good man leaves an inheritance for his children’s children.” To be clear, Perkins is not advocating you give zero money to your children or charity. Quite the opposite! He’s recommending you give it to them at a more optimal time: before you die.

If you ask any charity when they need donations, the answer is going to be, “Now!” Of course, no charity is going to turn down a huge, one-time windfall. But smaller, regular donations ensure the charity is helping people and will continue to do so for many years to come.

So, what about the kids? The average age for children to receive an inheritance from a parent or other relative is 51 years old. In Die with Zero, Perkins brings up some compelling reasons to give money to your children before your soul passes into the great beyond. As I stated earlier when you’re young, you have an abundance of time and health, but less money. By giving money to your kids, nieces, and nephews before they’re a half-century old, you can give them the magical trifecta: money, time, and health!

Giving money to your kids in their 20s for experiences like a backpacking trip through Europe or a mission trip to South America could be life-changing. You might choose to help your grown children with a down payment on a house, pick up the tab for the family vacation to Disney, or relieve them of a major car repair bill.

One big benefit of not waiting to transfer at least some of your wealth to your kids before you die is that you actually get to watch them enjoy it!  Currently, the IRS allows you to give up to $16,000 per year to any individual tax-free. If you are married, both you and your spouse can each gift your child $16,000, for a total of $32,000. If your grown child is married, you can also gift their spouse the same amount tax-free. (Please consult your tax pro for current IRS regulations on tax-free giving.)

How to Not Run Out of Money

Running out of money in one’s golden years is a huge fear for many people, which is the big reason for over-saving. Bill Perkins suggests long-term care (LTC) insurance and annuities as the answer. I’m not a financial planner, so I don’t recommend any particular type or brand of investment. But you might be wondering what exactly annuities and LTC insurance are, so a basic explanation is in order.

An annuity is a long-term insurance product that provides guaranteed income. For example, a $500,000 annuity would pay you approximately $2,396 each month for the rest of your life (depending on fees and rates of return) if you purchased the annuity at age 65 and began taking payments immediately. You or your beneficiary are guaranteed to get a least the amount you paid in ($500k). If you die before that amount is paid out, your beneficiary will get payments up to the amount that you initially paid for the annuity. You can think of an annuity as a DIY pension.

Skyrocketing healthcare costs in old age are a serious concern that long-term care insurance addresses. Long-term care insurance is an insurance product, sold in the United States, United Kingdom, and Canada that helps pay for the costs associated with long-term care. Long-term care insurance covers expenses generally not covered by health insurance, Medicare, or Medicaid. This article by AARP gives a good overview of the types of LTC insurance, so you can have a meaningful discussion with your financial or insurance pro about what options might make sense for you.

The Bottom Line

The message at the heart of the book, Die with Zero, is summed up in its subtitle: Getting all you can from your money and your life. The bottom line is to be intentional with your money, time, and health. Don’t live on autopilot! Yes, saving for the future is a good thing, but saving too much money isn’t.

Don’t forget to enjoy the present and buy more “memory capital” whenever you can. You want to be the old person with hundreds of amazing stories to delight your grandkids, not the one repeating the same four or five because that’s all you’ve got. Finally, please remember, there’s no prize for being the richest person in the cemetery! The ultimate goal of money is to support your happiness, both now and later.