You can't spend over your lifetime more than you have. Your lifetime balance sheet reflects this point. It shows that your lifetime spending or outlays (the right-hand-side of the balance sheet) equals your lifetime income. All amounts are presented as present values. Present values tell us what dollars paid or received in the future are worth today (in the present).

Your lifetime income comprises the total present value of receipts from annual labor earnings, Social Security benefits, pensions, annuities, retirement account withdrawals, special receipts, and current regular assets.

Your lifetime spending comprises the total lifetime present value outlays on annual housing expenditures, special expenses, taxes, retirement account contributions, Medicare Part B premiums, life insurance premiums, and discretionary spending.

Our software determines your annual discretionary spending to ensure the smoothest possible living standard of household members through time. In deciding what you should spend on a discretionary basis each year, we take into account your family composition, but also the cash constraints that your household faces. Most importantly, however, we incorporate your discretionary spending capacity--the fact that your lifetime discretionary spending plus your lifetime fixed spending, on housing, etc., cannot exceed your lifetime income.