Extreme Time Value of Money: Late-stage Career Planning

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From the Archives<br>Extreme Time Value of Money: Late-stage Career Planning

Kent Beck<br>Apr 21, 2026

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First published January 4, 2021, just before this newsletter started. Comes more starkly into focus given my recent Parkinson’s diagnosis. In that piece I introduced the time value of time, which I need to expand on further.

A billion dollars in 30 years. Would you take it? I wouldn’t. Here’s why that’s not dumb for me.<br>This is another of my “smash two ideas together” essays. In this case, the ideas are:<br>The time value of money &

Mortality

Heavy stuff, but there you have it. It’s a new year, time for big thoughts.

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Time Value of Money

I turn 60 this year [ed: now 65]. I’ve recently noticed my career thinking diverging from that of my colleagues. They are more willing than I am to sacrifice now for gains later. Reflecting on the differences I’m led back to a theme of economics I learned early and have been teaching geeks ever since: the time value of money.<br>The absurdity of software engineering dogma at the beginning of my career dragged me to the time value of money. The trend back then was to do more and more work at first (spending money all the while) for (it was promised) greater and greater benefit later and later.<br>This didn’t make sense to me. Much of that up-front work turned out to be useless speculation. More fundamentally, this style contradicted a central tenet of economics—the time value of money.

A dollar today is better than a dollar tomorrow. It’s worth more. If I have a dollar today, I can invest it and make more by the time tomorrow comes around. I should prefer less than a dollar today to exactly a dollar tomorrow, less by a discount rate (which, spoiler alert, is hard to figure out and shouldn’t be modeled as a constant, but please keep reading).<br>If you accept this truth, then you do exactly the opposite of “spend more now to (maybe) make more later”. Those dollars you spend now are more expensive than the dollars you earn later. You can create economic value simply by figuring out how to earn sooner or spend later, even before making anything!<br>Aligning with economics requires that you start earning sooner and defer spending as long as possible. This seems to contradict engineering purity—if I do a great job today then I’ll never have to invest in this code again. Sorry, that’s not how money works. Look at XP and you’ll find a hundred ways to earn sooner and spend later.<br>(At this point I encourage you to do background work to gain intuition about the time value of money. Build a spreadsheet. Play with parameters. Let the difference between a dollar today and a dollar tomorrow soak into your bones. That’s what I did.)<br>Here are 2 more ways to think about the time value of money. First, the less time involved, the less it matters. This will be important as we talk about the effects of mortality.

The second, the discount rate profoundly affects the difference in value. Compare 5% with 10% with the current yield on 30-year Treasuries of 1.6% [ed: 4.9%].

Discount Rate Isn’t Constant

Back to that billion dollars in 30 years. Why is that worthless to me? Is a billion dollars in 1000 years worth anything to you? No. You won’t be alive to benefit from it. 100 years? Same.<br>If you’re 20-something, a billion dollars in 30 years is awesome. You can do whatever for 30 years, secure in the knowledge that your financial options will explode at the end of that period. And you’re likely to be alive to experience it. For me, though, a billion dollars after either I’m too old to enjoy it [ed: hello, Parkinson’s] or after I’m dead is worth nothing. I’d literally rather have one dollar in my hand today.<br>(All numbers taken from the morbidly fascinating https://flowingdata.com/2015/09/23/years-you-have-left-to-live-probably/).

One of the challenges working with the time value of money is determining the discount rate. My discount rate here in the last stage of my career is not constant. That’s what I was missing. My colleagues have a smooth discount rate over the 10–20 year time scales we are used to. I stop financially caring about the future before they do. Here are the life probabilities for a 30-year-old male.

As long as my young colleagues get paid off some time in the next 30 years they have a high probability (relative to me) to have a long time (relative to me) to enjoy their money.<br>My “discount rate” isn’t a single rate at all. Past a certain horizon, probably 30 years, it’s...