With the economy still struggling, unemployment still lofty, and retirement savings lacking, more Americans than ever are terrified of the idea of dying penniless.
Financial adviser and author Stephen Pollan wants to remind you: That’s the whole idea. Not the prospect of outliving your cash; no one wants that. But the idea of using up all of your savings while you’re still here to enjoy it? That’s the mark of a well-lived life. Says Pollan, always outspoken: “You’re a jerk if you leave a single penny.”
First published almost 15 years ago, Pollan’s book Die Broke seemed like pure heresy at the time, overturning just about every accepted tenet of personal finance. The old model of success: Work yourself to the bone, and scrimp and save every nickel in order to leave a vast estate to your heirs.
Poppycock, says Pollan. The new model: Use your money to build a great life while you’re still around. Whether you’re Paul Allen collecting sports teams and Jimi Hendrix memorabilia, or Bill Gates trying to cure malaria — put your money to work while you’re still above ground.“You’re stupid to die with any money left over, because the amount of your estate is not the measure of your worth,” says Pollan. “People have realized that there’s nothing shameful about not having anything when you leave the Earth. The message of Die Broke used to be counter cultural – but now it’s become mainstream.”
That message appeals to people like Bonnie Russell. The Del Mar, California-based owner of Personal Public Relations grew up in tony Marin County, and she developed her own die-broke philosophy after seeing the corrosive effects of inherited wealth. “I met so many trust-fund babies who were so screwed up because they never had to earn a living,” says Russell. “That’s why if I plan it right, the last check I ever write will bounce. And I’ll leave behind nothing but a great tan.”But that doesn’t mean Russell is selfish--far from it. In fact she donates much of her time and money to her favorite charitable causes, so she can enjoy that fulfillment while she’s still around, instead of just bequeathing a dollar amount in a will. Russell doesn’t plan to pass on a bundle to her children and has no designs on her parents’ wealth, either.
“I don’t expect any largesse, and I’m so cool with that,” she says. “It’s their money and they can do whatever they want with it.”
Of course, for many Americans these days, using up all your savings might not be a choice; it’s become sheer necessity. Average life expectancy has continued to spike, now at almost 78 years and rising. Meanwhile retirement savings are still anemic, with half of Americans having put aside less than $25,000 for their golden years. As such, the idea of leaving a sizable estate is likely not in the cards for most.
But how do you arrange it so that — as Pollan himself is planning — your last check is to the undertaker, and it bounces? Timing is the tricky issue, of course, since no one knows when the Reaper will arrive at the door.
One solution: Annuities. When Pollan wrote about their appeal at the height of the ‘90s boom, they were stodgy and much-derided products, when compared to the surging Dow and Nasdaq. But these days, with the stock market wildly unpredictable and Social Security increasingly rickety, annuities — which throw off checks until you find yourself inside a pine box — are a key tool for those not wanting to outlive their cash.
Other planks of Pollan’s Die Broke philosophy look remarkable prescient, as well. “Quit Today” and be a free agent, since corporations don’t care about you and never will. “Don’t Retire,” in order to stay active and keep doing what you love (not to mention keep building assets). And “Use Cash,” to avoid getting trapped in crippling debt.
Bingo, bingo and bingo. Quips Pollan: “Die Broke turned out to be a pretty good reading of the tea leaves.”