Will your spending stay flat in retirement?
Probably not. Research that follows the same households for two decades finds that retirees spend less each year in real terms as they age, falling roughly 1% a year on average. Your plan almost certainly assumes the opposite, and that gap changes what you need to save.
7 min read · By RetireCiv Editorial · Updated July 31, 2026
What almost every retirement plan assumes
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 do not behave that way. When researchers stopped modelling what people ought to do and started measuring what they actually did, the pattern came out backwards.
Why does the flat assumption survive if it is wrong?
Because it is cautious and simple. A plan built on flat spending asks you to save more than you probably need, and erring that direction is defensible. It also takes one input instead of a model. David Blanchett, who has published more on this than anyone, notes that even his own research papers still default to constant spending. His words: change is hard.
What the data actually shows
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 is not 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%.
Are retirees cutting back because they want to or because they have to?
Both, and the 2026 study finally separated them. Blanchett sorted households by funded ratio, meaning whether their savings could support their spending. The badly underfunded cut hard, around 7.5% a year. But the very overfunded, who could afford to spend freely, still averaged only about 1% growth. People with money to spend chose not to spend it.
Does this mean I can retire on less?
It means the flat assumption probably overstates what you need. Blanchett puts the difference at roughly 20% in required savings, or an initial withdrawal rate about a fifth higher. Treat that as a reason to test your plan against a different assumption, not as permission to retire early on a thinner balance.
The go-go, slow-go, and no-go years
Retirement spending has a shape, and it follows your health more than your budget. Michael Stein named the three phases in 1988 and the labels stuck because they describe something people recognise in their own parents.
In the go-go years you travel, eat out, and finish the projects you deferred while working. 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.
Four ways to model retirement spending
| Pattern | What it does | At age 90 |
|---|---|---|
| Constant | Rises with inflation for life. The default. | 100% |
| Gentle decline | Falls 1% a year after inflation. | About 82% |
| Spending smirk | Keeps falling. Tracks the median retiree. | About 78% |
| Spending smile | Falls, then flattens after 80. Tracks the average. | About 85% |
Is it a smile or a smirk?
Both, from the same data. The average retiree shows a smile: the decline slows after 80 and curls upward, because a minority face very large late-life health costs that pull the average up. The median retiree shows a smirk, where spending keeps falling. Health shocks move an average without moving a middle. Blanchett’s own conclusion is that the shape matters far less than dropping the flat assumption.
Does the late upturn undo the earlier decline?
No, and this is the detail people misread. The smile curves upward in the rate of change, not in the spending level. Even on the smile, real spending bottoms out around four fifths of where it started and stays there. The upturn slows the fall. It never returns you to your first-year standard of living.
What this means if your pension is FERS
Federal retirees have a specific reason to care, and it is good news about a rule most feds dislike. Your FERS annuity does not 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 is 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.
Does this fix the diet COLA?
It softens it, and only for the pension. Social Security still receives a full CPI-W adjustment, so a large share of your guaranteed income keeps pace regardless. The diet COLA is still worth planning around, especially if you retire well before 62 and face years with no adjustment at all. See our lesson on how FERS COLAs work for the mechanics.
What about FEHB premiums?
They are the exception, and they run the other way. Federal retirees keep FEHB for life with the government share, but premiums have grown faster than general inflation over the long run. RetireCiv never applies a declining spending pattern to your health premiums for that reason. They are modelled separately, growing at your own healthcare inflation assumption.
Why does comprehensive coverage matter here?
Because it flattens the late-life spike that creates the smile. FEHB plus Medicare converts most uncertain medical cost into a predictable premium. Federal retirees are among the best-covered people in the country, which is an argument that your own spending path looks more like the steadily falling smirk than the upturning smile. Long-term custodial care remains the uncovered exposure.
How to use this without fooling yourself
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 has not 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 will 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 have not found extra room. You have found out that your plan depends on cutting back later.
- Change your pattern in Settings; it flows to the dashboard, scenarios, Monte Carlo, and your PDF report.
- The patterns are fitted on ages 60 to 90 and held flat outside that range.
- Only the flexible three quarters of spending moves. A mortgage payment never shrinks.
- Your readiness score always uses flat spending, so it cannot improve just because you changed this.
Which pattern should I pick?
That is your call, and it depends on how much of your budget is genuinely optional. We cannot tell you which is right for your household. What the research supports is that flat spending is the least likely of the four to describe a real retirement, and that the gap between any declining pattern and flat matters more than the choice among them. See our assumptions for exactly how each one is applied.
What if my spending goes up instead?
It happens, and the averages hide it. Long-term care is the clearest case: for retirees who die at 95, the highest one in twenty face out-of-pocket medical costs many times the median. A spending pattern is a central tendency, not a forecast. It cannot model a shock, which is why the long-term care lesson covers that risk separately.