Retirement spending doesn’t stay flat — it follows a smile-shaped curve. Most retirees spend more in their active early years (roughly ages 62–72), then naturally slow down in their quieter middle years, before costs rise again later in life as healthcare needs increase. Understanding this “retirement spending smile” helps you decide when to claim Social Security, how to manage Required Minimum Distributions (RMDs), and how to protect yourself from unexpected Medicare surcharges — so your money lasts as long as you do.

What exactly is the retirement spending smile?

Financial researcher David Blanchett coined the term after studying thousands of retiree households. He found that spending in real dollars (adjusted for inflation) tends to dip gradually through the middle of retirement, then ticks back up toward the end — creating a U-shape, or smile, when you plot it on a graph.

The early “go-go” years are filled with travel, hobbies, home projects, and helping grandchildren. The middle “slow-go” years are calmer and cheaper. The later “no-go” years bring fewer vacations but higher medical bills. Knowing which phase you’re in — or heading toward — changes everything about how you should draw down your savings.

How does the spending smile affect when I should claim Social Security?

Claiming Social Security at the right time is one of the biggest financial decisions you’ll make in retirement. Every year you delay past your full retirement age (currently 67 for most people born after 1960), your benefit grows by 8% — up until age 70. That means waiting from 62 to 70 can nearly double your monthly check.

Here’s where the spending smile connects: if your early retirement costs are high, you might be tempted to claim at 62 just to cover the bills. But if you can bridge those years with savings, a part-time income, or a spouse’s benefit, delaying can pay off enormously — especially since your later-years healthcare costs will be higher and you’ll want that income stream.

One important note: up to 85% of your Social Security benefit can be taxable depending on your combined income (that’s your adjusted gross income plus tax-exempt interest plus half your Social Security). Keeping other income sources low in your early retirement years — for example, by delaying RMDs and not selling big investments — can reduce how much of your benefit gets taxed.

What are the RMD rules I need to know for 2025 and 2026?

Required Minimum Distributions (RMDs) are the amounts the IRS requires you to withdraw each year from traditional IRAs and most workplace retirement accounts like 401(k)s. The SECURE 2.0 Act pushed the starting age to 73 for anyone who turned 72 after December 31, 2022. If you turn 73 in 2025 or 2026, your first RMD is due by April 1 of the following year — but taking two RMDs in one year can push you into a higher tax bracket, so plan carefully.

The amount you must withdraw is calculated by dividing your account balance (as of December 31 of the prior year) by a life expectancy factor published by the IRS. Miss an RMD and the penalty is steep: 25% of the amount you should have withdrawn (reduced to 10% if corrected quickly). Fitting your RMDs into the retirement spending smile framework matters because a big RMD in a slow-go year could unexpectedly trigger higher Medicare premiums the following year — a trap called IRMAA.

How do I avoid Medicare IRMAA surcharges?

IRMAA stands for Income-Related Monthly Adjustment Amount — a fancy way of saying Medicare charges higher-income retirees more for Part B and Part D coverage. In 2025, the standard Medicare Part B premium is $185.00 per month. But if your income (specifically your Modified Adjusted Gross Income from two years prior) exceeds $106,000 as a single filer or $212,000 as a couple, you pay more — sometimes significantly more.

The tricky part: Medicare looks back two years. So your 2026 premiums are based on your 2024 income. A large Roth conversion, a home sale, or a big RMD in 2024 could trigger IRMAA surcharges you weren’t expecting in 2026. Strategies to stay below the thresholds include spreading Roth conversions over several years, timing asset sales carefully, and using Qualified Charitable Distributions (QCDs) — which let you send up to $108,000 directly from your IRA to a charity in 2026, satisfying your RMD without it counting as taxable income.

If your income drops significantly due to a life event like retirement, divorce, or loss of a spouse, you can appeal your IRMAA surcharge using IRS Form SSA-44. Many retirees don’t know this option exists.

How should I adjust my withdrawal strategy for each phase of the smile?

The spending smile isn’t just useful for understanding your expenses — it’s a practical planning tool.

Go-go years (roughly 62–72): Spend from taxable accounts first to let tax-advantaged accounts grow. Consider delaying Social Security if possible. Keep a flexible budget for travel and experiences — this is when you’ll enjoy them most.

Slow-go years (roughly 72–82): RMDs are likely kicking in by now. Work with a tax advisor to manage distributions and avoid IRMAA. This is also a good time for Roth conversions if your income dips — you’re converting at a lower rate before healthcare costs push your bracket up.

No-go years (82+): Healthcare costs rise and spending becomes less discretionary. Long-term care insurance, a Health Savings Account (HSA) balance, or a dedicated medical reserve fund become critical. Review beneficiary designations and estate planning documents annually.

No two retirements are identical, but the smile shape holds up across income levels and lifestyles. Building your financial plan around it — rather than assuming flat spending — means fewer surprises and more confidence in every phase.

FAQ

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Frequently Asked Questions

When should I claim Social Security to maximise my benefit?

Waiting until age 70 gives you the largest possible monthly benefit — roughly 8% more for every year you delay past your full retirement age (67 for most people born after 1960). If you’re in good health and can cover expenses from other sources in the meantime, delaying nearly always pays off over a long retirement. Run the numbers using SSA.gov’s online estimator or a financial planner before deciding.

How much of Social Security is taxable?

Up to 85% of your Social Security benefit can be subject to federal income tax, depending on your “combined income” — which is your adjusted gross income, plus any tax-exempt interest, plus half of your Social Security benefits. If that total exceeds $34,000 (single) or $44,000 (married filing jointly), expect 85% of your benefit to be taxable. Managing other income sources carefully can reduce this amount.

What are the RMD rules for 2025 and 2026?

Under the SECURE 2.0 Act, Required Minimum Distributions now begin at age 73 for anyone who turned 72 after December 31, 2022. Your RMD amount is calculated by dividing your prior year-end account balance by an IRS life expectancy factor. Missing an RMD carries a 25% penalty on the missed amount, reduced to 10% if corrected promptly — so mark your calendar and plan distributions in advance.

How do I avoid Medicare IRMAA surcharges?

IRMAA surcharges kick in when your Modified Adjusted Gross Income from two years prior exceeds $106,000 (single) or $212,000 (married). Strategies to stay below those thresholds include spreading Roth conversions over multiple years, using Qualified Charitable Distributions to satisfy RMDs without raising taxable income, and carefully timing large asset sales. If your income drops due to a life event, you can appeal your surcharge using Form SSA-44.

What is the Medicare Part B premium for 2025?

The standard Medicare Part B premium for 2025 is $185.00 per month, up from $174.70 in 2024. Higher-income beneficiaries pay more through IRMAA surcharges, with the highest bracket reaching over $500 per month. Part B covers doctor visits, outpatient services, and preventive care, so it’s a core cost to factor into your retirement budget each year.