What Retirement Budgets Often Leave Out — and How to Correct Them

Learn why underestimating retirement expenses can leave you short when you need cash most.

Editor's Note: This story originally appeared on Boldin.

Many people approach retirement with a sharp eye on their savings, and that makes sense. Building a nest egg takes years of effort and discipline. But the spending side of the equation often gets far less attention, and that can create problems later.

The amount you expect to spend each year is the figure that connects everything else, and a retirement spending plan gives you a much stronger foundation.

“Most retirement advice, honestly, a lot of it gets it wrong,” says Mike Pappis, CFP professional and head of support at Boldin. “Your total investment account balance is not the number that defines success. The real number, the one that can truly make or break your retirement, is how much you plan to spend.”

Your portfolio pays the bills in retirement. Your spending determines how long it lasts, how much flexibility you have, and what success looks like over the course of two or three decades.

Why Monthly Retirement Estimates Are Often Too Low

Retirement spending projections usually come in low because big, irregular costs rarely fit neatly into a monthly budget. Car replacements, home repairs, and help for family members can appear without warning, yet they often never show up in a standard expense line.

The 80% rule, which suggests you may need 80% of your pre-retirement income, can be a useful starting point. But it does not account for those kinds of expenses.

“You may have a feeling for what you spend every month,” Mike says. “Eh, $7,000 a month sounds about right, for example. But once you revisit it, that number may very well be off.”

Routine monthly bills may feel easy to estimate. The irregular costs are different. They do not stand out until they arrive: a new car, a roof replacement, or helping a child through a difficult period. If those expenses are not built into the plan, they become surprises.

Why Spending Has More Influence Than Investment Returns

Once retirement starts, the amount you withdraw each year can affect your future more directly than market performance. After paychecks stop, spending becomes the variable that shapes the rest of the plan.

“It’s your lifestyle costs that determine how long your money lasts, how much flexibility you have, and what success even means for you,” Mike says. “Creating a spending plan isn’t just about tracking dollars. It’s about making sure your money lines up with your values and priorities.”

Taxes change. Markets rise and fall. Inflation does not move in a straight line. Spending is one of the few parts of the picture you can actively control.

What Go-Go, Slow-Go, and No-Go Years Mean

Go-go, slow-go, and no-go years describe the usual changes in retirement spending across three stages. A single monthly number that only rises with inflation cannot capture those shifts.

• Go-go years: High activity, peak travel and discretionary spending
• Slow-go years: Less activity, lower costs
• No-go years: Essentials dominate, and healthcare takes a larger share

The framework was introduced by Michael Stein, a CFP professional, in The Prosperous Retirement. It was later supported by David Blanchett’s paper Exploring the Retirement Consumption Puzzle in the Journal of Financial Planning, which found that real spending tends to follow a curve.

“Think of it in three phases,” Mike explains. “The go-go years when you’re most active, the slow-go years when you’re easing back a bit, and the no-go years when spending is mostly essentials like food and healthcare.”

Travel and other optional spending usually peak early, when energy is high and schedules are more open. Those expenses often ease in the middle years. Later on, spending narrows toward basics, while healthcare takes up a bigger share of the budget.

If you rely on a flat spending assumption, your projected retirement picture may look too comfortable or too tight depending on where you are in the timeline.

Must-Spend vs. Like-to-Spend

Must-spend includes the costs that are difficult to cut, such as housing, utilities, groceries, and healthcare. Like-to-spend covers the expenses you would prefer to keep, like travel, dining out, hobbies, and gifts, but could reduce if needed.

Laying that distinction out clearly can make retirement planning much more useful.

Mike puts it this way: “What are your costs you can’t cut like housing, food, and healthcare? And what are your discretionary expenses like travel, eating out, personal care, and hobbies? The things you’d love to keep but could scale back if you had to.”

Must-spend:

• Housing and utilities
• Groceries
• Healthcare and insurance
• Minimum debt obligations

Like-to-spend:

• Travel and vacations
• Dining out
• Hobbies and personal care
• Family gifts and support

Knowing where that line falls shows how much resilience your plan has. If markets take a sharp hit, that clarity gives you options to cut back without derailing everything.

Why a Single Monthly Number Can Miss the Mark

A flat monthly spending estimate can be much less useful than a phased retirement plan that reflects go-go, slow-go, and no-go years. That kind of structure can change the projected outlook in meaningful ways, though the outcome still depends on your assumptions, timeline, and market conditions.

Mike describes the case of a hypothetical couple, Mark, 60, and Elena, 58, who planned to retire at 62 and 60. Their example is meant to show how the planning process works. When they first built their plan several years earlier, they entered a flat $11,000 a month and moved on. At the time, it seemed close enough.

As retirement approached, they reviewed the categories together. Their must-spend baseline, including housing, utilities, groceries, and some travel, came to about $8,000 a month. When go-go-year discretionary spending was added in, including travel, dining, hobbies, and family gifts, the total moved closer to $10,000.

That was a meaningful difference from $11,000, and it gave them a clearer picture of which costs were fixed and which could be adjusted by phase.

“The difference wasn’t just about the number, but also understanding what flexibility they had if they ever needed to adjust,” Mike notes.

They also mapped out one-time expenses: two vehicle purchases, a roof replacement, and long-term care assumptions based on Genworth data. Before Medicare eligibility, they estimated private insurance at about $12,000 a year per person, then modeled original Medicare with a Medigap policy and drug coverage starting at age 65.

By replacing one flat figure with a phased plan, they gained a clearer view of how retirement spending could evolve.

“With the phases built in, they could see room for adjustment if needed,” Mike says. “If a severe market downturn hits, they could trim travel for a couple of years if necessary in future phases of retirement … and the plan will get back on track.”

How to Create a More Realistic Retirement Spending Plan

A stronger retirement spending plan rests on three elements: spending that changes by phase, a clear division between essential and discretionary costs, and a separate line for irregular expenses that do not appear in monthly totals.

The Expenses and Healthcare section in the Boldin Planner offers two ways to do this. The basic budget tool lets you set spending by phase. The more detailed version lets you sort expenses, set how often they occur, mark tax-deductible items, and assign phases to specific line items.

In both cases, the goal is the same: build a plan that reflects how retirement spending really works. That means considering the early years, the changes that happen over time, and the unusual costs waiting in the background.

Healthcare deserves the same attention. Costs tied to pre-Medicare coverage, Medicare assumptions, and long-term care can all change the picture in important ways, and putting them alongside your regular expenses gives you a more honest view of total retirement costs.

Plans also need regular updates. A number that seemed right a few years ago may no longer fit as retirement draws near. Life changes, and the plan should change with it.

“Get it wrong and the plan falls apart,” Mike says. “Get it right and everything else starts to click into place.”