Analyzing the Retirement Spending Smile

Researchers have identified a retirement spending smile for traditional retirees. Retirees generally spend less as the years pass, and reduce their spending the most in the middle years of traditional retirement (approximately a retiree's seventies).

Learn more about the retirement spending smile at https://www.kitces.com/blog/estimatin....

If it's common for traditional retirees to cut their spending a little in most or all years of retirement, many people planning for retirement may have a more financially secure retirement than they assume.

Using https://www.cfiresim.com/, I demonstrate in this video that incorporating spending reductions into a retirement simulation makes a huge difference. For people who fit the general pattern uncovered by researchers, retirement may not cost as much as they assume.

If prospective retirees know they will probably spend like a typical retiree (reducing their spending a little in most or all years as they age), they may enter retirement with much greater confidence.

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