Retirement researchers increasingly recognize that real spending does not remain flat throughout retirement. As Dr. David Blanchett emphasized in his recent Think Advisor article:
“Integrating reduced real spending into retirement income models not only improves the outcome of decisions around appropriate portfolio withdrawal rates, but also optimal portfolios, allocations to lifetime income, and so forth. Therefore, the more widely reduced real spending is leveraged in retirement research and financial planning tools, the more realistic the guidance is going to be.”
This insight aligns directly with the actuarial approach and our Actuarial Financial Planner models. Rather than assuming a constant real withdrawal rate each year, the actuarial approach can model spending as a dynamic path that reflects how retirees actually behave:
- Real discretionary spending that declines over time,
- Some essential spending that rises with inflation and
- Other essential spending that rises at a rate faster than inflation.
We discussed the benefits of front-loading discretionary expenses in retirement, how to use the Actuarial Financial Planner to accomplish this and included several examples in our post of April 11, 2026 entitled “Increase Your Discretionary Retirement Spending While You Are Healthy and Active.”
Microsoft Copilot makes it practical for households and advisors to implement this improved modeling. This combination—the actuarial approach plus Copilot’s modeling capabilities—gives planners and retirees a framework that is both realistic and operational. It supports better decisions about budgeting, portfolio construction, and the role of lifetime income products, while grounding those decisions in spending patterns that match observed retiree behavior.
As Blanchett suggests, the more widely reduced real spending is integrated into planning tools, the better the guidance becomes. The actuarial approach and Copilot provide a straightforward way to do exactly that right now.
