What Is the 'Retirement Spending Smile'?
Retirement budgets are often built as if spending stays flat, adjusted only for inflation, from the first year to the last. Actual spending data tells a different story.
The short answer
The retirement spending smile refers to a pattern researchers have observed in household spending data: retirees often spend more in the early years of retirement, less in the middle years, and then more again in the later years, when plotted over time it traces a shape resembling a smile rather than a flat or steadily declining line. It’s a description of a general tendency, not a rule that applies identically to every household.
The three phases behind the pattern
This pattern is often broken into three loosely defined stretches sometimes called the go-go, slow-go, and no-go years. In the go-go years right after retirement, spending tends to run higher as people travel, pursue hobbies, and stay active while health and energy allow. In the slow-go years that typically follow, spending often eases as travel and activity naturally slow down. In the no-go years toward the later stages of retirement, spending can climb again, frequently driven by rising healthcare or long-term care needs rather than discretionary activity.
Why this matters for planning
A retirement budget that assumes flat, inflation-adjusted spending every year can overstate needs in the middle years and, more importantly, understate them in the later years when healthcare-related costs tend to rise. Recognizing the smile pattern doesn’t mean assuming it will play out identically for any one household, but it does suggest that a plan built entirely around a constant safe withdrawal rate may not reflect how spending actually tends to move.
- Early flexibility matters. Higher spending in the go-go years is often discretionary, meaning it can potentially flex if a plan needs to adjust.
- The middle years aren’t a place to over-plan for. Assuming spending stays at its early-retirement peak for the full duration can lead to overly conservative decisions.
- Late-life costs deserve real attention. Rising expenses later in retirement are often the least discretionary and the hardest to predict, which is part of why estimating retirement healthcare costs is treated as its own planning task.
- Averages hide variation. Health, family history, and personal circumstances all affect whether, and how strongly, an individual household experiences this pattern.
How it interacts with other planning tools
The spending smile is sometimes cited as one reason certain retirees look at approaches like guardrails-based withdrawals instead of a rigid fixed-percentage plan, since a framework that can flex with actual spending needs may fit the smile pattern better than one that assumes a constant real-dollar withdrawal every year. It’s also a reason some planning conversations treat healthcare and long-term-care costs as a distinct line item late in retirement rather than folding them into a general inflation assumption.
What to weigh
The retirement spending smile is a description drawn from aggregated data across many households, not a forecast for any individual retirement. It’s most useful as a reminder that a retirement budget doesn’t have to be treated as a single flat number multiplied by years remaining, and that both early flexibility and late-life cost planning deserve their own attention.
The takeaway
Spending in retirement often doesn’t move in a straight line — many households spend more early, ease off in the middle, and see costs climb again later, largely tied to health. Building that general shape into expectations, without assuming it will match any one retirement exactly, can make for a more realistic plan than assuming flat spending throughout.