Go-Go, Slow-Go, No-Go: Retirement Spending Phases and What 80% Success Really Means

The go-go years are when most discretionary spending happens. Travel, grandchildren visits, home projects, a second vehicle, club memberships, and helping adult children tend to cluster in the first ten to fifteen years of retirement, while health and energy are highest. For many Arizona retirees this is also when a summer place in Flagstaff or out of state gets used most. Spending in these years can match or exceed the final working years, especially once you add healthcare premiums before Medicare. A plan that squeezes this phase to protect age 95 trades your most valuable years for your least certain ones.

The slow-go years usually bring a natural decline in real spending. Travel gets shorter and closer to home, one vehicle replaces two, and fewer big projects happen. Blanchett's analysis of household spending data found that real spending tended to fall by roughly 1% to 2% a year through much of this stretch, and that the decline was not driven by running out of money: it appeared across wealth levels. Retirees simply spent less on the things that require energy. That pattern means a flat, fully inflation-adjusted spending assumption overstates later-life needs, sometimes by 20% or more by the mid-80s.

The no-go years are where the smile turns back up. Healthcare, prescription drugs, in-home help, and assisted living or memory care can push spending higher again, sometimes sharply. In-home aide care runs roughly $75,000 to $80,000 a year nationally, assisted living roughly $70,000, and a private nursing home room roughly $120,000 to $130,000, with the Phoenix area broadly in line. Not every household faces those costs, and many face them for only a few years, but the plan should hold a reserve for them rather than pretending they average out. This is why the late-life portion of the curve is better handled as a separate reserve or insurance question than as a flat spending line.

Monte Carlo simulation runs your plan through hundreds or thousands of hypothetical market sequences, each with different returns, inflation, and order of good and bad years. The success rate is simply the share of those trials in which the portfolio never ran out before the end of the plan, often age 95 or 100. A failed trial is any path where the balance touched zero, even for the last year of a 35-year plan. The model assumes you keep spending exactly as planned no matter what markets do, which is the least realistic assumption in the entire exercise. Real retirees who see their portfolio drop 30% do not keep raising withdrawals for inflation; they adjust.

That is why the magnitude and timing of failure matter more than the headline percentage. In a typical 80% plan, the failing trials often run out in the late 80s or 90s after a poor sequence of returns in the first decade, and the shortfall would have been avoided by trimming discretionary spending 10% to 15% for a few years along the way. Social Security, which does not run out in these simulations, still covers a meaningful share of spending even in a failed trial. A plan with a 90% success rate whose failures are catastrophic early can be riskier than an 80% plan whose failures are small and late. Good planning software can show you the shortfall size and age, and that information is more useful than the single number on the dashboard.

A 100% success rate usually means you are overspending on safety. To pass every trial, including the worst sequences in the simulation, you must spend as though the worst case is certain. For a couple with $3 million, the difference between a 95% plan and an 80% plan can be $15,000 to $25,000 a year of spending, illustratively, sustained over decades. In most historical and simulated paths, the 100% plan ends with a very large unspent portfolio. That can be the right choice if leaving a large estate is a goal, but it should be a deliberate choice, not a side effect of misreading a probability.

Guardrails are the practical bridge between a probability and a spending decision. You set a starting spending level at a success rate you are comfortable with, then define in advance the conditions that trigger a change: for example, cut spending 10% if the plan's success rate falls below 70%, or raise it 10% if it climbs above 95%. Some versions use withdrawal rate bands instead of probabilities. Either way, the rules turn a vague worry into a specific, pre-agreed response, and they are what make a lower starting success rate reasonable. The adjustment in a bad market is usually smaller and less frequent than people expect, because it is made early rather than after years of drift.

Build the plan around the spending you expect in each phase, not one number for 30 years. A reasonable starting point is your current lifestyle plus planned travel for the first decade, a modest real decline in the slow-go years, and a separate healthcare and care reserve for the late years. The shape matters more than precision.

Front-load the things that depend on health. If you want to take the big trips, help the kids with a down payment, or buy the second home, the go-go years are when those dollars buy the most. A realistic spending curve often shows these goals are affordable earlier than a flat-line plan suggests.

Aim for a success rate you can live with, usually in the 75% to 90% range, and pair it with written guardrails. Know in advance what number would prompt a spending cut, how large the cut would be, and which expenses you would trim first. Having that decision made before a bear market is the difference between an adjustment and a panic.

Ask to see what failure looks like. When a plan shows 80%, ask when the failing trials run short, by how much, and how much Social Security and any pension still cover at that point. A shortfall of 15% at 93 is a very different risk than running dry at 78.

Plan the no-go years as a funding question, not just a spending line. Decide whether late-life care will be covered by a long-term care policy, a hybrid policy, home equity, or an earmarked portion of the portfolio. Once that reserve is defined, the rest of the portfolio can support a more generous go-go budget with more confidence.

Re-run the plan every year. The probability changes as markets, spending, and health change, and guardrails only work if someone is checking them. An annual review with updated balances is the mechanism that makes a lower starting success rate prudent rather than reckless.

• Assuming spending rises with inflation every year for 30 years, which understates what you can afford in your 60s and early 70s.
• Reading an 80% success rate as a 20% chance of ending up broke, instead of a 20% chance of needing a spending adjustment at some point.
• Targeting 99% or 100% success and underspending during the healthiest years of retirement, only to leave a far larger estate than intended.
• Ignoring late-life care costs because the average spending curve declines, leaving no reserve for the years when costs actually spike.
• Running a Monte Carlo plan once at retirement and never updating it, so the guardrails never trigger when they should.
• Focusing on the headline probability without looking at how large and how late the shortfalls are in the failing trials.