6 Tips for Creating a Retirement Spending Plan

6 Tips for Creating a Retirement Spending Plan

Kerra Bolton

Sun, December 28, 2025 at 8:07 AM EST

3 min read

Most people plan for how much to save in retirement, not how they’ll spend it.

Without a clear spending plan, even a well-funded nest egg can run dry faster than expected. Creating a retirement spending plan helps retirees balance lifestyle goals with long-term financial security, ensuring their money lasts through every stage of retirement.

Financial experts say the strongest plans account for essentials like housing and healthcare, leave room for flexibility, and get updated regularly.

Here are six smart tips to turn your savings into a spending plan that truly works.

1. Define Your Lifestyle Before You Set Your Budget

Before crunching numbers, retirees should start with a vision of how they want to live. Questions such as “Where will I live?” and “How do I want to spend my days?” help clarify priorities before setting a budget.

“A strong retirement spending plan starts aligning your lifestyle goals with your financial realities,” said Tyler End, co-founder and CEO of Retireable. “Many people sprint to retirement without taking time to define how they truly want to live. Once those lifestyle goals are clear, you can build a financial plan around them.”

Find Out: 5 Clever Ways Retirees Are Earning Up To $1K per Month From Home

2. Make Your Money Last for a Longer Life

One of the biggest risks retirees overlook is longevity. Many people plan as if they’ll only live to their mid-80s. However, medical advances mean many retirees now reach their 90s or beyond.

“Longevity is also a risk people don’t often think about,” said Julie Beckham, AVP and financial education expert at Rockland Trust. “For example, as you live longer, your retirement income must stretch out over a longer period of time.”

Building a retirement plan that assumes a longer lifespan helps ensure savings won’t run short. Strategies like delaying Social Security or maintaining modest investment growth can make income last.

3. Plan Ahead for Long-Term Care Costs

Health expenses can quickly derail even the best retirement plan. Because Medicare doesn’t cover assisted living or nursing home care, retirees are encouraged to plan by setting aside funds or exploring long-term care insurance.

Evan Farr, a certified elder law attorney, said many people mistakenly assume they’ll remain healthy for life, a reality for only about 30% of the population. The other 70% should build flexibility into their retirement budget and prepare for the potential costs of ongoing or

4. Structure Your Income — But Stay Flexible

A retirement spending plan works best when income is organized into clear categories. Experts recommend segmenting income, so essential expenses like housing, food, and utilities are covered first, while discretionary spending, such as travel and hobbies, comes next.

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“Set a safe withdrawal rate, usually 4-5%, and review annually,” said Ben Waterman, co-founder of Strabo, a global wealth-management platform. “Adjust spending based on fluctuating portfolio performance.”

5. Review Your Plan Regularly

Retirement spending plans shouldn’t be static. Experts suggest reviewing them at least once a year or after any major life event, such as a health change, market swing, or family milestone.

“Real life isn’t a spreadsheet,” Waterman said. “Assume you will have lifestyle shifts, inflation, and other unexpected costs like healthcare spending as you get older.”

Regular check-ins help ensure the plan remains aligned with income needs, tax laws, and inflation. A quick annual review gives retirees confidence that their strategy still works and allows them to make small adjustments before small issues become big financial setbacks.

6. Start Planning Early To Maximize Compounding

The most overlooked cost in retirement is the cost of waiting. The earlier people start planning and saving, the more time their money has to grow through compounding.

“Your priority should be to leverage tax-advantaged accounts like 401(k)s, IRAs and Roth accounts, and to invest for long-term growth,” End said. “The savings rate and account type are just as important as what you invest in.”

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