The “Go-Go” Years: Why It Pays to Front-Load Retirement Spending While You’re Still Active

You’ve saved for decades. You’ve watched your retirement account grow. Now that you’re finally retired, shouldn’t you be cautious with every dollar? Here’s the thing: new research is challenging that entire mindset. Turns out, spending more in your early retirement years might actually be the smartest move you can make.

The Three Phases Every Retiree Experiences

Retirement isn’t one long vacation that looks the same year after year. Financial planners commonly refer to three phases, popularly known as the Go-Go, Slow-Go, and No-Go years of retirement. The go-go years typically span the first decade of retirement, roughly ages 65-75, when health is good and energy is high.

This is when you’re most likely to chase those dreams you postponed for decades. Think European river cruises, hiking national parks, or finally learning to play guitar. The go-go years start at the beginning of your retirement until about age 70, typically the most active time when you might plan to do things after you complete your decades of working. The slow-go years typically start around age 70 and last until about 80 years old, when the level of activity might slow down due to health or the ability to stay active.

Your Spending Actually Drops as You Age

Let’s be real: conventional retirement wisdom tells us to spend the same inflation-adjusted amount every year. That sounds sensible, right? Wrong. J.P. Morgan found the average yearly spend for retirees aged 60 to 64 is $75,630, compared with $51,920 for retirees 90 to 94, with average total spending trending down by 5% to 8% every 5 years.

Based on data spanning the period 2005–2019, real spending declined for both single and coupled households after age 65 at annual rates of about 1.7 percent and 2.4 percent, respectively. Even more surprising? The fact that spending declines broadly, including among those in the highest wealth group, suggests that the decline may not be related to economic position but to other issues such as declining health in older years. This isn’t about running out of money. It’s about changing desires and capabilities.

Why Traditional Planning Gets It Wrong

The findings contradict traditional wisdom that spending will be constant or even increase during older age, and suggests that individuals and couples could spend more early in retirement. Think about it: most retirement calculators assume you’ll need roughly the same amount every year for thirty years. Typically, newly retired people spend more money than those that have been retired for a while due to more travel and recreation, but over the long term, living expenses generally tend to decline, with retirees in the highest age brackets spending less money on travel, entertainment or meals out.

According to research from the U.S. Bureau of Labor Statistics, total average annual expenditures for those age 75+ are 19% lower than those who are age 65-74. That’s a massive difference most retirement plans ignore completely.

The Case for Spending More Now

I know it sounds crazy, but delaying your dreams until you’re eighty might mean you never get to enjoy them at all. Many retirees say they wish they had enjoyed their healthy years of retirement, rather than waiting until their health and mobility had declined. The Go-Go Years may involve more spending because of travel and luxuries, and some people may feel guilty about extra spending during this time, but there’s no need if you have planned correctly, giving yourself permission to spend more at this stage as part of your retirement planning.

The research backs this up. Financial planners advising households and policymakers should not rely on the common assumption that real spending will be constant or even increase, because this is not supported by estimates of spending trajectories based on household-level spending data. In other words, plan for higher spending early on. Your future seventy-five-year-old self will likely spend less anyway, not because money is tight, but because you simply won’t want or need as much.

How to Front-Load Without Going Broke

This doesn’t mean blow through your savings in year one. Smart front-loading requires strategy. The “bucket strategy” divides your portfolio into specific buckets for shorter- and longer-term goals, with the “now” bucket including money needed over the first one to five years of retirement used to cover expenses beyond any income coming in, the “soon” bucket for expenses beyond five years, and the “later” bucket broadly calculated to replenish the other buckets when needed.

One approach is to fill that first bucket with a year’s worth of expenses in cash investments and another three to five years’ worth of expenses in high-quality cash equivalents, providing padding to help insulate from market volatility so new retirees can hopefully ride out market losses. This protects you from having to sell stocks during a downturn right when you need the money most. Meanwhile, your long-term bucket keeps growing.

The key is balance. It’s essential to find balance between enjoying these experiences and ensuring long-term financial security. Work with a financial advisor to calculate exactly how much “extra” you can safely spend during your go-go years without jeopardizing your later decades. The math might surprise you in a good way.