Optimize spending. After determining what’s “enough,” Perkins advises mapping out the expenses and experiences that are critical to your fulfillment and the impact you want to have on the world. For us, that’s putting money toward supporting our kids’ education and well-being, traveling and giving back.
Before aiming to die with zero, I wanted my family to be able to spend an entire month each summer living in a foreign country. Now, this dream looks all the more worthwhile as the type of enriching experience I value. And, depending on what happens with travel post-Covid, it can be more achievable, since I won’t be putting it off just to have a bit more saved for retirement.
The idea of leaving nonprofits money in our will also feels a bit detrimental to the causes we want to support. Why not give sooner if we can? To that end, I’ve automated some of my giving plans similar to how we contribute for retirement.
Rethink retirement. One of the first books on this concept, “Die Broke” by Stephen Pollan and Mark Levine from 1998, prescribes a four-step plan to ensure you utilize every dollar while alive. Step three is to “not retire.” It was a radical suggestion back then. Today, not so much.
This is an important consideration for those (outside the super-rich) who want to die without any debt and spend their later years living on “just enough.” I’m already thinking about getting my real estate license in my 50s to generate some additional income and supplement our needs in retirement.
Have a plan for the kids. Not leaving an inheritance to your children doesn’t mean you don’t care about them. Instead, it means that you bestow your wealth upon them when they’re young and most likely working to start a business or a family or investing. The best part is you can bear witness to it all.
“If we're trying to have the maximum impact on our kids’ lives, we want to basically deliberately choose to give them money in a certain time frame,” Perkins says, “not when they’re in their 60s and their health is declining.”
Do we risk spoiling them? Not if we explain our plan and if they understand that the money they’re receiving in portions is to help them build a strong and meaningful life for themselves and their kids. And yes, we’re fully aware of the gift tax (the U.S. taxes the transfer of money or property to another person above $15,000 per year). So while our kids are young, we’re filling up as many investment buckets as we can for them that carry tax advantages, from a 529 college savings plan to a custodial Roth IRA. We also have life insurance, as that’s integral to taking care of our kids, should one of us pass away sooner than expected.
I’m not sure what the afterlife has in store for us, but I do trust that this alternative financial framework will enable us to make the most of our living years. And the kids? They’ll be alright.
This article was provided by Bloomberg News.