The utility of a dollar after death is zero

The title of this piece comes from a post a reader linked in the comments. The line itself isn’t strictly true: you might have children, or grandchildren, and it is entirely possible to extract utility from money even after you’re dead (a nuance the original authors are careful to address). Still, the line is useful, because it compresses the central question of personal finance into a single sentence: the goal is not to save money, it is to maximize the utility of money across time. Saving is simply the mechanism.

Since Die with Zero was published, this question has generated a debate that, in most of its public forms, has been remarkably unproductive. Someone smarter than me has called retirement an unsolvable problem, at least in the financial sense, and I think that framing is closer to the truth than either side of the debate wants to admit.

If you read Die with Zero looking for a spending algorithm, you will be disappointed, possibly angry, for reasons I’ll get to. But read as a corrective to a mindset, specifically the FIRE one, it holds up much better. The book’s rules are best treated not as rules but as a push. “Die with zero” is a better marketing line than “maximize utility,” but it describes the same underlying idea. Stripped of branding, the actual message is that experiences compound, that they should be front-loaded, and that life happens in seasons that do not repeat.

I am now in the season where an injury takes weeks to heal, if it heals at all. There have been dinners with my wife where the lighting was too dim and I was too tired to read the menu, and I had to ask her to read it to me instead. I never needed glasses day-to-day; I kept a pair at the office to spare my eyes during long screen hours. I am wearing them now. It is Saturday morning.

This is the part that won’t land if you’re in your thirties: you will not understand this, the same way I didn’t understand it at your age. You believe, in a narrow sense correctly, that you are invincible. But looking back, I don’t regret how George Best-y I spent it in my twenties and thirties, largely because even given the chance today, I couldn’t replicate it. What used to cost a single night to recover from now costs a month.

Yes, I could have saved another 10% in those years and be in a materially stronger position today. But that’s a pointless exercise. If I’m running back the clock, I also have to run the one where I don’t sell my apartment in Luxembourg, and I’d be further up the wealth ladder still. Ain’t no Delorean around here.

“Do not live on autopilot” is another genuinely useful rule from the book, and it’s harder to follow than it sounds… especially now, with two small children. The path of least resistance is to be reactive rather than proactive, to let the calendar fill itself. But the moment you stop paying attention, the window closes permanently. I take no pleasure in finding a new activity for my daughter, getting her on a waitlist, rearranging my schedule to make room for it…only to hear, two weeks in, that she doesn’t like it. But it is a take it or lose it proposition.

The trouble with leaning too far into Perkins’s framework is that it discounts longevity risk. You start to feel foolish for not spending more today, then irritated at yourself for feeling foolish, because you know that spending more isn’t actually responsible given what the ‘status of public healthcare in country XYZ‘ imply about the years ahead. The book look at this from both the intuitive angle (count everything, including home equity, via downsizing or a reverse mortgage) and the less intuitive one: treat life expectancy as a probability distribution, and plan against the distribution rather than a point estimate.

Which brings me to the post that gave this piece its title, and specifically how they mocked the Merton Share with something the authors call “omega”.

“Omega quantifies how much you fear running short of money relative to how much you fear leaving money unspent. It scales between 0 and 1. The low-omega retiree cares most about living well through spending. A seat in business class gives a thrill. The affordability of that upgrade doesn’t concern him; in his mind, he has enough wealth to afford it today — and he may not be here tomorrow.

The high-omega retiree, on the other hand, is mortified at the thought of shrinking the nest egg by thousands of dollars for a few hours of extra luxury. Sure, upgrading to business class nicks only a small fraction of wealth today — but what about tomorrow? High-omega types can’t get past the aforementioned six angry horsemen of old age. The disutility of seeing wealth drop overwhelms the utility of consuming more goods, services, and experiences.“

What actually provokes people, I’d argue, is not the concept of dying with zero but the examples chosen to illustrate it. A business-class ticket? That’s distinctly…an American frame?!? Here in Europe, the aspirational upgrade is simply flying an airline that doesn’t seem actively engineered to make the experience miserable at every step, from booking to baggage claim — Hello Ryanair. The most legitimate critique of Die with Zero is that it was written for the top percentile of American wealth, and translates poorly outside it.

Omega doesn’t solve anything.

What it does is put the trade-off in front of you, which is not nothing. You cannot optimize this problem, it isn’t optimizable, but you can at least understand which trade-off you’re making.

The authors claim the extremes of omega are rare. I’d push back on that. The extremes are rare only among people aware that omega exists. Among people who aren’t, the vast majority, the extremes are common: the frugal parent who gives their children nothing before death, on the theory that inherited money saps ambition…a reasoning that only holds if you’re wealthy enough for the inheritance to functionally replace effort, which is almost never the case. More often, a modest transfer is the difference between renting forever and having the option to buy, if circumstances align. The opposite extreme is just as common: the person who spends everything, then votes to have the state backstop the consequences, effectively outsourcing the retirement problem to whichever populist promises to solve it.

The value of omega, then, isn’t that it resolves the equation. It’s that it manufactures awareness, awareness that happens to compress well into a format that travels on TikTok.

Seen this way, omega has traced the inverse arc of the 4% rule. That rule began as an answer to a narrow empirical question, how much can you withdraw without running out of money, and metastasised into two opposing camps: people who think spending half of 4% is already reckless, and people who never read past the headline and assume the number holds for a sixty-year retirement rather than a thirty-year one.

Which is why I’ve come to dislike articles that pose questions like this one. Especially the good ones. It’s a genuinely interesting question; the problem is that most readers don’t land on the right conclusion. Credit to Nick for including the caveat anyway: there is no optimal portfolio here.

Alas, you will die with too much money, or too little. Get over it.

But as Nick shows here, anything ‘balanced’ would put you close enough to the target.

What I am reading now:

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