Rethinking Retirement Spending: Why One-Size-Fits-All Plans Don’t Work

By Marcus Perks, Independent Financial Adviser | Supportive Financial Planning.

For many years, the "retirement income smile" has shaped the way people think about retirement spending. The idea is simple: spending starts high in the early active years, dips during the quieter middle years, then rises again later as care costs increase—producing a smile-shaped curve. But what if that model no longer holds true?

New research from the University of Bath, the Institute for Policy Research, and Lane Clark & Peacock (including Steve Webb, former Pensions Minister) challenges this long-held belief—and has major implications for how you plan and manage your income in retirement.

At Supportive Financial Planning, we believe this evolving picture reinforces one key truth: retirement planning must be personal. Here’s what the research tells us—and why bespoke advice matters more than ever.

Spending Actually Declines Over Retirement

The new study, “Downhill All the Way?”, is based on data from more than 100,000 pensioners, tracked over 51 years. Unlike the classic ‘smile’ shape, the research found that real weekly spending typically declines as people age, even when income stays stable or rises.

That means retirees aren’t necessarily spending less because they have less—but because their lifestyle and needs change over time.

Care Needs Rise—But Not for Everyone

The later years of retirement are often associated with higher care costs. While this is true for some, the report highlights how widely care costs can vary. According to older estimates from the Dilnot report:

• The median lifetime cost of care is about £20,000

• But some people will pay £250,000 or more

According to the 2021 Census, only about 2.5% of people aged 65+ live in care homes. Even at age 90+, only 21% of women and 10% of men do. This variability makes it difficult to predict and plan for late-life care without personalised modelling.

The Retirement Experience Isn’t One-Size-Fits-All

Another key takeaway from the research is just how different the retirement experience is depending on your circumstances:

• Newer retirees generally have higher incomes, more private pensions, and are more likely to own their homes

• Those living alone, renting, or lacking private pension income follow different spending trajectories

• Ironically, future generations may face more housing insecurity, as reliance on renting rises again

These differences matter. Looking at "average" retiree figures can be misleading—and that’s where tailored advice becomes essential.

What It Means for Your Retirement Plan

The report makes one thing clear: the idea that you need a constant, inflation-adjusted income throughout retirement may no longer apply to many people—especially homeowners. Instead, your retirement income strategy should reflect your actual needs, lifestyle, and long-term goals.

That could mean:

• Spending more in your early retirement years

• Planning flexibly for uncertain future care costs

• Avoiding unnecessary caution that leaves too much wealth untouched

Why Bespoke Advice from Supportive Financial Planning Matters

At Supportive Financial Planning, we’ve always known that retirement isn’t a formula—it’s a personal journey. That’s why we don’t rely on outdated models or generic income assumptions. We work with you to create a bespoke decumulation plan based on your lifestyle, health, housing situation, and ambitions.

Whether you want to:

• Understand how much you can safely spend

• Plan for unpredictable care costs

• Balance gifting, legacy planning, and personal spending

—we’re here to help you plan with clarity and confidence.

Let’s Build a Retirement Plan That Fits You

The end of the “retirement smile” doesn’t mean the end of good outcomes—it just means we need to plan better.

📞 Call us on 0345 337 3414.
📧 Email us at cliveperks@supportivefp.co.uk.
🌐 Or request a free consultation by clicking on our "schedule a call" button.

Disclaimer: This article is for general information purposes only and should not be considered personalised financial advice. Figures accurate as of May 2025. Source: Techlink - Pensions: Decumulation.