Retirement Spending Smile
The observed pattern that real retirement spending falls through the early-to-mid years, then rises late in life as healthcare costs climb.
The retirement spending smile describes how real (inflation-adjusted) spending tends to move over a retirement. It's high early on — the active 'go-go' years of travel and hobbies — drifts down through the slower 'slow-go' years, then rises again late in life as healthcare and support costs increase, tracing a shallow smile shape.
It matters because many plans assume flat inflation-adjusted spending for 30+ years, which overstates mid-retirement costs and can understate late-life healthcare. Modeling the smile produces a more realistic spending path and often a more achievable plan.
The late-life upturn is dominated by healthcare and long-term-care costs, which historically rise faster than general inflation. A plan that treats healthcare as a flat line misses the most important part of the smile.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.