Your Retirement Number Is Wrong. Here’s Why It’s Actually Three Numbers

One of the biggest mistakes I see in retirement planning is relying on outdated rules that don’t reflect how people actually live. For years, the standard advice has been simple: plan to spend about 80% of your pre-retirement income for the rest of your life. It sounds clean and easy, but it’s also misleading.

The reality is that retirement spending is not flat. It evolves over time, often in predictable ways. That’s where the 80/70/60 rule comes in. It provides a much more realistic framework for understanding how your expenses change throughout retirement and helps you plan with greater confidence.

The traditional 80% rule assumes that your spending will remain consistent for 20 or 30 years. In practice, that rarely happens. Most retirees naturally spend less as they age. By assuming a flat spending rate, many people end up overestimating how much they need, which can lead to working longer than necessary or underspending during the years they’re healthiest and most active.

The 80/70/60 rule takes a different approach by breaking retirement into three distinct phases. In the early years of retirement, often called the “go-go” years, spending tends to be highest. This is when people are traveling, pursuing hobbies, and checking off bucket list experiences. During this phase, spending typically sits around 80% of pre-retirement income.

As retirees move into the middle phase, known as the “slow-go” years, spending begins to decline. Travel slows down, daily routines become more home-centered, and lifestyle costs decrease. During this stage, spending often drops to around 70% of pre-retirement income.

In the later years of retirement, referred to as the “no-go” years, spending tends to be at its lowest. Activity levels decrease, and priorities shift toward comfort and healthcare. While medical expenses may rise slightly, overall spending usually settles closer to 60% of pre-retirement income.

This phased approach reflects how life actually unfolds. Early retirement is often filled with activity and experiences, while later years become more simplified. Even with rising healthcare costs, total spending generally remains lower than in those initial retirement years.

There are several reasons for this natural decline in expenses. By the time most people retire, major financial obligations like mortgages are often paid off. Commuting costs disappear, and there is no longer a need to save for retirement. These changes alone can reduce expenses by 20% to 25% without any major lifestyle sacrifices.

Understanding this progression can be incredibly powerful. It removes the fear that you need an oversized portfolio just to feel secure. It also gives you permission to spend more confidently in the early years of retirement, when your time, health, and energy are at their peak.

The 80/70/60 rule is not meant to be a rigid formula, but rather a guide. Your personal spending will depend on your lifestyle, health, location, and goals. Some people may spend more in early retirement, while others may maintain higher costs later due to healthcare needs. The key is recognizing that spending is dynamic, not static.

From a planning perspective, this framework allows you to build a more flexible and accurate retirement strategy. Instead of assuming one fixed number for decades, you can align your financial plan with how your life is likely to change. This often results in more efficient use of your savings and a more realistic path to retirement.

The biggest takeaway is simple. Retirement is not one long, unchanging phase. It’s a series of stages, each with its own priorities and spending patterns. When you plan for that reality, you reduce uncertainty and make better decisions about when you can retire and how you can enjoy it.

In many cases, this shift in perspective helps people realize they are closer to retirement than they think. And more importantly, it helps them use their money in a way that actually supports the life they want to live.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.