The 3 Phases of Retirement Spending and How to Plan Each One

Here's something most retirement calculators get dangerously wrong: they assume you'll spend the same amount every single year for 25 or 30 years. That's like budgeting the same grocery bill for a marathon runner and a newborn. Your spending in retirement isn't a straight line — it's a curve, and understanding that curve could save you hundreds of thousands of dollars in unnecessary worry (or very real shortfalls).

Research from retirement planning experts, including data from the Bureau of Labor Statistics and the Employee Benefit Research Institute, consistently shows that retirees move through three distinct spending phases. Financial planners often call them the go-go years, the slow-go years, and the no-go years. Each phase has its own spending patterns, risks, and planning needs.

If you treat retirement as one big block of identical years, you'll either overspend early and run short later — or underspend throughout and miss years of experiences you can never get back. Here's how to plan each phase so your money actually matches your life.

What the Three Phases of Retirement Look Like

Before diving into dollar amounts and strategies, let's define what we're working with.

The Go-Go Years (Roughly Ages 65–75)

This is the active, early phase of retirement. You're healthy, energized, and finally free from the daily grind. Retirees in this phase typically spend more than they did while working — sometimes 10% to 20% more. Travel tops the list, but so do hobbies, dining out, home renovations, gifts to family, and new pursuits like golf memberships or RV adventures.

According to the Bureau of Labor Statistics' 2024 Consumer Expenditure Survey, households headed by someone aged 65–74 spent an average of roughly $63,000 per year, compared to about $50,000 for those 75 and older. The difference is significant.

The Slow-Go Years (Roughly Ages 75–85)

Energy and mobility start to slow down. You may still travel, but perhaps closer to home or less frequently. Dining out decreases. Activity-based spending drops. Research from financial planner Michael Kitces and retirement researcher David Blanchett shows that real (inflation-adjusted) spending tends to decline by about 1% to 2% per year during this phase. Many retirees naturally spend 15% to 25% less than they did during the go-go years.

This doesn't mean life gets boring — it means your spending shifts. You might spend more on home comfort, family visits, streaming services, and low-key entertainment. But the big-ticket travel and recreation bills tend to shrink.

The No-Go Years (Roughly Ages 85+)

Discretionary spending drops significantly in this phase. You're spending far less on travel, hobbies, and going out. Overall spending may be 30% to 40% lower than the go-go years in most categories — with one glaring exception: healthcare and long-term care.

Fidelity's 2025 Retiree Health Care Cost Estimate puts the average 65-year-old couple's lifetime healthcare costs at approximately $365,000. A huge chunk of that spending is concentrated in the later years. Nursing home care in 2026 averages over $9,500 per month for a semi-private room nationally, and home health aides run $6,000 or more per month in many metro areas. This is the phase where healthcare costs can explode, even as every other category of spending declines.

How to Build a Phase-Based Retirement Budget

Now that you understand the shape of retirement spending, here's how to actually build a plan around it.

Step 1: Estimate Your Go-Go Spending First

Start with your current annual spending as a baseline. If you're still working, subtract work-related costs (commuting, professional wardrobe, lunches out) but add anticipated retirement expenses (more travel, hobbies, health insurance if you're retiring before Medicare at 65).

A common starting point: plan for 100% to 110% of your pre-retirement spending during the go-go years. Yes, that's higher than the old "80% rule" you've probably heard. That outdated rule of thumb underestimates how much active retirees actually spend.

For example, if you spend $80,000 per year now, budget $80,000 to $88,000 per year for ages 65–75.

Step 2: Apply a Spending Decline for Later Phases

Using research-backed assumptions, reduce your annual spending by about 1.5% per year in real terms starting around age 75. Here's what that looks like for someone starting at $85,000 per year:

• Ages 65–74 (Go-Go): $85,000/year
• Ages 75–84 (Slow-Go): Declining from ~$85,000 to ~$72,000/year
• Ages 85–94 (No-Go): Declining from ~$72,000 to ~$61,000/year (excluding major healthcare events)

This natural decline is actually good news — it means your portfolio doesn't have to support peak spending for 30 straight years.

Step 3: Add a Healthcare Surge Buffer

Here's where most phase-based plans fall apart. People account for the spending decline but forget to layer in the healthcare spike. You need a separate line item — almost like a sinking fund — for potential long-term care costs in the no-go years.

Options to fund this buffer include:

• Long-term care insurance (if purchased in your 50s or early 60s, premiums are more manageable)
• A hybrid life insurance/LTC policy that covers care costs or pays a death benefit
• A dedicated investment account earmarked solely for late-retirement healthcare — aim for $150,000 to $250,000 per person
• Health Savings Account (HSA) funds that have been invested and grown tax-free over decades

Don't assume Medicare will cover everything. It does not pay for custodial long-term care, which is the single biggest expense in the no-go years.

Adjusting Your Investment Strategy by Phase

Your portfolio should evolve along with your spending phases. A single static allocation doesn't account for the different demands each phase places on your money.

Go-Go Years: Growth Still Matters

You need your portfolio to last 25 to 30+ years, so keeping 50% to 60% in equities during the go-go years is appropriate for many retirees. You're drawing income, but your time horizon is still long. Keep 2 to 3 years of spending in cash or short-term bonds so you're never forced to sell stocks in a down market.

Slow-Go Years: Shift Toward Stability

As spending decreases and your remaining time horizon shortens, gradually shift to 40% to 50% equities and increase your allocation to bonds and stable-value investments. The goal is preservation with moderate growth — enough to keep pace with inflation but with less volatility.

No-Go Years: Safety and Liquidity

By this point, your portfolio should be heavily weighted toward income-producing, low-volatility investments — think 30% to 40% equities at most. However, you need liquidity for potential healthcare costs. Don't lock everything into illiquid investments. Maintain a significant cash buffer (6 to 12 months of expenses) and consider Treasury Inflation-Protected Securities (TIPS) to guard against healthcare inflation, which historically runs 2 to 3 percentage points above general inflation.

How to Avoid the Two Biggest Phase-Planning Mistakes

Understanding the three phases is only useful if you avoid the two traps that catch most retirees.

Mistake 1: Underspending in the Go-Go Years

This might sound counterintuitive, but one of the most common retirement regrets is not spending enough in the early, active years. A 2024 Employee Benefit Research Institute study found that roughly one-third of retirees actually increased their wealth during the first two decades of retirement. They were so afraid of running out that they never enjoyed the money.

If your financial plan shows you can safely spend $85,000 a year and you're only spending $60,000, you're not being prudent — you're missing out. Those go-go years are when you have the health and energy to travel, pursue passions, and make memories. You can't get a knee replacement at 85 and then backpack through Europe.

Actionable fix: Run your retirement plan through a Monte Carlo simulation (most free tools like Fidelity's or Personal Capital's retirement planners offer this). If your success rate is above 90%, give yourself permission to spend more in the go-go years. Consider setting a "spending floor" (what you need) and a "spending ceiling" (what you can enjoy when markets cooperate).

Mistake 2: Ignoring the Healthcare Cliff

The second trap is planning as if spending only goes down. For many retirees, spending follows a "U-shape" or "smile" pattern — high in early retirement, lower in the middle, then rising sharply due to healthcare and long-term care costs. A couple facing even two to three years of home health aide needs could burn through $150,000 to $250,000.

Actionable fix: Stress-test your plan with a long-term care scenario. Add $10,000 per month for 3 years to your no-go phase projections and see if your plan survives. If it doesn't, explore long-term care insurance or hybrid policies now, while you're still insurable.

A Simple Phase-Based Retirement Planning Template

Here's a straightforward framework you can use today to start planning by phase.

1. Calculate Your Baseline Annual Spending

Track 3 months of spending, multiply by 4, and add any irregular annual expenses (insurance premiums, property taxes, vacations). This is your baseline.

2. Assign Phase Multipliers

• Go-Go (years 1–10 of retirement): Baseline × 1.0 to 1.1
• Slow-Go (years 11–20): Baseline × 0.80 to 0.85
• No-Go (years 21–30): Baseline × 0.65 to 0.70 plus a healthcare buffer of $5,000 to $10,000 per year per person

3. Total It Up

Using a baseline of $80,000:

• Go-Go: $85,000 × 10 years = $850,000
• Slow-Go: $66,000 × 10 years = $660,000
• No-Go: $58,000 × 10 years = $580,000
• Healthcare buffer: $100,000 to $200,000
• 30-year total: approximately $2.1 to $2.3 million in today's dollars

Compare this to the flat-spending assumption: $85,000 × 30 = $2.55 million. The phase-based approach shows you may need $200,000 to $400,000 less than a flat projection suggests — which could mean you're closer to retirement readiness than you think.

4. Build Guardrails for Each Phase

Set upper and lower spending limits for each phase. If your portfolio grows faster than expected in the go-go years, increase your ceiling. If markets drop, pull back to your floor. This dynamic approach lets you enjoy good years without jeopardizing bad ones.

Putting Your Phase-Based Plan Into Action

Here's how to implement this starting today, regardless of whether you're 5 years from retirement or already in it.

If you're 5 to 10 years out: Start tracking your spending meticulously. Build your phase-based projections and stress-test them. Investigate long-term care insurance while you're healthy and premiums are lower. Max out your HSA if you have access to one — it's the best vehicle for funding no-go healthcare costs.

If you're in the go-go years right now: Review your spending honestly. Are you enjoying your money, or hoarding it out of fear? Run a Monte Carlo simulation and get comfortable with your spending ceiling. Front-load those bucket-list experiences while you have the health to enjoy them.

If you're entering the slow-go years: Shift your portfolio toward stability. Start earmarking funds specifically for healthcare contingencies. Review your Medicare supplemental coverage and make sure your estate documents are current.

If you're in or approaching the no-go years: Ensure you have maximum liquidity for healthcare needs. Consider a Qualified Longevity Annuity Contract (QLAC) if you haven't already — it can provide guaranteed income starting at 80 or 85, exactly when you need that safety net most.

Retirement isn't a single 30-year chapter — it's three very different ones. Plan for the life you'll actually live in each phase, and you'll have more confidence, less anxiety, and a far better shot at making your money last exactly as long as you need it to.