RETIREMENT REALITY

The Things the Numbers Don’t Tell You

Part 1 of 5: You May Not Spend as Much at 90 as You Think

One of the most common assumptions in retirement planning sounds perfectly reasonable:

If you spend $80,000 during your first year of retirement, you’ll need to increase that amount every year to keep up with inflation.

At 3% inflation, $80,000 becomes about $108,000 after 10 years, $144,000 after 20 years and roughly $194,000 after 30 years.

That’s how many retirement projections are built.

There’s just one problem.

Real retirees don’t necessarily spend that way.

Retirement Spending Doesn’t Move in a Straight Line

A 2026 study by retirement researcher David Blanchett examined spending using data from the Health and Retirement Study.

The research found that inflation-adjusted—or “real”—spending generally declines as retirees get older. Even relatively affluent retirees who appear capable of maintaining their spending tend to spend less.

That’s important because it suggests declining spending isn’t always the result of retirees running out of money.

Often, they’re simply choosing to spend less.

Think about a typical couple retiring at 65.

During their first decade of retirement, they might travel extensively, eat out several nights a week, buy a new vehicle, remodel the kitchen and regularly visit children and grandchildren.

At 78, they may still travel—but perhaps not as often.

At 88, international travel may no longer sound particularly appealing. They may drive less, eat out less frequently and spend considerably less on entertainment.

Retirement researchers sometimes describe this progression as the “go-go,” “slow-go” and “no-go” years.

The terminology may be a little simplistic, but the concept makes sense.

GRAPHIC: Retirement Spending May Not Rise Forever

Illustration only. The second column shows what happens when $80,000 of spending increases by 3% annually. The third is an illustrative example of how spending might change as a retiree ages and is not intended as a forecast.

The takeaway: Traditional retirement projections often assume spending rises with inflation indefinitely. Research on actual retirees suggests inflation-adjusted spending frequently declines with age.

Healthcare Is the Big Exception

Not every expense declines.

Healthcare becomes a much larger part of the retirement budget as people age.

Research cited by Blanchett found that households headed by someone age 75 or older devote roughly 15% of spending to healthcare, compared with less than 5% for households headed by someone younger than 35. Healthcare spending also tends to increase with age even while total spending declines.

That creates an interesting retirement spending pattern.

Travel may decline.

Transportation may decline.

Entertainment may decline.

But healthcare may increase.

The result isn’t necessarily the constantly rising spending line commonly shown in retirement projections.

Could Traditional Planning Be Too Conservative?

Here’s where the research becomes especially interesting.

Blanchett estimated that incorporating declining real spending into a retirement model could support initial retirement spending roughly 20% higher than a model assuming spending remains constant after inflation.

That doesn’t mean retirees should immediately increase their withdrawals by 20%.

It means the assumptions matter.

Consider a 65-year-old couple who has dreamed for years about taking their children and grandchildren on a major family vacation.

They can afford the trip.

But they decide not to go because they’re worried about what their portfolio might look like when they’re 90.

At 90, they may still have the money.

What they may not have is the ability to take the trip.

That’s a retirement risk that doesn’t appear on most financial planning reports.

Money Has Different Value at Different Ages

A dollar is always worth a dollar financially.

But its usefulness may change.

The $10,000 spent taking your grandchildren to Europe at age 68 might create memories your family talks about for decades.

The same $10,000 sitting in an investment account when you’re 95 may provide additional financial security—but perhaps less enjoyment.

Good retirement planning has to balance both objectives.

We certainly don’t want clients running out of money.

But we also don’t want someone reaching age 90 with a huge portfolio and realizing they unnecessarily postponed many of the things they wanted to do.

The Otium Perspective

Retirement planning shouldn’t simply answer, “Will my money last?”

It should also help answer:

“When should I use it?”

At Otium Financial Planners, we help clients model retirement spending across different stages of life rather than assuming retirement will look exactly the same at 65, 75, 85 and 95.

Because the goal isn’t simply to make your money last.

It’s to make sure your money helps you live the retirement you’ve spent decades preparing for.

Coming Next: We spend a lot of time worrying about retirees spending too much. In Part 2, we’ll look at research suggesting that for some retirees, the bigger problem may be exactly the opposite.

Sources: David Blanchett, “The Retirement Spending Smile: Robustness and Implications for Retirement Planning,” Financial Planning Review, 2026; Health and Retirement Study.