The Retirement Spending Smile Revisited: Cross-Sectional Patterns versus Within-Household Dynamics

Derek Tharp
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Derek Tharp: University of Southern Maine

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Abstract: The "retirement spending smile" (Blanchett, 2014), a U-shaped pattern in the rate of retiree spending change, has influenced how advisors project retirement spending. We replicate Blanchett's analysis using RAND HRS/CAMS data (2001–2009) and extend it with panel methods through 2021. The smile pattern appears when comparing different households at different ages but is not statistically detectable when tracking the same households over time. In our replication, coefficient signs match Blanchett's specification, but 95% bootstrap confidence intervals for Age² and Age include zero — the curvature is not statistically distinguishable from simple linear decline. We also document that the ln(Spending) coefficient sign depends on whether spending is measured at interval start or end, an implementation choice unspecified in the original. The smile attenuation finding is robust to survey weighting. For individual client projections, a constant real decline (~1%, sensitivity 0–2% annually) is a more defensible baseline than assuming a smile.

Date: 2026-02-26
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ctu3g_v1

DOI: 10.31219/osf.io/ctu3g_v1

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