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Why your expenses in retirement aren't flat — and why that matters for safe withdrawal planning
Most retirement planning tools assume your spending stays roughly flat in real terms — you withdraw the same inflation-adjusted amount every year. But decades of spending data tell a different story. Research by David Blanchett (2014) and Sudipto Banerjee (2014) independently documented a U-shaped pattern now called the “retirement spending smile”: expenses start high, dip in the middle years, then rise again late in life as healthcare costs take over.
Understanding this pattern changes how you think about safe withdrawal rates, front-loading discretionary spending, and planning for late-life healthcare — the real financial risk in a long retirement.
Go-Go years (roughly 65–75)
Early retirement is the most expensive decade. Energy is high, mobility is good, and the bucket list is long. Travel, hobbies, dining, and new experiences fill the calendar. Historically, spending in this phase runs 110–120% of pre-retirement baseline. If you retire early at 50 or 55, this window can stretch even longer. This is the phase you spent your whole career imagining — and it costs more than most models assume.
Slow-Go years (roughly 75–85)
Energy and mobility shift. Long-haul travel becomes less appealing. Discretionary spending on experiences declines naturally. Banerjee's analysis of actual retiree spending data found a real (inflation-adjusted) decline of roughly 1–1.5% per year during this phase. The portfolio gets a break from withdrawals just when many models predict peak sequence-of-returns risk. This is the dip of the smile.
No-Go years (85+)
Healthcare dominates. Assisted living, in-home care, prescription costs, and medical procedures can push spending back to — or above — early retirement levels. But the composition has changed entirely: this is no longer travel and leisure. It's medical and care costs. This is the tail of the smile, and it's the key financial risk in a long retirement. Many retirees who spent modestly in their 70s are caught underprepared for what arrives at 88 or 92.
The chart below shows a stylized version of the spending smile over a 30-year retirement, expressed as a percentage of initial retirement spending. The pattern is smooth in the data — retirees don't flip a switch — but the arc is consistent across multiple large-scale studies.
Stylized illustration based on Blanchett (2014) and Banerjee (2014)
Illustrative. Actual experience varies by individual health status, lifestyle, and long-term care needs. The pattern is broadly consistent across multiple peer-reviewed studies of retiree spending.
Most safe withdrawal rate research — including the classic Trinity Study — assumes flat real spending: you draw the same inflation-adjusted amount every year for 30 years. The spending smile reveals three important implications for FIRE planners.
Flat models overstate mid-retirement withdrawals
A simulation that projects the same withdrawal at year 18 as at year 3 overstates what most retirees actually spend in their Slow-Go years. This means the simulated portfolio depletion risk is higher than your likely real-world experience — you probably have more cushion in your 70s than a flat-spending Monte Carlo suggests.
Safe withdrawal rates are conservative, but for the wrong reason
The 4% rule has significant margin built in — historically many 30-year periods end with large remaining balances. Part of that conservatism implicitly buffers the late-life healthcare spike. But the cushion is unevenly distributed: the real risk isn't ruin at year 20, it's being cash-strapped at 90 when a memory-care facility costs $10,000/month.
The late-life healthcare spike is the key risk
The right response to the smile isn't to reduce your FIRE number — it's to explicitly plan for the tail. An HSA invested for decades is purpose-built for this. Long-term care insurance (ideally purchased in your 50s) hedges the care cost. Medicare Supplement (Medigap) caps most out-of-pocket medical costs after 65. Ignoring the tail and spending freely in the Go-Go years without a plan is the main smile-related mistake.
Spending smile estimate
Take the FIRE quiz to see how the spending smile applies to your numbers
Take the quiz →The spending smile interacts meaningfully with your choice of withdrawal strategy. Some approaches adapt naturally; others require intentional adjustments.
Floor & Ceiling and Guyton-Klinger naturally adapt
Variable withdrawal strategies that cut distributions when markets underperform will naturally pull back in the Slow-Go years even without a market downturn — simply because you're spending less. This creates an organic match between the strategy's guardrails and the smile pattern. The portfolio benefits from lower withdrawals precisely when it may need the runway to fund late-life costs.
Fixed-percentage withdrawals build a buffer automatically
A percentage-of-portfolio approach (e.g., withdraw 4% of current balance each year) reduces the dollar withdrawal when the portfolio has grown but spending needs have dipped. In the Slow-Go years, the combination of lower spending and a portfolio that may have recovered creates an expanding buffer — exactly the reserve needed for No-Go healthcare costs.
Front-load discretionary spending deliberately
The smile gives you explicit permission to spend more in the early years. That trip to Patagonia makes more sense at 62 than at 82. Build your early retirement budget to reflect Go-Go realities — then accept that spending will naturally taper as the slow-go phase arrives. Don't plan for flat spending and then feel guilty about spending more early. The data says that's normal.
Protect the tail with dedicated vehicles
A well-funded HSA is the single most efficient tool for late-life healthcare spending — triple tax-advantaged and designed for exactly this cost. Long-term care insurance, purchased in your 50s before premiums become prohibitive, hedges the care cost risk. Medicare Supplement (Medigap) caps most out-of-pocket costs after 65. These aren't optional extras; they're the financial infrastructure for the right side of the smile.
Withdrawal Strategies
How different approaches handle variable spending needs across a long retirement.
Floor & Ceiling Strategy
A flexible withdrawal approach that naturally adapts to spending changes across the retirement smile.
HSA Triple Advantage
The most tax-efficient vehicle for funding the late-life healthcare spike at the right of the smile.
The 4% Rule
Why the safe withdrawal rate has more cushion than it appears — and how the smile explains part of that margin.