Go-go, slow-go, no-go: how retirement spending changes

Researcher Michael Stein coined the go-go / slow-go / no-go framework in the 1990s. It's since been validated by spending surveys: average inflation-adjusted retirement spending declines roughly 1-2% per year through the early and middle retirement years, then ticks up modestly in the final years as healthcare and long-term care costs rise.

This matters because a flat-spending model (the default in most calculators) adds up to 10-15% more total lifetime spending than what retirees actually do. That extra spending has to come from somewhere in the projection, which means the model says you need more savings than you actually do. Over a 30-year horizon, that's the difference between "can't retire yet" and "can retire two years sooner."

The three phases roughly correspond to age bands and the energy / mobility / healthcare states that come with them. Go-go years run roughly age 60-75: travel, hobbies, dining out, family visits, possibly second homes. This is the peak discretionary-spending decade. Slow-go years run roughly 75-85: lower travel, less discretionary spending, more time at home. Spending drops 20-30% from go-go levels for most retirees, even before adjusting for any healthcare changes. No-go years run 85+: physical activity declines further, but healthcare and (potentially) long-term care costs rise. Total spending in the no-go phase varies wildly depending on health and whether long-term care is funded by family, insurance, or self-pay.

Worked example. A retiree with $80,000/year base spending at age 60. Under a flat-spending model with 3% inflation, lifetime spending from 60 to 90 is roughly $4.0M. Under a phased model with spending falling to 70% of base in slow-go years and 60% in no-go years (with healthcare offset), lifetime spending is roughly $3.5M, or about $500K less. That $500K is real funding capacity that a flat model hides.

RetireWise lets you model the phase shift. The wizard's Income/Spending step has a "reduce spending" toggle: enter the age at which discretionary spending steps down (commonly 75) and the percentage reduction (commonly 15-25%). Healthcare is modeled separately so the discretionary phase shift doesn't accidentally undercut healthcare spending. The simulator routes both through the Monte Carlo machinery.

Counter-argument: not everyone wants to plan for a spending decline. Some retirees specifically want to maintain or even increase real spending through retirement (more travel, more grandkids, more gifts). That's a legitimate plan choice; it just costs more. The point of modeling the phases isn't to assume they'll happen, but to make the choice explicit.