Traditional retirement planning models assume household consumption remains completely constant in inflation-adjusted dollars from retirement day until age 98, escalating rigidly by 2.5% CPI every year. Empirical longitudinal data on actual retiree expenditures—most notably research by retirement actuary David Blanchett—demonstrates that real retirement spending rarely follows a flat horizontal line. Instead, consumption traces a U-shaped trajectory known as the Retirement Spending Smile.
Mathematically, real inflation-adjusted retiree spending follows a quadratic curve: S(t) = S_0[1 - α(t - t_0) + β(t - t_0)^2]. During the first decade of retirement (ages 62 to 72, the active "Go-Go" years), international travel, hobbies, and home upgrades keep real outlays high—averaging $108,000 per year for a couple with a $1,650,000 portfolio. Between ages 73 and 84 (the "Slow-Go" years), travel frequency tapers off and discretionary consumption naturally declines by roughly 1.5% to 2.0% annually in real terms, lowering baseline spending to $74,000 per year. Finally, beyond age 85 (the "No-Go" years), rising out-of-pocket medical, home-health aide, or assisted-living expenses push total spending back upward toward $105,000+ per year.
Relying on a flat-line bank calculator introduces two costly distortions at once. First, projecting a constant $108,000 inflation-adjusted draw across ages 73 to 84 overstates mid-retirement cash needs by more than $350,000, causing households to work years longer than mathematically necessary. Second, ignoring the late-life care surge leaves the portfolio under-buffered right when Continuing Care Retirement Community (CCRC) or custodial expenses arrive.
Generic calculators cannot capture this U-shaped trajectory because they accept only a single baseline expense figure multiplied by uniform annual inflation.
This template models three distinct multi-year spending phases ($108,000 for 10 years, $74,000 for 12 years, and $105,000 for 14 years) paired with an $18,000 annual medical care stream starting at age 84. Load the preset to inspect the U-shaped cash-flow schedule.