Many people think they can plan on spending less later in retirement since they'll become less active as they age. But if their health declines, they may actually shift spending rather than reduce it. Do you think it's risky to plan as if one's expenses will go down later in retirement? --Tim, U.K.

Yes, I do think it's risky but I understand why people mistakenly think it's safe.

In the 1990s, financial planner Michael Stein wrote "The Prosperous Retirement" in which he laid out three stages of post-career life: the go-go, or earliest stage, when people are most vigorous and eager to make the most of their newfound freedom from the daily grind; the slow-go phase, when people remain active but not quite as much as during their initial retirement years; and the no-go phase, when old age kicks in and people retreat to a more sedentary life.

Many people assume that their spending will drop in that final stage -- one financial planner has estimated that retirees over 75 spend about 25% less than those aged 65 to 74 -- but Stein himself says that the no-go phase is actually the most uncertain as far spending goes. Much of that uncertainty surrounds your health. If you're lucky enough to have no major medical issues and remain relatively fit throughout retirement, your overall spending may drop once you shift to a stay-at-home lifestyle.

If you end up requiring expensive medical care or need assistance because you're physically unable to care for yourself, your outlays could rise dramatically depending on how much of your care is covered by programs like Medicare or insurance.

But medical costs aren't the only potential surprise factor. Regardless of whether your expenses go up or down, you could end up living longer than you expect, and have to fund more years in retirement than you anticipated. A 2006 Society of Actuaries report found that only 29% of retirees and 30% of pre-retirees thought they would live longer than the average life expectancy. In reality, closer to 50% will outlive the average.

The upshot: During your career and maybe even well into retirement, it's extremely difficult to tell how much you'll spend in retirement and whether your spending will rise, drop or remain relatively constant throughout retirement.

Given that, I think it would be unwise to count on your living costs going down late in retirement. If you rely on spending less and you're wrong, you might have to make unpleasant cutbacks in your final years in order to avoid running out of dough. That could make for an anxious, and grim, retirement.

When you're still many years from retiring, the most important thing is to make sure you're saving enough for a long retirement. And in estimating the appropriate level of savings, it's prudent to assume that you'll want to maintain your purchasing power throughout retirement -- and that you'll live several years beyond life expectancy.

A tool like T. Rowe Price's Retirement Income Calculator can help you arrive at an appropriate savings rate based on how much you've already got socked away, the age at which you plan to retire and how you invest your savings.