Do You Actually Spend Less as You Age in Retirement? What the Research Shows

What Does the Research Actually Show About Retirement Spending?

David Blanchett's research (Journal of Financial Planning, 2014) analyzed actual Bureau of Labor Statistics spending data and found that real (inflation-adjusted) spending declines about 1-2% per year during the first 15-20 years of retirement.

The pattern: - Ages 65-70: Highest spending. Travel, home projects, new activities. - Ages 70-80: Gradual decline. Less travel, fewer big purchases, simpler lifestyle. - Ages 80+: Spending may increase due to healthcare, home modifications, or care needs.

The 'go-go, slow-go, no-go' framework captures this: active years, slower years, and years when health limits activities.

Important: this is an AVERAGE pattern. Individual experience varies. Some retirees maintain high spending into their 80s. Others reduce spending dramatically by 70. The key is modeling YOUR expected pattern, not a generic one.

How Does This Affect Your Required Savings?

Most retirement calculators assume constant inflation-adjusted spending — $7,000/month today becomes $7,000/month (in today's dollars) at 85. This overstates the spending need for the middle decades.

The analysis engine offers configurable age-adjusted spending: a default 15% reduction when the younger spouse turns 70 and an additional 30% reduction at 80. These are optional — you can model flat spending if you prefer the more conservative assumption.

Impact example: A couple spending $8,000/month at 65: - Flat spending model: requires ~$2.2M portfolio for 90% success - Age-adjusted model: requires ~$1.85M portfolio for 90% success - Difference: approximately $350,000 less required savings

This doesn't mean you should save less — it means you may have more flexibility than a flat-spending model suggests.

Should You Plan for the Spending Smile or Flat Spending?

Conservative approach: Plan for flat spending. If spending does decline, you'll have a surplus — which is a comfortable problem to have.

Realistic approach: Model the spending decline but add a healthcare cost increase in late retirement (the uptick in the U-curve). The analysis engine does this by applying healthcare inflation (5.5%) separately from general inflation (3.3%).

The best approach: Run BOTH scenarios. The flat-spending model shows your 'worst case' (you never slow down). The age-adjusted model shows the more likely scenario. If both show 85%+ success rate, you're in strong shape. If only the age-adjusted model passes, you have less margin.

Want to Model Your Personal Spending Curve?

The analysis at myaifinancialplan.com lets you configure your spending assumptions — flat, age-adjusted, or custom — and shows the Monte Carlo impact of each. Start free at myaifinancialplan.com.