Bill Perkins: Die With Zero

Death wakes people up and the closer it gets, the more awake and aware we become. When the end is near, we suddenly start thinking, What the hell am I doing? Why did I wait this long? Until then, most of us go through life as if we had all the time in the world.

To get the most out of your time and money, timing matters. The vacation to Italy provided different utility when you were a toddler than when you were 25, than when you would be 90.

Dad could not have enjoyed any kind of vacation at that point—his physical ability was greatly diminished, and travel would have posed too great a risk. Sure enough, he loved the gift I gave him. As he sat holding the iPad and watching the video, he laughed, he cried, he reminisced. Too old to acquire significant new experiences, he could still derive great enjoyment from the highlight video. In fact, he thought it was the best gift ever. That was when I realized that you retire on your memories.

The meaning of life is the acquisition of memories

When you teach your daughter to swim or to ride a bike, it’s not because you think she’ll get a better-paying job with those new skills. Experiences are like that: When you spend time or money on experiences, they are not only enjoyable in the moment—they pay an ongoing dividend, the memory dividend

We wake up every morning preloaded with a bunch of memories that we can access at any time—mainly to get around and navigate the world. When you face a large rectangular panel, there’s a huge dividend from having once learned what a door is—think of all the doors you can open!

You see the person making coffee in your kitchen and you don’t start from scratch with them, as if you’re meeting a stranger. You know this is a person you love, and you know why you love this person. All the history that went into your relationship, all your past conversations and shared experiences, built the current feeling you have toward this person.

So every time you remember the original experience, you get an additional experience from mentally and emotionally reliving the original experience. It’s why people keep photo albums—and why, if their house is on fire, they usually grab their albums before trying to save just about any other possession.

If you stack up all those little bars—all the ongoing memory dividends from an experience—you get a second bar that might be as tall as the bar that represents the original experience. In fact, sometimes the second bar is even taller. One way this can happen is through compounding

The number of available experiences also diminishes as you age

Generally enjoyment and fulfillment from an experience is proportional to the amount of time and money invested

He decided to have children, and that decision limits how he can spend his money and his time. Bear in mind that every choice you make affects subsequent choices—and the choice to have children is the most common example of that.

To be safe but still avoid needlessly leaving money behind, just think of the maximum age to which anyone can live. So a rational person, in Modigliani’s view, will spread their wealth across all the years up to the oldest age to which they might live.

Beware indefinitely delayed satisfaction

Try a life expectancy calculator from an insurance firm

Federal reserve board tracks inheritance receipts, which peaks at 60

My friend Baird has a mother who’s 76 and knows she can’t spend her money before she dies—the last trip she took lasted five days, and that was two days too long, he says. Since her money is of limited use to her, she has been trying to give it away to Baird, who is 50—but by this point, Baird really doesn’t need the money anymore!)

Health affects return on utility - Let’s say that an aging skier decides to continue enjoying the sport by giving himself more breaks or longer breaks between runs. Great idea—but that doesn’t mean he’s getting the same experience as when he was younger and stronger. If he used to get in 20 good runs in one day on the slopes, now he can manage only 15. In effect, the same amount of money he spent on that day of skiing now brings him only 75 percent of the skiing enjoyment it did years earlier.

Too many of us still view ourselves on an ongoing basis as being in our twenties, even though our real age is somewhere in our fifties, sixties, or even seventies. While it’s admirable to view oneself as “young at heart,” it’s also necessary to be more realistic and objective about your body and how it’s aging. You can wakeboard at 50 but not so much at 57. Everybody becomes like that eventually. As you get older, your health declines and your interests gradually narrow

When you’re a baby, there’s no greater happiness than Mom and the crib. In a way, the amount of utility that babies get from money is very similar to what the elderly get. Money is nearly worthless at the very beginning and the very end of life.

your personal interest rate—which rises with your age. Suppose you’re 20 years old; at this age, you can afford to wait a year or two to have an experience, because you can typically have the same experience later. Therefore, your personal interest is low—someone doesn’t have to pay you much for you to be willing to delay the experience. Let’s say you wanted to take a trip to Mexico this summer, but your boss said to you, “I could really use you here this summer. I know you wanted to take this Mexico trip, but would you consider taking it next summer instead? I would pay you x percent of the price of the trip to do that.” Okay, interesting offer. So how high would x have to be for you to agree? 10 percent? 25 percent?

Now suppose you’re 80. At this point, delaying an experience becomes much more costly, so your x would have to be much higher than when you were 20. Even if someone paid you 50 percent of the price of the trip to delay it, you should not necessarily take the offer—your personal interest rate at age 80 may be higher than 50 percent. It might even be higher than 100 percent.

When my daughters were little, we loved watching Pooh’s Heffalump Movie together. I think it’s the most wonderful kids’ movie there is—a sweet, innocent story about friendship. We watched it many times. But then one day, when my younger daughter was ten, I suggested we watch the Heffalump movie and, to my astonishment, she just wasn’t interested anymore. All of a sudden, she thought she was too old for it! If someone had told me that by this date my kid would stop wanting to watch the Heffalump movie, I probably would have watched it with her a lot more. Unfortunately, in real life you rarely get an exact date for when you will no longer be able to do something—these things just seem to fade away.

We ourselves die many deaths in our lives - the teenager in us dies, the single unattached you dies, the parent to an infant dies, etc.

think of a set of different swimming pools—there’s usually a wading pool for little kids, a pool with a waterslide for older kids and teens, an adults-only pool, maybe even a pool for lap swimming and a pool just for seniors. Now, you can go in every pool for as long as you want, but only if you follow that pool’s precise rules.

So if you don’t learn to swim by the time you’re too old for the kiddie pool, you can still go to the teen pool, and later to the adult pool; but if you’re no longer a teen, no more waterslide for you! Some people act as if they will have access to the kiddie pool and the teen pool all their lives—or that their whole life is one big pool that they can use at any time. But then time passes and they find themselves in the senior pool and ask themselves how they wound up there!

1 group of students was told it was their last 30 days on campus. Do activities and write them down. Another group was told do write their normal activities down. The first group was much happier. Most people just have the sense that there’s no time urgency near home; they act as if they will always be able to visit that museum or that nearby beach or that friend some other time. As a result, we spend many of our evenings watching TV, and we fritter away our weekends. In short, when something feels abundant and endless, the truth is, we don’t always value it. The idea of having a finite number of phases with a finite number of days in each has nothing to do with money.