Retirement Spending Plan: How to Know If Your Number Is Right
Most people heading into retirement have watched their savings for decades. That focus makes sense, and it takes discipline to build. But the spending side tends to get less attention, and that can catch you off guard later. What you plan to spend each year is the number that ties everything else together, and a retirement spending plan puts you in a much stronger position.
“Most retirement advice, honestly, a lot of it gets it wrong,” says Mike Pappis, CFP® professional and Head of Support at Boldin. “Your total investment account balance is not the number that defines success. The real number, the one that can truly make or break your retirement, is how much you plan to spend.”
Your portfolio funds retirement. Your spending shapes how long it lasts, how much room you have to adjust, and what a good outcome looks like across 20 or 30 years.
Why Your Monthly Spending Estimate Is Probably Off
Most retirement spending estimates run low because irregular costs like car replacements, home repairs, and helping out family arrive unplanned and never show up in a monthly budget line. The 80% rule, which suggests you’ll need 80% of your pre-retirement income, is a useful starting point, but it doesn’t account for any of that.
“You may have a feeling for what you spend every month,” Mike says. “Eh, $7,000 a month sounds about right, for example. But once you revisit it, that number may very well be off.”
Monthly spending feels familiar. The irregular stuff doesn’t register the same way until it lands: a car purchase, a roof, helping a kid through a rough patch. None of it shows up in a monthly budget line, and if it’s not in your retirement plan, it arrives unplanned.
Why Spending Drives Retirement Outcomes More Than Investments
Retirement spending can determine how long your portfolio lasts more directly than investment returns do, because once you stop earning, how much you withdraw each year is the variable that drives everything else.
“It’s your lifestyle costs that determine how long your money lasts, how much flexibility you have, and what success even means for you,” Mike says. “Creating a spending plan isn’t just about tracking dollars. It’s about making sure your money lines up with your values and priorities.”
Tax law shifts. Markets move. Inflation doesn’t behave on schedule. Spending is one of the few variables you can get your hands on and adjust.
What Are Go-Go, Slow-Go, and No-Go Years?
Go-go, slow-go, and no-go years describe how retirement spending typically moves across three phases, and a flat monthly number rising with inflation can’t capture any of it.
Go-go years: High activity, peak travel and discretionary spending
Slow-go years: Pullback in activity, costs ease
No-go years: Essentials dominate, healthcare takes a larger share
The framework was introduced by Michael Stein, a CFP® professional, in The Prosperous Retirement. It was later backed by data in David Blanchett’s 2014 paper “Exploring the Retirement Consumption Puzzle” in the Journal of Financial Planning, which found that real spending follows a curve.
“Think of it in three phases,” Mike explains. “The go-go years when you’re most active, the slow-go years when you’re easing back a bit, and the no-go years when spending is mostly essentials like food and healthcare.”
Travel and discretionary spending usually peak early, when energy is high and your schedule is wide open. Those costs pull back through the middle years. In later years, spending narrows to essentials while healthcare takes up more of the budget.
A flat spending assumption, depending on where in retirement you’re projecting, can make your situation look either rosier or tighter than it is.
What’s the Difference Between Must-Spend and Like-to-Spend?
Must-spend covers the expenses you can’t cut: housing, utilities, groceries, and healthcare. Like-to-spend is everything you’d prefer to keep, like travel, dining, hobbies, and gifts, but could trim if you needed to.
Getting that split on paper does real work in retirement planning. Mike frames it this way: “What are your costs you can’t cut like housing, food, and healthcare? And what are your discretionary expenses like travel, eating out, personal care, and hobbies? The things you’d love to keep but could scale back if you had to.”
Must-spend:
- Housing and utilities
- Groceries
- Healthcare and insurance
- Minimum debt obligations
Like-to-spend:
- Travel and vacations
- Dining out
- Hobbies and personal care
- Family gifts and support
Knowing where that line falls tells you something about how much resilience your plan has. If markets drop hard in a bad year, that clarity gives you a path to pull back without the whole plan unraveling.
Why a Flat Monthly Spending Estimate Can Fall Short in Retirement
Replacing a flat monthly spending estimate with a tiered retirement spending plan that accounts for go-go, slow-go, and no-go phases can meaningfully shift your plan’s projected success, though results will vary based on your inputs, timeline, and market conditions.
Mike walks through the experience of a hypothetical couple, Mark (60) and Elena (58), planning to retire at 62 and 60 respectively. Their story is illustrative to show how the planning process works. When they first built their Boldin plan four years earlier, they put in a flat $11,000 a month and moved on. It felt close enough at the time.
With retirement coming into view, they sat down with the Boldin Planner’s detailed budgeter and went through the categories together. Their must-spend baseline, housing, utilities, groceries, and some travel, came out around $8,000 a month. Add in the go-go-years discretionary spending, travel, dining, hobbies, family gifts, and it ran closer to $10,000.
That was a real gap from $11,000, and a number they could now account for, phase by phase, with a clear split between what was fixed and what was flexible.
“The difference wasn’t just about the number, but also understanding what flexibility they had if they ever needed to adjust,” Mike notes.
They also mapped out the one-time costs: two car purchases, a roof replacement, and long-term care assumptions drawn from Genworth data. Before Medicare, they estimated private insurance at around $12,000 a year per person, then modeled original Medicare with a Medigap policy and drug plan from age 65.
They gained clarity by swapping a single flat figure for a tiered plan that tracks how retirement spending evolves. “With the phases built in, they could see room for adjustment if needed,” Mike says. “If a severe market downturn hits, they could trim travel for a couple of years if necessary in future phases of retirement… and the plan will get back on track.”
How to Build a More Realistic Retirement Spending Plan
An effective retirement spending plan is built on three things: a budget that varies by phase, a clear split between must-spend and discretionary costs, and a line for irregular one-time expenses that don’t appear in monthly figures.
The Boldin Planner’s Expenses and Healthcare section gives you two approaches. The basic budgeter lets you set spending by phase. The detailed budgeter lets you categorize expenses, set frequencies, flag tax-deductible items, and assign phases to individual line items.
The goal in both cases is a plan that reflects how you’ll spend across retirement: what the early years look like, how that shifts over time, and what irregular costs are sitting in the background.
Healthcare is worth the same care. Pre-Medicare insurance, Medicare plan assumptions, and long-term care all move the numbers in ways that matter, and seeing them alongside your recurring expenses gives you a more honest read on total retirement costs.
Plans drift. A number that felt right a few years ago may need a fresh look as retirement gets closer. Circumstances change, and the plan should keep up.
“Get it wrong and the plan falls apart,” Mike says. “Get it right and everything else starts to click into place.”
Frequently Asked Questions About Retirement Spending
A retirement spending budget typically starts around 80% of pre-retirement income, according to Fidelity and AARP, though that benchmark is just a rule of thumb and doesn’t account for you, or how spending shifts across phases or for irregular costs like car replacements and long-term care. A tiered retirement spending plan built around your actual costs will give you a more useful baseline than a percentage rule.
Go-go, slow-go, and no-go years describe the three phases of retirement spending. The framework was introduced by Michael Stein, a CFP® professional, and supported by research from David Blanchett of Morningstar. In the go-go years, spending on travel and discretionary items tends to run high. The slow-go years bring a pullback in activity and costs. The no-go years center on essentials, with healthcare carrying more of the budget.
Must-spend covers what you’d pay no matter what: housing, food, utilities, healthcare. Like-to-spend is discretionary spending (travel, dining, hobbies, gifts) for things you’d like to keep but could reduce if needed. Having that distinction built into your plan tells you how much room you have to adjust if something goes sideways.
Retirees often pay more in taxes than expected because multiple income streams (Social Security, IRA withdrawals, pensions, and taxable account gains) can converge in the same year and push income into higher brackets. This can also make more of your Social Security benefit taxable and trigger Medicare premium surcharges (IRMAA). The timing and order of withdrawals across account types has a real effect on what you owe.
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