I’ve given you an impossible task: to die with zero.
bill perkins, die with zero
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The One Thing – Die With Zero Summary
This book changed everything I ever thought about retirement and savings for the future.
My biggest take is most people wait far too long to start spending down the principal (that is the money that is growing your retirement & savings accounts.
Suggested Podcast Pairing – Bill Perkins on All the Hacks.
The order for me was to listen to the podcast first then go read the book.
As mentioned previously, pairing podcasts with books can lead to asymmetric results. And in this case, I think you’ll get a lot more from the book if you listen to the podcast first.
Here’s why.
Without the podcast, I would have completely written this book off without a second thought as another self-help book and never read it.
With the podcast, I felt the author’s passion for just how wrong we have all been thinking about retirement and savings.
Two things, in particular, grabbed my attention:
- Experiences have a long-term value as memories that “pay out” as we age
- A person’s ability to extract enjoyment from their money begins to decline with age.
These two ideas from the podcast inspired me to go read the book.
Not to spoil it, but, the key takeaway from the book, is to strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.
Die with Zero Summary
Bill Perkin’s book and conceptualizations about dying with zero dollars in your accounts is both deeply personal and myth-busting.
For most of my life, I’ve been taught to save money so I can retire and leave money behind to those I love when I die.
Die with Zero flips that dogma on its head.
The author argues and proves quite adeptly that should have a good idea of when you are going to die and start spending down your principal much earlier than you think.
The reason is the experiences that you have matter a great deal to “future you”. Much more than the money you’re putting away for the “future you”.
“The business of life is to make memories”
bill perkins, die with zero
People so often talk about saving for retirement.
But there are far fewer conversations about saving for excellent and memorable life experiences that need to happen much sooner than the typical retirement age
This reminds me of an article I once read about doctors not accepting treatment for diseases that kill them. Check it out.
I really hope you get as much as I did out of this book.
It made me feel much better about my life choice of taking mini-retirements and spending down the principal to increase my bank of memories for when I’m older.
Buy it on Amazon – Hard Cover | Paperback | E-book
As always here are my raw notes > followed by my Kindle highlights.
My Notes While Reading
Bill Perkins’s concept seems so simple, but it comes littered with difficult personal issues like giving money to your family or charity.
What Bill teaches you in this book is to strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.
Use the tactics in this book
Thriving not surviving
to increase your overall lifetime fulfillment, it’s important to have each experience at the right age.
This book reminds me of the article I read about doctors not accepting treatment for diseases that kill them. Something Doctors die differently?
A person’s ability to extract enjoyment from their money begins to decline with age.
Consumption smoothing – It’s called consumption smoothing. Our incomes might vary from one month or one year to another, but that doesn’t mean our spending should reflect those variations—we would be better off if we evened out those variations.
The path they lay out is frugality—choosing to live simply so that you don’t need a lot of money. Yet that’s not one of my big takeaways from their life-changing book, and it’s not what I’m advocating for you.- This is how I need to write and talk about 4HWW
I’ve spent enough of my life energy earning money!
The business of life is to make memories
Rule No. 4: Use all available tools to help you die with zero. Knowing approximately when you are going to die helps determine the life energy you need to be spending down
You want to attempt to optimize spend based on life expectancy.
Longevity risk vs mortality risk
Annuities are life insurance policies, not investments. Life insurance to make sure you don’t run out of money before you die. I like this, it’s good “what if the opposite were true” thinking! This means that the Charitable Trust is also a life insurance policy BUT also acts like an investment because it grows for you and gives you the initial tax break.
Work with a fee-only financial advisor
We are solving for your total life enjoyment!
Final Countdown App – life expectancy countdown to keep you honest.
Rule No. 5: Give money to your children or to charity when it has the most impact.
Inheritance peaks at age 60! Fuck that’s crazy.
I call it the three Rs—giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?).
The Enemies of Rational Thinking: Autopilot and Fear
Rule No. 6: Don’t live your life on autopilot.
The borrow now for how you will be living in 10 years is fucking brilliant! My income is likely to be much higher in 10 years and we can borrow a ton of money against our stock accounts! Freakonomics – Steven Levitt.
No, the key takeaway, I now realize, is to strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.
Einstein supposedly called compound interest the greatest force in the universe. Small changes in health can lead to a negative compounding that has enormous impacts on your lifetime fulfillment and experience points. – This is an interesting point. I didn’t think about the compounding effect of being 10 lbs overweight on your knees over many decades. AND this is why BMI is more important than I thought.
Three factors that affect Life energy – health, free time, and money.
Rule 7 – Think of your life as distinct seasons. Start to time bucket your life. My current bucket is the max time, max money, and health is still good but diminishing so time to MAX the fuck out on experiences. Note this is different from THINGS.
What’s the takeaway here? Being aware that your time is limited can clearly motivate you to make the most of the time you do have. – The study about the students with 30 days before they moved far away is a great one.
Time buckets vs bucket lists – I need to complete this exercise before I get home from Mex. Time buckets 5 years 50-55, 55-60, 60-65, 65-70 – that’s 20 trips with Alli. 20 fishing trips.
Rule 8 – Know when to stop growing your wealth
survival threshold = 0.7 × (cost to live one year) × (years left to live)
Your peak is a date, not a number!
Traditionally, people continue to increase their net worth until they stop working, and are afraid to dip much into their principal even after retirement. But to make the most of your hard-earned money, you must crack open your nest egg earlier (starting to spend down your savings sometime between 45 and 60 for most people) so that you end, theoretically, with zero
People so often talk about saving for retirement. But there are far fewer conversations about saving for excellent and memorable life experiences that need to happen much sooner than the typical retirement age.
Rule No. 9: Take your biggest risks when you have little to lose.
My Highlights from Kindle
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But the sad truth is that too many people delay gratification for too long, or indefinitely. They put off what they want to do until it’s too late, saving money for experiences they will never enjoy. Living as if your life were infinite is the opposite of taking the long view: It’s terribly shortsighted.
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how to maximize fulfillment while minimizing waste.
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Although we all have at least the potential to make more money in the future, we can never go back and recapture time that is now gone. So it makes no sense to let opportunities pass us by for fear of squandering our money. Squandering our lives should be a much greater worry.
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What I am an advocate for is deciding what makes you happy and then converting your money into the experiences you choose.
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to increase your overall lifetime fulfillment, it’s important to have each experience at the right age.
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It’s called consumption smoothing. Our incomes might vary from one month or one year to another, but that doesn’t mean our spending should reflect those variations—we would be better off if we evened out those variations.
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How? The book contended that your money represents life energy. Life energy is all the hours that you’re alive to do things—and whenever you work, you spend some of that finite life energy.
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The path they lay out is frugality—choosing to live simply so that you don’t need a lot of money. Yet that’s not one of my big takeaways from their life-changing book, and it’s not what I’m advocating for you.
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Many psychological studies have shown that spending money on experiences makes us happier than spending money on things.
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Start actively thinking about the life experiences you’d like to have, and the number of times you’d like to have them. The experiences can be large or small, free or costly, charitable or hedonistic. But think about what you really want out of this life in terms of meaningful and memorable experiences.
Invest in Experiences
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“Whatever I paid, I feel it was a bargain because of the life experiences I gained,” he tells me. “You can’t take those away, and I would never have them erased for any amount of money.” What he gained from that trip, in other words, is priceless.
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The main idea here is that your life is the sum of your experiences. This just means that everything you do in life—all the daily, weekly, monthly, annual, and once-in-a-lifetime experiences you have—adds up to who you are.
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Carson, the butler of Downton Abbey, “The business of life is the acquisition of memories. In the end that’s all there is.”
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you retire on your memories. When you’re too frail to do much of anything else, you can still look back on the life you’ve lived and experience immense pride, joy, and the bittersweet feeling of nostalgia.
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Experiences yield dividends because we humans have memory.
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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
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So buying an experience doesn’t just buy you the experience itself—it also buys you the sum of all the dividends that experience will bring for the rest of your life.
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Investing in experiences, on the other hand, really could change your life, even at 50.”
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the number of actual experiences available to you diminishes as you age.
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Making deliberate choices about how to spend your money and your time is the essence of making the most of your life energy.
Why Die with Zero?
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Once you’re in the habit of working for money to live, the thrill of making money exceeds the thrill of actually living.
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There is just no way to get those hours back. If you die with $ 1 million left, that’s $ 1 million of experiences you didn’t have.
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How many hours was that? Well, divide the $ 130,000 by $ 19.56 an hour and you get a little more than 6,646. That’s 6,646 hours that Elizabeth worked for money she never got to spend.
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What I’m saying is that people who save tend to save too much for too late in their lives. They are depriving themselves now just to care for a much, much older future self—a future self that may never live long enough to enjoy that money.
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That’s more than 88 percent left over—which means that a person retiring at 65 with half a million dollars still has more than $ 440,000 left at age 85!
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So the question remains: Why didn’t retirees spend more of their money when they were young enough to enjoy it more fully? What were they waiting for?!
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The first is that people did have good intentions to spend the money, but once they reached a certain age, they found that their wants and needs changed, or perhaps diminished.
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go-go years, slow-go years, and no-go years.
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The plastic over the couches
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The decline in spending over time was even more acute for retirees with more than $ 1 million in assets, according to separate research conducted by J.P. Morgan Asset Management, which analyzed data from more than half a million of its customers.
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The answer: long-term care insurance. Look into it and you might discover that it costs less than you think, especially if you start paying premiums before you’re 65.
How to Spend Your Money (Without Actually Hitting Zero Before You Die)
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Rule No. 4: Use all available tools to help you die with zero.
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If you don’t want to use a life expectancy calculator, that’s your choice—just don’t tell me you have no idea how long you’ll live, and then use that as an excuse to save money like you’re going to live to be 150.
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All good questions, and thinking about them is a first step toward optimizing your spending.
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You Are Not a Good Insurance Agent!
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What fewer people realize is that there are financial products designed to deal with longevity risk, too.
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In fact, thinking of annuities as insurance makes them a lot more sensible than thinking of them as investments—because as investments they are not good at all. But that’s not their goal—their goal is to insure you against the risk of outliving your money.
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Economists generally think that annuities are such a rational way to deal with longevity risk that many experts have long wondered why more people don’t buy annuities—a question economists call “the annuity puzzle.”
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But let’s assume you are working with a fee-only adviser, someone you pay a flat fee for giving you financial advice. This kind of adviser doesn’t have an incentive to avoid annuities and also doesn’t get paid commissions for selling annuities.
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So always keep this end goal in mind. Make “maximize total life enjoyment” your mantra, using it to guide every decision—including what to focus on with your financial adviser.
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Cooper Richey put it well when he said, “The human brain is wired to be irrational about death.”
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What I’m saying is that dying with zero is not only about money: It’s also about time.
What About the Kids?
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Rule No. 5: Give money to your children or to charity when it has the most impact.
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Well, people at the Federal Reserve Board track such things, and here’s what they find: For any income group you look at, the age of “inheritance receipt” peaks at around 60.
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I call it the three Rs—giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?).
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I know I might sound harsh when I talk about this stuff.
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The Enemies of Rational Thinking: Autopilot and Fear
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Autopilot is easy, and it’s what most people around you are doing.
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Don’t wait until you’re dead to give your money away.
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peak utility of money (the time when it can bring optimal usefulness or enjoyment) occurs at age 30, then at age 30 every dollar buys you one dollar’s worth of enjoyment. By age 50, the utility of money has declined considerably: Either you would get a lot less enjoyment out of that same dollar or you would need more money (say, $ 1.50) to obtain the same amount of enjoyment as you got out of $ 1 back when you were a healthy, vibrant 30-year-old.
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In short, by giving the money to my kids and other people at a time when it can have the greatest impact on their lives, I’m making it their money, not mine.
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That is why one analysis concludes that “donors should ask not just how, but how soon, their gifts will be used.” I couldn’t agree more. But
Balance Your Life
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Rule No. 6: Don’t live your life on autopilot.
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When economist Steven Levitt, of Freakonomics fame, landed at the University of Chicago as a first-year professor, a senior colleague named José Scheinkman told him he should spend more and save less—the same advice that Scheinkman himself had gotten from Milton Friedman, the even more famous University of Chicago economist. “Your salary will only go up, your earning power will only go up,” Levitt recalls his older colleague telling him, in almost a perfect echo of what Joe Farrell told me. “And so you shouldn’t be saving now, you should be borrowing. You should be living today in much the way that you’ll be living in 10 or 15 years, and it’s crazy to actually be scrimping and saving, which is what at least someone like me who was brought up in a middle-class family was taught to do.” Levitt
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No, the key takeaway, I now realize, is to strike the right balance between spending on the present (and only on what you value) and saving smartly for the future.
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A person’s ability to extract enjoyment from their money begins to decline with age.
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To me, travel is the ultimate gauge of a person’s ability to extract enjoyment from money, because it takes time, money, and, above all, health.
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Chris started to regain his composure, and after 15 minutes his breathing and heart rate were normal, so he and I were able to enjoy a Painkiller with our soggy dollars. Phew!
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Reminds of my dad surfing
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So you’d better spend the money when you still have the health.
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The utility, or usefulness, of money declines with age.
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I realized that there must be a curve. In other words, if the horizontal axis on a graph represents your age, and the vertical axis represents your capacity to enjoy life experiences that money can buy, then if you were to plot your potential enjoyment by age, you would see some kind of curve.
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Starting sometime in your twenties, your health very subtly starts to decline, causing a corresponding decline in your ability to enjoy money.
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The same is true for companies
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Ability to Enjoy Experiences Based on Health
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Love this graph for when to sell your startup
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Notice that I am being careful to say that some people would be better off doing that. Everybody’s situation is different. For example, some people’s favorite activities, such as mere walking, are inexpensive; others don’t require tip-top physical health.
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There you have it: It makes sense to spend more of your money at some ages than others, so it makes sense to adjust your balance of spending to saving over the years accordingly.
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So what do you do? How do you achieve more balance in your life? I suggest several ways of thinking about the problem. Depending on who you are and how you think, different ones will resonate with you.
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How fast your body’s health declines depends on how in shape (or not) you are now. So if you are 2 percent from optimal health now, you may be 20 percent from optimal health 10 or 15 years from now. Basically, there is a compounding effect to being in poor health. I don’t
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Einstein supposedly called compound interest the greatest force in the universe. Small changes in health can lead to a negative compounding that has enormous impacts on your lifetime fulfillment and experience points.
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People of all ages should be spending more time and money on their health.
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But earlier investments in health would actually yield greater lifetime fulfillment.
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Better health doesn’t just give you a better retirement years from now—investing in your health is investing in every single subsequent experience!
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The more money you have, the more you should be using this tactic, because your time is a lot more scarce and finite than your cash. I am constantly trading money back into time. I’ll never get more than 24 hours in a day, but I can do my utmost to free up as much of that finite time as I possibly
Start to Time-Bucket Your Life
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Start to Time-Bucket Your Life
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My point—and this is important—is that the day I die and the day I stop being able to enjoy certain experiences are two distinctly different dates. And this is true for everyone.
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“All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence,” Ware writes.
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Now, let’s take a deep breath. I recognize that all this talk about death and regrets in life sounds very depressing. I realize that by attempting to raise awareness of what you will eventually lose forever, I am handing you a kind of anticipatory grief.
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Good use of language for my M&A book here,
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What’s the takeaway here? Being aware that your time is limited can clearly motivate you to make the most of the time you do have.
Know Your Peak
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survival threshold = 0.7 × (cost to live one year) × (years left to live)
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Many of us have been trained to think that our plan for drawing down our savings should be framed in terms of numbers—that is, that once we reach a certain amount in savings, we can then retire and start living off those savings.
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To understand why you should think in terms of a date, not a number, you need to recall that enjoying experiences requires a combination of money, free time, and health.
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but all other things are usually not equal! That’s because for every additional day you spend working, you sacrifice an equivalent amount of free time, and during that time your health gradually declines, too.
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Increasingly, given rising life expectancies, retirement experts recommend that middle-income retirees wait until they’re 70 to claim Social Security benefits, at which point they can receive more than 100 percent of their full benefits.
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Accumulation of Net Worth Traditionally, people continue to increase their net worth until they stop working, and are afraid to dip much into their principal even after retirement. But to make the most of your hard-earned money, you must crack open your nest egg earlier (starting to spend down your savings sometime between 45 and 60 for most people) so that you end, theoretically, with
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Our culture’s focus on work is like a seductive drug.
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People so often talk about saving for retirement. But there are far fewer conversations about saving for excellent and memorable life experiences that need to happen much sooner than the typical retirement age.
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One of the most important times to re-bucket your life is when you’re nearing your net worth peak.
Be Bold—Not Foolish
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Rule No. 9: Take your biggest risks when you have little to lose.
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asymmetric risk: when the upside of possible success is much greater than the downside of possible failure. When you face asymmetric risk, it makes total sense to be bold, to grab the opportunity at hand.
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One is: How much time do you spend with these people? Often it’s not that much time at all, because we tend to take for granted what is readily available.
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Second, don’t underestimate the risk of inaction.
Conclusion: An Impossible Task, a Worthy Goal
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I’ve given you an impossible task: to die with zero.
Acknowledgments
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Once I had a professional writer and a set of good ideas and what seemed like a strong proposal, I needed a publisher to help the book reach the widest possible audience.
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Charles Denniston created every single chart and picture in this book. Whenever we swapped out data sources or requested other changes, Charles always quickly turned around just what we needed.