“Die with Zero,” a concept introduced by Bill Perkins, encourages people to spend their money during their lifetime to maximize experiences and avoid leaving behind unspent wealth. The idea is simple: live life fully, make memories, and avoid hoarding money for a future that may never come. However, while this philosophy has appeal, it is not without its drawbacks. Below are eight problems with “die with zero,” along with practical strategies to mitigate these risks.

1. Outliving Your Money

One of the biggest risks of “dying with zero” is outliving your savings. Life expectancy is unpredictable, and with advances in healthcare, many people are living longer than they anticipate. Running out of money in your later years can be catastrophic, leaving you financially vulnerable at a time when you may need it the most.

Ways Around It:

• Plan for longevity: Create a financial plan that assumes you will live to 90 or 100 years old. This ensures your money lasts throughout your lifetime.
• Consider annuities: Buying an annuity can guarantee a steady income for the rest of your life, reducing the risk of outliving your funds.
• Have a flexible spending plan: Spend based on different scenarios—if your health allows for it, you can splurge on experiences, but if you live longer than expected, reduce spending.

2. Unexpected Medical Expenses

Healthcare costs tend to rise as you age, especially during your final years. A “die with zero” approach might leave you unprepared for large, unexpected medical bills, which could deplete your savings quicker than anticipated.

Ways Around It:

• Get adequate health insurance: Ensure you have comprehensive health insurance that covers a range of medical expenses, including long-term care.
• Set aside a health savings fund: Keep a portion of your wealth in a health-focused emergency fund specifically for unexpected medical costs.
• Look into long-term care insurance: Consider purchasing long-term care insurance to cover costs that traditional health insurance may not, like nursing homes or in-home care.

3. Economic Downturns

The economy is unpredictable. A recession, inflation, or market crash could quickly erode your investments and savings, especially if you’ve structured your financial plan around the “die with zero” concept. This leaves you vulnerable to market conditions beyond your control.

Ways Around It:

• Diversify investments: Spread your investments across different asset classes to minimize the impact of an economic downturn.
• Keep a buffer: Maintain a safety cushion in liquid assets, like cash or low-risk bonds, to weather economic storms without having to sell assets at a loss.
• Avoid risky investments in later years: As you approach retirement, shift your portfolio towards safer, more stable investments.

4. Poor Investment Timing

Not everyone has the expertise to manage investments perfectly. Misjudging the timing of your withdrawals or the stock market’s performance can lead to significant financial shortfalls in your later years.

Ways Around It:

• Seek professional advice: Consult a financial planner to help you strategize your investments and withdrawals in a tax-efficient and sustainable way.
• Use target-date funds: These funds automatically adjust your investment risk based on your age, reducing risk as you get closer to retirement.
• Stagger withdrawals: Rather than withdrawing all at once, consider staggered withdrawals to minimize the impact of market volatility.

5. Forgetting About Inflation

Inflation erodes purchasing power over time. If you’re not accounting for inflation in your spending and saving plans, your money may not go as far as you think, leaving you short in your later years.

Ways Around It:

• Invest in inflation-protected securities: Look into inflation-protected investments like Treasury Inflation-Protected Securities (TIPS) to safeguard against rising costs.
• Update your financial plan regularly: Revisit your financial plan every few years to adjust for inflation and ensure your savings keep pace with the rising cost of living.
• Factor inflation into your retirement plan: Build inflation into your budget forecasts to make sure your money stretches as far as you need it to.

6. Neglecting a Legacy for Your Family

While the “die with zero” philosophy focuses on spending for yourself, many people still want to leave a financial legacy for their children or loved ones. Dying with nothing can feel selfish, especially if family members depend on you or would benefit from an inheritance.

Ways Around It:

• Leave a portion for inheritance: Set aside a specific amount for inheritance and only spend the remainder.
• Gift while you’re alive: Instead of waiting until death, consider gifting money to family members during your lifetime, allowing you to see how it benefits them.
• Create a trust: If you want to pass on wealth but still maintain control over how it’s used, setting up a trust can ensure your legacy is distributed according to your wishes.

7. The Fear of Running Out

Many people feel more secure knowing they have a safety net of savings. The idea of “dying with zero” might cause anxiety and stress, especially as you near the end of your life and realize that your savings are dwindling.

Ways Around It:

• Create a financial safety net: Even if you’re following the “die with zero” concept, keep a financial buffer for unexpected expenses.
• Adopt a hybrid approach: Spend on experiences, but keep enough savings to maintain peace of mind. You don’t have to go all-in on dying with zero.
• Automate savings to avoid overspending: Set up automatic savings and budget rules to ensure you don’t spend more than you can afford.

8. Misjudging the Cost of Aging

Aging comes with a host of expenses, from long-term care to in-home health aides. If you miscalculate these costs, you could find yourself strapped for cash when you need it the most.

Ways Around It:

• Plan for long-term care: Budget for the possibility of requiring long-term care, and explore insurance options that can help cover these costs.
• Downsize early: Reduce housing costs by downsizing earlier in life to free up resources for aging-related expenses.
• Research senior living options: Investigate different senior living options and their associated costs early on to avoid surprises later.