For many retirees, the toughest question isn’t “Do I have enough saved?”, it’s “How much can I actually spend without running out?”

The truth is that it’s a balancing act.

You want the freedom to enjoy your money, but you don’t want to jeopardize the security you’ve worked so hard for. The good news is there are smarter ways to approach retirement spending than sticking to outdated rules of thumb like the coveted “4% rule”.

Why the 4% Rule Falls Short

You’ve probably heard of the “4% rule.”

The idea is fairly simple: in your first year of retirement, you withdraw 4% of your portfolio, then increase that dollar amount each year for inflation.

While it’s a useful starting point, the 4% rule has serious shortcomings:

It assumes you’ll spend the same amount every year, for the rest of your life.
It doesn’t reflect how retirees actually spend. Often more in the early years, less later, sometimes with a bump for healthcare.
It ignores how Social Security, pensions, and other income sources fit into the picture.
It doesn’t consider taxes or the order you draw from accounts, both of which can drastically affect how long your money lasts.

In real life, retirement spending looks more like a smile or curve than a straight line.

The Retirement Spending Smile

Instead of flat, inflation-adjusted withdrawals, many retirees follow what I call the Retirement Spending Smile (Curve).

Early Years (60s and 70s): Spending is usually higher. This is when travel, hobbies, and “bucket list” experiences are front-loaded.
Middle Years: Spending often slows as life settles into routines. Fixed costs like housing and healthcare remain, but discretionary spending drops.
Later Years: Spending may rise again, not for vacations but for healthcare, long-term care, or support needs.

Spending Smile Visualized

This curve is often a more realistic reflection of life, and it can help you feel confident about spending more early, when you’re healthiest, without sacrificing security later.

Why the “Smile” Works Better:

Using a Retirement Spending Smile offers several advantages over a one-size-fits-all rule:

Tax Planning Opportunities: Early retirement years often bring lower taxable income, which means you can take advantage of Roth conversions, harvest gains, or fill lower tax brackets before Required Minimum Distributions (RMDs) kick in.
Integration With Guaranteed Income: Social Security and pensions typically begin later, so you can draw more from your portfolio in the early years, then taper once those streams kick in.
Flexibility With Guardrails: Instead of one rigid number, you set a range. If markets are strong, you can safely increase spending. If markets stumble, you tighten the belt temporarily.

How This Works:

Imagine a couple retiring with $2 million saved.

If they followed the 4% rule, they’d withdraw $80,000 in year one and keep adjusting for inflation, regardless of life stage, markets, or taxes.
With a Spending Curve approach, they might withdraw $110,000 in their first decade (to front-load experiences), reduce to $80,000 in their middle years once Social Security starts, and allow for higher healthcare spending later if needed.

By layering in tax planning and dynamic adjustments, this couple can enjoy their wealth more fully, without running unnecessary risks.

So What’s a Good Number?

While no two retirees are alike, research offers some useful benchmarks:

A starting withdrawal rate of 3%–5% is often considered sustainable. However, this may cause some people to underspend significantly in retirement.
Retirees with significant guaranteed income (pensions, Social Security) can usually lean toward the higher end of that range, or more.
Those relying solely on investments may want to start lower and adjust upward later.
Flexibility is key: cutting spending by even 5%–10% during down markets can dramatically improve the odds of long-term success.

Bottom line: the “right” number is personal to you.

What Really Determines How Much You Can Spend

At the end of the day, the “safe” amount depends on more than portfolio size.

It’s a combination of:

Your guaranteed income sources (Social Security, pensions, annuities)
Your health, lifestyle, and longevity expectations
Your tax situation and withdrawal strategy
Your goals for legacy or charitable giving
Your comfort with adjusting spending as circumstances change

A thoughtful plan ties all of these together so you can spend confidently and still sleep at night.

Parting Thoughts:

The 4% rule might be a decent conversation starter, but it’s not a strategy. Real life requires more flexibility. The Retirement Spending Curve reflects how retirees actually live, lets you make the most of your early years, and builds in tax-smart strategies to preserve wealth over the long run.

If you’ve ever wondered “Am I spending too much, or not enough?”, that’s not a question a rule of thumb can answer.

It’s a question worth answering with a personalized retirement plan.

Have any questions about what you’ve read? Let’s talk about them!