# Retirement Spending Drops Over Time. Here's How to Budget for It.
Most people spend heavily in early retirement, then cut back dramatically as they age. The traditional 80% rule, which assumes retirees need 80% of pre-retirement income annually, ignores this reality.
A better approach divides retirement into three phases. Early retirees spend 80% of their pre-retirement income on travel, hobbies, and active pursuits. Middle years drop to 70% as activity slows. Late retirement settles at 60% when healthcare replaces discretionary spending.
This 80-70-60 framework reflects actual spending patterns. Research shows retirees typically spend the most in their 60s and 70s, then reduce outlays significantly after age 80. Healthcare expenses may rise, but overall spending often falls because people travel less and pursue fewer expensive activities.
Planning with this tiered approach prevents oversaving or undersaving. You won't sock away excessive funds for leisure spending you won't actually do. You also won't fall short when you truly need the money.
Adjust these percentages based on your health, lifestyle, and family history. Someone expecting active travel in their 80s should maintain higher spending assumptions. Those with significant family longevity or health concerns might revise the percentages differently.
The key: your retirement budget should evolve with your life, not stay frozen in time.