The Surprising Retirement Rule That Encourages Seniors To Spend Money

A goal many people have is to save enough money to live comfortably in retirement, and it's not unfounded. However, there's one surprising retirement rule that encourages seniors to spend money. The "Die With Zero" idea from the Bill Perkins book "Die With Zero: Getting All You Can from Your Money and Your Life" says that retirees should prioritize living life to its fullest over continuing to accumulate wealth throughout their retirement years. While this doesn't necessarily mean retirees shouldn't be careful with their spending habits, it does represent the idea of spending the savings they have accumulated throughout their working years. This way, they're not the richest person in the graveyard when they die.

According to Bill Perkins, the goal behind this principle is to prioritize spending, so that the hard-earned money retirees made during their working years can allow them to live a life in which memorable experiences and helping others are the focus. Surprisingly, Bill Gates is also on board with the "Die With Zero" idea, which he's stated on his website. Gates plans to give away virtually all his wealth over the next 20 years through the Gates Foundation with the idea of saving and improving lives through his philanthropic efforts, something he's been dedicated to for decades.

The real idea behind the retirement rule that encourages seniors to spend money isn't about being frivolous or living extravagantly. Rather, it's the principle of being strategic with spending down retirement savings to make the most of every moment. Like with saving for retirement, a retiree must carefully plan how and when to spend the money they've put away. Citing a Wall Street Journal study, Langan Financial Group, a retirement and wealth management company, states that retirees only withdraw 2.1% of their savings on average per year. This is only half of the 4% withdrawal amount recommended by most financial planners.

Many retirees have spent most of their working years being frugal and investing for retirement, and it can be a difficult habit to break once they stop working. According to Allianz Life, 64% of Americans fear running out of money more than death, which contributes to retirees' lack of spending the money they've accumulated. However, there are consequences of not using savings that can reduce the quality of life in retirement years.

Missing out on opportunities contributes to stress as retirees age, and deteriorating health can make it harder to accomplish certain goals. For instance, taking trips abroad or enjoying hobbies can be more difficult in old age, whereas spending money on these things while one is still able to enjoy them can make life feel more fulfilling. Additionally, helping family members financially or using money to spend time with loved ones often provides joy that can't be felt after death.

So, what can you do to boost your chance of having the most successful retirement possible? Well, although it's always best to hire a trusted financial planner to discuss your retirement goals, you can do a few basic things on your own to get the most value from your money — and your life. Start by asking yourself a few key questions, such as what you envision your retirement to be and how you want to spend your retirement savings while you're still alive. In a recent Gallup report, only 45% of non-retirees expected to have enough money to live comfortably in retirement. However, this contrasted significantly with the 75% of retirees who actually have a comfortable amount set aside for their retirement needs.

Having medical care and a dedicated emergency fund in place for unexpected expenses provides peace of mind, but using some of your savings for doing things you've always wanted to do, or participating in experiences that make you happy, is equally important. Consider dividing your retirement savings into separate funds designated for various expenditures. Doing so will enable you to spend money on fulfilling experiences without guilt. Along with your emergency fund, make sure to set aside money for travel, family, hobbies, or whatever makes you happy as you get older, so you make lasting memories by sharing experiences with others.