Die with Zero Chapter 5: What About the Kids?

To summarize this chapter in one sentence: decide how much of your wealth you’d like to give to your children, charities, or other beneficiaries, and do that now rather than waiting until you’re gone.

Most inheritances (from small bank accounts, to the sale of mom and dad’s home, to leftover IRA money, etc.) occur around the age of 60. Often at this time in their life, the “children” are close to or already retired themselves. They’ve saved up their own money, and while the inheritance may fund a few more trips, it’s often not needed. I can verify in our own practice — many clients in their 60s or 70s call us because they have money to invest from an inheritance that they don’t need/care to spend now.

Perkins argues that, all else being equal, receiving these funds earlier in life (when trying to establish a career, a family, buying a first house, paying off college debt, etc.) will have a much larger benefit to their life on the whole. Even if it’s a lesser amount due to less time invested/growing, it still outpaces the value of receiving a larger amount later in life.

“What if I end up needing that money towards the end of my life for medical or long-term care costs?” Perkins’ response is to transfer these risks by buying long-term care insurance, while also recognizing that if you really want to give money to the kids, you should prioritize that over saving these additional costs. If you give a lot of money away and then require care you can’t afford, it will either be covered under Medicaid, or would be tens to hundreds of thousands of medical bills just to extend your life a few days or weeks. Again, from his background as an engineer, this is a very sub-optimal use of your money.

What about charities? Perkins argues that they always benefit from having money sooner rather than later. The earlier they receive funding, the more they can expand their footprint and provide the services they do to those in need now.

I don’t expect Perkins’ ideas regarding giving to children or charities to convince all, but his challenge to be intentional while living can be taken to heart.

“What is the value to you of a week at a cabin on a lake? Or of a day with a beloved relative? The price might be extremely high or fairly low, but the fact that you can even propose a ballpark price says that the value of an experience can be quantified. [...] I am making a big deal about quantifying the value of experiences with your children because doing so forces you to pause and think about what’s really best for your kids.”

Let us know

• Do any of the loved ones (especially if they are beneficiaries listed on your accounts or heirs in your estate) have financial needs now that they won’t when you’re 90? How would you feel about helping them now?

• Could the charities you support do more good if they have more funding now?

Until next time, happy reading!