Retirement Retirement Planning

Retire 5 Years Earlier by Making One Simple Change in 2026

You may not be planning for your yearly retirement expenses accordingly.

By Tobi Amure, CFEI® , Edited by Amanda Machado

Updated April 10, 2026

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Most individuals are obsessed with having a seven-figure retirement. You may be caught up trying to get $1 million or above to afford $60,000 per annum in retirement expenses. Such pressure may cause you to work longer before retirement, even when you are weary and need to take things a bit slower.

Nevertheless, it is actually quite unusual that real spending of retirees remains constant throughout each year. Research has shown that retirees tend to spend more during their early years and gradually tend to reduce their spending with age.

Should you deliberately adjust your retirement plans for those changes, you may be able to retire earlier than you thought.

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Rewriting the classic $60,000 retirement plan

Imagine a 60‑year‑old professional who wants to retire at 65 and spend $60,000 annually throughout retirement. Using the classic 4% rule, that steady $60,000 spending level suggests a nest egg of around $1.5 million. That target seems unrealistic to lots of the middle-class savers, particularly those who may have made career breaks.

However, what happens when the same individual realizes that it's unlikely to keep spending the same amount over 25 years of retirement? Rather than swamping in at $60,000 annually, this person budgets a regressive retirement annual spend that decreases with age.

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The simple change: a step-down spending plan

A step-down spending plan breaks down retirement into stages with various budgets rather than a single unvarying figure. A realistic version would resemble the following:

How much	When	Why
$60,000	In your 60s	It's when travel, activities, and family visits may be at their peak
$50,000	In your 70s	As some discretionary expenses taper off and you spend more time closer to home.
$40,000	In your 80s and beyond	Many retirees report spending significantly less on travel, cars, and entertainment.

If you average those three decades, the long-term annual spending target is closer to $50,000 than $60,000. Using the same 4% rule framework, an average withdrawal of about $50,000 a year suggests a portfolio around $1.25 million instead of $1.5 million, roughly $250,000 less than the original target.

How this could help you retire 5 years earlier

This $250,000 shift does not only exist on paper. If you're in your late 50s or early 60s, it could free you from a few additional years of aggressive accumulation, which you previously thought you needed to retire.

Consequently, your plan no longer depends on hitting $1.5 million exactly, meaning you might be closer to financial independence than you think.

You might also see that your current savings, plus future Social Security benefits, support retiring several years sooner than expected. Depending on your personality and lifestyle, you may never need $1.5 million at all. When you put these pieces together, you can use the step‑down spending approach to design a retirement plan that fits you.

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How to turn this idea into an actionable plan

This framework does not operate on complex software, yet it needs clear assumptions. Write down your perception of your 60s, 70s, and 80s in the real world. Think of activities, responsibilities, and the amount of time you would prefer to spend away from home.

Map your "go‑go," "slow‑go," and "no‑go" years

A well‑known early description of changing retiree spending comes from Michael Stein's book The Prosperous Retirement. He outlined "go‑go," "slow‑go," and "no‑go" years to show how energy and expenses evolve. Use that framework to sketch your own stages, then write down what you expect to spend, travel, and enjoy in each phase.

Right‑size your budget for each decade

Use a set annual figure to represent each stage rather than using a single figure. You can choose $60,000 for your 60s, $50,000 for your 70s, and $40,000 for your 80s. Then identify what spending must be fixed from the adjustable ones, to get a place where future changes would be comfortable.

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Stress‑test your plan with flexible withdrawal rules

Researchers who study withdrawal strategies find modest adjustments can support higher starting income. You can manage discretionary expenditure a little in the lean market years and a little in the years of good returns. That strategy will allow your portfolio to be sustainable even though you will have more freedom during more active years.

Revisit your assumptions every few years

There is hardly a first draft of any retirement plan that can precisely match life, and hence, check-ins should be regular. Every few years, compare your actual spending with what you projected for that stage. Use those changes to re-target future decade goals and determine whether it is reasonable now to retire earlier.

Bottom line

You may not need a perfectly round seven‑figure portfolio to retire on your terms. A more nuanced view of how spending changes with age can shrink the target meaningfully. One helpful detail many people overlook involves guaranteed income from Social Security, pensions, and overlooked senior benefits.

As those sources cover more of your essential costs, your investments mainly fund travel, hobbies, and other flexible goals. That framework is compatible with a decreasing spending curve, and pressure on your savings decreases.

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