Will your spending stay flat in retirement?

Open any retirement calculator, and it will hold your spending flat in real terms. Enter $70,000 a year, and the tool quietly raises it with inflation, every year, until you die. That assumption sits underneath the 4% rule, most financial planning software, and, until recently, every projection on this site.

The idea is reasonable on its face: prices go up, so your income should keep pace. Economists call this consumption smoothing, and the life-cycle hypothesis predicts people will try to keep their standard of living steady across their whole lives.

The trouble is that real retirees don’t behave that way. When researchers stopped modeling what people ought to do and started measuring what they actually did, the pattern came out backward.

Real spending falls through retirement. Blanchett first measured it in 2014 using the Health and Retirement Study, finding an average decline of about 1% a year between ages 60 and 90. He rebuilt the analysis in 2026 with far more data: eleven survey waves, 7,843 observations, 2,262 households tracked over two decades.

The decline held. Separate work by Hurd and Rohwedder found real spending dropping around 2% a year, and it dropped in every wealth quartile they looked at, not only among households that were running short.

This isn’t a subtle effect. Retirees in their late 80s were living on noticeably less, in real terms, than the same people did at 65.

• The decline shows up in US, UK, Italian, and Spanish household data.
• Over a two-year window, only about 55% to 60% of households show a real decline.
• Stretch the window to ten years, and that rises to roughly 75% to 85%.

Retirement spending has a shape, and it follows your health more than your budget. Michael Stein named the three phases in 1998, and the labels stuck because they describe something people recognize in their own parents.

In the go-go years, you travel, eat out, and finish the projects you deferred while working, and spending looks a lot like it did before you retired. The slow-go years arrive somewhere around 70 to 84, when energy drops and the travel budget goes with it. The no-go years bring the sharpest change: discretionary spending nearly stops, and health costs take its place.

The research puts numbers on the shape. Real spending falls slowly in your 60s, fastest in your late 70s, then either keeps falling or flattens out, depending on which retiree you look at.

Federal retirees have a specific reason to care, and it’s good news about a rule most feds dislike. Your FERS annuity doesn’t keep full pace with inflation. Under the diet-COLA rule in 5 U.S.C. 8462(b), a year of high inflation gives you CPI minus one percentage point, and most FERS retirees receive no COLA at all before 62.

That means your pension slowly loses purchasing power by design. It’s the single most common complaint about FERS, and it is real.

Now set it beside the spending research. If your real spending drifts down around 1% a year while your annuity drifts down by a similar amount, the two move together instead of pulling apart. The erosion that looks alarming against a flat spending line looks a good deal less alarming against a falling one.

RetireCiv keeps flat spending as the default, deliberately. Switching a declining pattern on improves every projection at once, and a number that improves because you changed an assumption hasn’t told you anything about your retirement.

The useful move is comparison: run your plan both ways and look at the distance between the answers. That distance is the honest measure of how much this assumption is carrying. On the Monte Carlo page you’ll see all four patterns run side by side on the same market path, so the only thing separating them is the spending question.

One caution deserves weight. Roughly a third of the retirees in the underlying data were underfunded, and their steep cuts were forced. If your plan only works with a declining pattern switched on, you haven’t found extra room. You’ve found out that your plan depends on cutting back later.

• Change your pattern in Settings (sign-in required); it drives the Monte Carlo simulation and your scenario comparisons. The dashboard and the PDF budget show your spending at retirement, before the pattern is applied.
• The patterns are fitted on ages 60 to 90. Past 90 the yearly rate of change holds flat, so real spending keeps easing down rather than leveling off.
• Only the flexible three-quarters of spending moves. A mortgage payment never shrinks.
• Your readiness score always uses flat spending, so it can’t improve just because you changed this.