EXCERPTS
"You've been allocated one lifetime; that's it. Regardless of the source of your wealth, regardless of whether you're planning a legacy that will survive you, you have until the day you die to achieve your dreams. True, you can create legacies that will carry your visions beyond your grave, but you've got to envision those plans and set them in motion while you're still here. So an important step in wealth planning is to assure you'll have enough to satisfy your needs and desires throughout your life expectancy. That's called securing your "nut" (finally, a financial term from the squirrels rather than a Scrabble® triple-word-score Hall of Famer).
Start by defining and articulating how you want to spend your money throughout your life: I call this "satiation spending." This will be much more than your Christmas list for Santa—a good wealth coach can guide you through the process. Together you'll take what you have and what you plan to spend, mapping that over a realistic projection of your lifespan. You'll extrapolate a return on your investment, an inflation rate, a life expectancy, and voila! That's how you'll determine if you have enough assets to meet all your needs and wants.
The nut is the amount that supports your satiation spending beyond your expected lifespan. It requires consideration of investment returns, changing personal circumstances, market fluctuations, and on and on. Like so much in this process, it's an arbitrary calculation, though not random: inherently flawed but helpful nonetheless. The flaw is that nobody can see the future. For instance, in 2004 you never saw a nut calculation that anticipated the 50 percent market slide in 2008-2009, but a good calculation will specifically address and provide reasonable flexibility to accommodate such surprises. Where nut calculations are helpful is taking your financial snapshot—your sense of where you stand now—and telling you whether you're likely to have enough."