The “retirement spending smile” offers a glimpse of how you may spend money in retirement, despite not knowing exactly how much you’ll need.

This simple framework can help you enjoy your active years while preparing for future healthcare costs.

The “retirement spending smile” gets its name from its shape -- it looks like a smile when you chart how retirees spend money over time. Although not all retirements are the same, it’s common for retirees’ spending patterns to follow this pattern. It has three stages: early, middle, and late retirement.

1. Early retirement

Retirees embrace leisure activities they’ve long anticipated. This may mean finally taking that dream vacation, pursuing hobbies more frequently, dining out at restaurants, or enjoying more outings with friends and family. Some retirees may make purchases they’ve delayed, like renovating their home or finally buying the vehicle they’ve had their eye on.

2. Mid-retirement

As energy levels dip, so does spending. Retirees enjoy more home-cooked meals instead of dining out. They’re more inclined to go on a local day trip instead of vacation. This stage is where retirees settle into sustainable routines without the price tag of early retirement.

3. Late retirement

Healthcare can be a significant cost during this stage as health conditions change. Costs may include anything from regular medical visits and prescription medications to potential long-term care needs. While this uptick in spending may seem daunting, you can prepare effectively by knowing healthcare costs are one of the most predictable pieces of retirement planning.

Making the spending smile work for you

You can use the “retirement spending smile” to compare your expenses with those of most retirees, offering valuable insight into how your financial needs could evolve. You may be years away from retirement or already living it. Either way, knowing this pattern can add to your peace of mind. You can plan for changes and adjust your financial strategy accordingly. The spending smile is a roadmap for living well through every season of your retirement, giving you something to smile about for years to come.

For more information on the spending smile and healthcare costs in retirement, check out Voya Financial’s report here.