| Yet, as I discussed in my last column, living that life is difficult for some folks even if they can afford it. These individuals are financially independent but highly reluctant to spend. One potential reason is that they became wealthy over a period of decades - as most affluent Americans do - as a result of disciplined saving and investing. Their mantra was "avoid frivolous spending and never touch principal." That makes perfect sense when someone is in the asset accumulation phase. But, after a certain age, it's no longer the case. After all, what is the point of accumulating wealth if you never enjoy it? Another reason that many affluent people never spend down their fortunes is that they are afraid of running out of money. This concern is understandable for folks who don't believe they have enough for a retirement that may last two or three decades or more. But - like you, perhaps - I've known many men and women with more than enough who are still reluctant to spend and enjoy it. Often they lack confidence because they don't know how long they will live, what their total expenses will be or what their portfolios will return. Welcome to the club. No one knows these things. But just because it's a legitimate concern doesn't mean that it should be financially paralyzing. It's quite possible to make some reasonable estimates that will allow you to loosen your purse strings. Let's start with how long you might live. Sure, you could step in front of a bus or suddenly drop dead tomorrow, but that isn't likely. Insurance companies have turned life expectancy into a science. And while you probably don't have all the tools available to an actuary, you can get a pretty good estimate of how many years you have left by using an online longevity calculator. Blueprint Income offers a basic one here. And it's free. After calculating how long you might live, you can estimate what your portfolio will earn and how much you will receive in Social Security benefits. The government allows you to estimate your Social Security benefits here. To best estimate what your portfolio will earn, look at historical asset class returns. Since 1926, for example, U.S. stocks have returned an average of 10% annually. U.S. bonds have averaged 5.5% a year. That means that a portfolio that is, say, 60% stocks and 40% bonds is likely to earn in the neighborhood of 8.2% a year. (You can increase this return by owning a greater percentage of stocks, diversifying into higher-returning small caps and/or outperforming the market averages with your security selections.) Once you've made a reasonable calculation about how long you're likely to live and how much you're likely to earn (including pension benefits and any other sources of income), you need to calculate how much you're likely to spend. Here the estimation gets much more personal. Some folks are content to live simple lives based on low-cost activities like reading, watching TV and movies, browsing the internet, walking, swimming, and socializing. Others want to travel to exotic locales, pursue expensive hobbies and savor some of the finer things life has to offer. You are the best judge of which category you belong to or where you fall on the spectrum. Yet Bill Perkins - author of Die With Zero - points out that many folks make a crucial mistake that prevents them from enjoying the money they've accumulated. They fail to recognize that their material wants and needs will decline dramatically with age. He suggests that you divide the decumulation phase of your life into three categories: the go-go years, the slow-go years and the no-go years. We'll discuss all three - and how they should impact your spending today - in my next column. Good investing, Alex  | 
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