The Retirement Spending Smile: Why Your Costs Change With Age

Ask most people how much they will spend in retirement and you get a single number. Perhaps it is seventy thousand dollars a year, or whatever the household budget happens to be at the moment. The quiet assumption buried inside that number is that spending stays flat, climbing only with inflation, for twenty-five or thirty years. It is a tidy assumption. It is also one that the actual spending behavior of retirees does not support.

Research into how households really spend their money as they age points to a different shape. Spending tends to start relatively high in the first active years of retirement and then drift downward through the middle years. Late in life, for the average across many households, the pace of that decline tends to ease and can tick back up as health and care costs grow for some. Plotted on a chart, that path of change looks a little like a smile. The idea has a name, the retirement spending smile, and it is one of the more useful mental models you can carry into planning because it quietly reshapes two of the biggest questions in retirement: how much you need to save, and how fast you can safely spend it.

This guide walks through what the spending smile actually describes, what the public spending data show, where the framework gets oversimplified, and how to turn the pattern into a flexible plan instead of a rigid rule. None of this is a promise about your own future. It is a way of thinking that tends to match reality better than a flat line.

What the spending smile actually describes

The core observation starts with how fast spending changes, not just how high it is. The financial researcher David Blanchett, who is widely credited with documenting the pattern, plotted the annual percentage change in a retiree's inflation-adjusted spending by age. Measured that way, real spending tends to fall through most of retirement, but the rate of that decline is not constant. It is often steepest in the middle years and becomes less negative later in life, so the curve of those growth rates dips and then turns back up, tracing the smile shape.

That is a subtlety worth holding onto, because it is easy to lose. A growth rate can turn less negative while the underlying level of spending is still falling. In plain terms, spending can keep going down year after year, just more slowly near the end. The smile that appears in the rate of change does not by itself prove that the total dollars a household spends rise again at the very end.

Whether the level of spending actually rebounds late in life is a separate and more conditional question. In the average across many households it can turn up, because a minority of households face large health or care costs that are big enough to lift the average. For the typical household, the level often keeps drifting down instead. The decline through most of retirement is gentle, not a cliff, and it is uneven across categories. Travel, dining out, hobbies, and other discretionary spending often shrink the most as people age. Housing and health care behave differently and can hold steady or rise.

The possible late-life upturn that completes the smile comes largely from health care and, for some households, long-term care. In a 2026 analysis published in the Financial Planning Review, Blanchett points to idiosyncratic healthcare shocks as a likely explanation for why the average turns up late in life while the typical household does not, rather than treating a universal rebound as a settled finding. When those costs arrive, they can be large enough to push one household's total spending back up even as its discretionary spending keeps falling. For many other households, costs on that scale never arrive, and real spending simply keeps declining.

A second strand of language comes up alongside Blanchett's curve. The phrases go-go, slow-go, and no-go years are usually traced to Michael Stein's work on retirement stages. Those two ideas, the curve of spending changes and the phases of life, describe the same reality from different angles.

What the public spending data show

You do not have to take the pattern on faith. The U.S. Bureau of Labor Statistics runs the Consumer Expenditure Survey every year and publishes average annual spending by the age of the household reference person. The 2024 figures, released in December 2025, tell a clear downward story across the older age brackets.

Households headed by someone aged 55 to 64 spent an average of about $84,946 in 2024. That figure drops to roughly $65,354 for households headed by someone aged 65 to 74, and falls again to about $55,834 for households aged 75 and older. The overall average across all ages was $78,535. In other words, the oldest households in the survey spent roughly a third less than the late-career households just a decade or so younger.

A fair word of caution about this data. These are cross-sectional averages, which means they compare different households at different ages in the same year rather than following the same people over time. The 55 to 64 group includes many who are still working and still earning, which lifts their spending. Household size also tends to shrink with age. So the raw gap between brackets overstates how much a single household's spending would fall purely because of aging. Even after accounting for those effects, though, careful longitudinal research that does follow the same households still finds real spending drifting downward through most of retirement. The direction holds up. The exact slope is what gets debated.

The three phases, in plain terms

The phased version of the spending smile is easier to picture than a curve, and it maps onto how people actually describe their own retirements. The ages below are rough and vary enormously from one person to the next. Health, not the calendar, usually decides when each phase arrives.

The go-go years

These are the early, active years, often the first decade of retirement. Energy is high, health is usually good, and the list of things people waited their whole careers to do is long. This is when travel, second homes, hobbies, home projects, and spending on grandchildren tend to peak. Many households spend as much or more in these years than they did while working, which is the opposite of the old rule of thumb that retirement automatically costs less. For planning, the go-go years are the expensive, joyful front end of the smile.

The slow-go years

Somewhere in the mid-seventies to early eighties for many people, the pace eases. Travel does not stop, but it moves closer to home and happens less often. The big discretionary outlays taper. People have usually done the bucket-list trips, furnished the home the way they want, and settled into routines that cost less. This is the dip in the smile, where real spending tends to be low. Whether it stays low or turns back up later depends mostly on health and care costs. It is also the phase that flat-spending plans miss entirely, because they assume this money is still being spent at go-go levels.

The no-go years

In the final phase, often the mid-eighties and beyond, daily life becomes more home-centered. Discretionary spending keeps falling, but health care, in-home help, and possibly long-term care can rise sharply. For some households these costs are modest and total spending simply stays low, producing more of a downward slope than a smile. For others, a serious health event or years of care can send spending higher than at any earlier point. This is the uncertain tail of retirement, and it is where a late-life rise in spending either appears or does not.

Smile, or smirk? Why averages can mislead

The smile is an average, and averages hide the spread. Blanchett's 2026 work draws a sharp line here, and it is worth being precise about what it measures. The study principally compares the average and the median annual change in spending by age, not the level of spending directly. Measured as a rate of change, the average retiree's figure eases and turns up late in life, tracing the familiar smile, while the median retiree's rate keeps declining, tracing what he calls a smirk. For that median household, spending simply declines through retirement and keeps declining, with no late-life upturn.

Why the difference? The upturn in the average change is driven heavily by a minority of households that face large, prolonged care costs. A healthcare shock pulls the average up even when most people's spending keeps drifting down, so it does not touch the median household. Blanchett presents this healthcare explanation as a likely cause rather than a proven mechanism, and treats late-life care as a wild card when projecting income needs for the final stretch of retirement. A plan built on the average and a plan built on the median can look quite different, and neither is wrong. There is no single curve that fits everyone, only a central tendency of declining real spending wrapped in a wide band of outcomes.

Why the flat-spending assumption can mislead your plan

Here is where the pattern stops being trivia and starts affecting decisions. Many retirement calculators and simple rules assume you will spend the same inflation-adjusted amount every year. If real spending actually tends to decline through the middle of retirement, that flat assumption builds in a cushion you may not need, which can cause two very different mistakes.

The first mistake is oversaving and underliving. A person who models thirty years of flat spending may conclude they need a much larger nest egg than their real spending pattern requires, and so they keep working longer than necessary or spend their healthiest years being overly frugal. The go-go years are the one phase where health and desire line up, and they do not come back. Spending too cautiously then, to fund a flat budget that will not actually materialize later, is a real cost even if it never shows up on a statement.

The second mistake runs the opposite direction. Some people hear spending declines with age and decide the later years will be cheap, so they front-load spending aggressively and leave the no-go years underfunded. That ignores the right side of the smile. The table below shows a simplified, clearly hypothetical comparison of a flat-spending plan against a declining-then-rising plan, both starting from the same first-year budget of $75,000, to make the shapes concrete.

The numbers in that table are illustrative, not a forecast of your spending. The point is the shape, not the precision. Notice that both plans begin at the same first-year figure, so the only thing that differs is what happens afterward. A plan that assumes a flat line will tend to overestimate total lifetime spending compared with a plan that follows the smile, while still leaving room for a possible late-life rise. That gap is exactly why the assumption matters.

What this means for how much you withdraw

The spending smile connects directly to withdrawal strategy. The well-known starting point for many retirees is a fixed withdrawal, such as taking an initial percentage of the portfolio and then adjusting that dollar amount for inflation every year. That approach is built on the same flat-spending idea, and it is intentionally conservative because it has to survive a thirty-year horizon through good markets and bad.

If your real spending is likely to decline through the middle years, you have more flexibility than a strictly flat plan assumes. Blanchett's modeling suggests that building in a realistic decline can support a meaningfully higher starting withdrawal rate than assuming spending keeps pace with inflation for life. You might reasonably spend a little more in the early years, knowing the slow-go dip is coming. Many planners build this into dynamic strategies that let withdrawals rise and fall with both the portfolio and the retiree's actual stage of life, rather than marching up with inflation regardless of what is happening. If you want the foundation first, our explainer on the 4% rule lays out the fixed approach, and the spending smile is best understood as a refinement layered on top of it, not a replacement for careful planning.

Two cautions apply. First, flexibility in withdrawals is only real if your essential costs are covered by stable income such as Social Security, a pension, or an annuity. You can afford to flex discretionary spending. You cannot flex the electric bill. Second, the early years of retirement carry their own risk from the order in which market returns arrive, which is a separate issue from spending patterns and deserves its own attention before you lean hard into front-loaded spending.

The no-go years trap

The single most common way people misuse the spending smile is to treat the entire back half of retirement as cheap. The data make the middle years look inexpensive, and it is tempting to extend that straight through to the end. That is the trap.

Discretionary spending does keep falling in late life for most people. But health care does not follow the same path, and long-term care follows no predictable path at all. A single multi-year stay in a care setting, or years of paid in-home help, can cost far more than any travel budget from the go-go years. This is the part of the pattern that is both the most important to plan for and the hardest to predict, because it is driven by health events no spreadsheet can schedule.

The balanced response is not to assume the worst for every year, which would push you back into oversaving, and not to assume the best, which leaves you exposed. It is to treat late-life care as a specific, separate risk and decide in advance how you would fund a bad outcome. That might mean earmarking a portion of assets, keeping home equity in reserve, considering insurance, or planning around family support. Our deeper look at health care costs in retirement covers the categories that tend to drive any late-life rise, and it pairs naturally with the smile because it fills in the one part of the picture the averages make look deceptively small.

Turning the pattern into a plan

The spending smile is most useful when it stops being a chart and becomes a set of choices. A practical way to apply it is to separate your retirement budget into layers and let each layer behave the way the data suggest it will.

Start by covering essentials with reliable lifetime income. Housing, food, insurance, and basic health costs should sit on a floor of Social Security, any pension, and possibly an annuity, so these do not depend on market performance or on getting the spending curve exactly right. Our guide to building a retirement spending plan walks through how to map income against expenses in this layered way.

Next, fund the go-go years deliberately. Treat the first decade as the time to spend on experiences while health allows, and size that spending knowing it is likely to taper. This is not permission to be reckless. It is permission to not be needlessly frugal in the one window when the money buys the most life.

Then plan the middle years as the natural dip, not as a budget you must force spending up to meet. If your real spending falls on its own, let it. The savings from the slow-go years become a buffer for the end.

Finally, reserve for the no-go tail. Keep a defined pool, whether assets, home equity, or insurance, set aside for the possibility of significant late-life care. If that cost never arrives, the reserve becomes a legacy. If it does, you are not scrambling. One way to make that reserve feel concrete is to pick a target and see how steady saving could build toward it. The tool below is a simple savings-goal illustration: set a target reserve, your current set-aside, a monthly contribution, and an assumed annual return, and it estimates how the balance grows toward the goal. Every figure is yours to change, and the result is an illustration, not a projection of what late-life care will actually cost.

Inflation still runs underneath all of this, and it works in the opposite direction from the real spending decline the smile describes. Even if the quantity of goods and services you buy shrinks over time, the price of each item keeps climbing, so a budget held flat in dollar terms quietly buys less every year. A simple worked example makes that erosion concrete. Picture a fixed annual budget of $65,000 in the dollars you expect to be spending 20 years from now. At 3 percent annual inflation, that future $65,000 has approximately $35,989 of today's purchasing power, a little more than half of today's lifestyle. You find that figure by dividing the future budget by one plus inflation raised to the number of years, here $65,000 divided by 1.03 to the twentieth power. Read it in the correct direction: a budget set 20 years out, translated back into today's money, is worth about $35,989. It is not a claim that today's $65,000 only buys $35,989 worth of goods right now. That is the reality check against the comforting idea that later years are automatically cheaper. Real spending may fall on its own, but it does not fall nearly as fast as a frozen nominal budget would force it to. The numbers here are a clearly labeled hypothetical, not a forecast of inflation or of your budget.

This is why the two forces have to be read together. The spending smile tells you the real quantity of goods a retiree tends to buy drifts down through the middle years, while the inflation math tells you the dollar price of whatever you do buy keeps climbing. The useful habit is to picture your lifestyle in today's dollars and let a separate inflation adjustment handle the nominal figures.

Common mistakes to avoid

A few errors come up again and again when people first meet the spending smile. The first is treating the exact percentages from any study as a personal prediction. The curve describes populations. Your own path depends on your health, your tastes, where you live, and luck. Use the shape, not the decimals.

The second is confusing a change in the rate of spending with a change in the level. The smile shows the pace of decline easing late in life, which is not the same as total spending rising again for everyone. For the typical household the level often keeps falling right through the end, and even in the average, a rise late in life is conditional, appearing only when a minority of households with heavy care costs lift the figure enough to turn it back up.

The third is forgetting that the survey data mix retirees with workers. The sharp drop between the late-career and early-retirement brackets partly reflects the loss of work-related spending and the shrinking of households, not pure aging. The true aging effect on a single household is gentler than the raw survey gap suggests.

The fourth is letting the pattern override your own numbers. The best plan is still built on your actual expenses, income floor, and tolerance for risk. The spending smile is a lens for interpreting those numbers, not a substitute for gathering them.

The bottom line

Retirement spending is not a flat line, and planning as though it were quietly distorts both how much you think you need and how freely you think you can spend. The evidence, from national spending surveys to detailed household research, points to real spending that tends to be highest in the active early years, declines through the middle years, and is uncertain at the end, where health and care costs decide whether the pace of decline eases, flattens, or in some households turns back up into a true rise.

The useful response is neither to assume later life is cheap nor to save as if every year will cost the same. It is to spend with intention in the years that offer the most life, let the middle years dip naturally, and reserve seriously for a late-life tail you cannot schedule. Get those three moves right and the spending smile stops being an abstract chart. It becomes a reason to enjoy the early years more and to plan the later ones more precisely.