CPI vs JP Morgan Spending Curve: Which Retirement Spending Pattern Is Right for You?
Most retirement calculators model spending as flat in real terms — you spend the same amount every year, adjusted for inflation. But research suggests this assumption may be wrong, and the error has real consequences for how much you think you need to save.
Updated May 2026 · 6 min read
The CPI assumption: simple and conservative
The standard assumption in retirement planning is that spending remains flat in real terms — meaning it rises with inflation (CPI) each year but doesn't change in purchasing power. If you spend $80,000 today, the model assumes you'll spend $80,000 in today's dollars every year for 25 years.
This is a conservative assumption. It means your portfolio needs to sustain a constant real income for the entire planning horizon. It doesn't account for the fact that most people genuinely spend less as they age — not because money runs out, but because their needs and desires change.
The CPI assumption suits some situations well:
- If you have significant fixed costs that genuinely won't change (rent, mortgage, care obligations)
- If you want to be deliberately conservative in your planning
- If you're modelling a bequest goal — preserving capital throughout retirement
The JP Morgan curve: what research actually shows
In 2014, retirement researcher David Blanchett published "Exploring the Retirement Consumption Puzzle" — a comprehensive analysis of how actual household spending changes over retirement. The findings, later incorporated into JP Morgan's retirement research, showed something consistent and important: real spending in retirement tends to decline over time, not remain flat.
The pattern follows a rough "smile" shape: relatively high spending in early retirement (travel, activity, new experiences), a gradual decline through the middle years, a low point in the mid-to-late 70s and early 80s, then a potential late-life uptick driven by health and aged care costs.
These three phases are commonly described using the framework introduced by Michael Stein in his 1998 book The Prosperous Retirement — the "Go-Go," "Slow-Go," and "No-Go" years. Blanchett's 2014 research provided the empirical confirmation of the spending decline that Stein's framework describes, but the terminology itself predates Blanchett's paper.
RetireConfident implements this as a three-phase decline:
| Phase | Years | Real decline |
|---|---|---|
| Go-Go | Years 1–10 | 1.0% per year |
| Slow-Go | Years 11–20 | 1.5% per year |
| No-Go | Years 21+ | 0.5% per year |
Over a 30-year retirement, this compounds to a meaningful reduction. By year 20, real spending is approximately 78% of the starting level (0.99¹⁰ × 0.985¹⁰ ≈ 0.778). By year 30, around 74% (× 0.995¹⁰ ≈ 0.740). The cumulative reduction in required real income is significant — and it directly affects how much portfolio is needed to fund the retirement.
The practical difference for your plan
To illustrate, consider a retiree with $900,000 in super, spending $70,000 per year in today's dollars, with a 30-year planning horizon and 7% expected returns (before fees and inflation):
CPI (flat real spending)
JP Morgan curve
The JP Morgan curve doesn't just show a higher success rate — it also shows a higher sustainable spending level in early retirement, when spending capacity and desire are greatest. That's the key insight: if real spending genuinely declines, you can afford to spend more now without increasing long-run risk.
The important caveat: aged care
The JP Morgan curve shows average behaviour. Individual experience varies significantly, and the largest source of late-life spending variation is aged care and health costs.
Residential aged care in Australia can cost $150,000–$600,000 in a lump sum accommodation deposit (RAD) alone, on top of ongoing care fees. For retirees who need significant formal care, late-life spending may sharply increase rather than continue the decline the JP Morgan curve models.
The RetireConfident calculator models aged care costs as a separate, stochastic component — separate from the spending pattern — so you can use the JP Morgan curve for discretionary spending while still stress-testing for the aged care scenario.
Which should you choose?
Your spending is dominated by fixed costs that won't change with age (rent, support obligations)
You want to be deliberately conservative — maximising the probability you never run short
Your primary goal is capital preservation or a large bequest
Your spending includes significant discretionary items (travel, restaurants, entertainment) that naturally decline with age
You're concerned about underspending in early retirement — and want to calibrate spending to what you'll realistically use
You're comfortable modelling aged care costs separately, as a tail risk rather than a base assumption
A reasonable middle ground for most retirees: use the JP Morgan curve as your base spending assumption, and run a separate aged care stress test to understand the tail risk. This gives you a realistic central case without ignoring the scenarios where late-life costs are significant.
Compare spending patterns in the calculator
RetireConfident's Retirement Calculator lets you toggle between CPI and JP Morgan spending patterns and compare the results side-by-side using the What-If Scenario tool.
The aged care modelling feature lets you stress-test late-life care costs separately from your base spending assumption.
Open Retirement Calculator →Frequently asked questions
What is the JP Morgan retirement spending curve?+
The JP Morgan retirement spending curve (based on Blanchett's 2014 research) describes how real spending tends to decline over the course of retirement. Rather than staying flat in purchasing power terms, actual spending typically falls gradually through the "Slow-Go" years (roughly 70-79) and declines further in the "No-Go" years (80+), before often rising again near end of life due to aged care or health costs.
Does real spending actually decline in retirement?+
On average, yes. Research consistently shows that retirees spend less in real terms as they age, reflecting reduced travel, entertainment, and activity as health and energy decline. However, this is an average — individual experiences vary widely. Healthcare and aged care costs can significantly increase spending in later years, partially or fully offsetting the general decline.
Which spending pattern should I use in a retirement calculator?+
It depends on your situation. CPI (flat real spending) is more conservative — it assumes you'll spend the same in real terms throughout retirement, which tends to overstate required savings. The JP Morgan curve is more realistic for many retirees, but risks underestimating costs if you have significant health or aged care expenses later in life. A reasonable approach is to use the JP Morgan curve for your base spending, but model aged care costs separately.
How does the JP Morgan curve affect my retirement plan?+
Using the JP Morgan curve instead of flat CPI spending generally reduces the required portfolio size, increases sustainable spending in early retirement, and shows a higher probability of success at a given spending level. The difference can be meaningful — for a 30-year retirement, real spending is approximately 22% lower than the starting level by year 20 under these rates, and around 26% lower by year 30.