.png)
Most retirement calculators start with a big assumption:
Take what you're spending today and inflate it by 3% every year for the rest of your life.
But what if that’s wrong? Worse, what if that flawed thinking causes you to save more than necessary, delay retirement, or spend less than you can actually afford?
J.P. Morgan’s new retirement spending study—based on over 280,000 households—challenges this conventional wisdom. Let’s break down the three retirement spending surprises they uncovered, and how they could reshape your entire plan.
Watch on YouTube:
The biggest myth in retirement planning is that your spending steadily rises with inflation. J.P. Morgan’s real-world data says otherwise.
They call this the retirement spending curve, and it makes intuitive sense. In your 60s, you're active—traveling, helping family, enjoying new experiences. But by your 70s and 80s, life slows down.
So if your plan assumes a 3% annual spending increase, you may be overestimating by hundreds of thousands of dollars.
For retirees with $250,000 to $750,000 in investable assets, J.P. Morgan found the inflation-adjusted spending increase is just 1.8% per year—even including rising healthcare costs.
That’s a full percentage point lower than the 3% most plans use.
Why it matters:
Let’s say you're 50 and expect to need $80,000 per year (in today’s dollars) when you retire at 65.
Using the 4% rule:
That’s a potential difference of years of extra work based on a flawed assumption.
Let’s go one step further:
If you also adjust the 4% rule’s withdrawal increases to match the 1.8% inflation figure, the required portfolio drops even more.
Your actual goal may vary depending on your preferences, legacy goals, and income sources—but this shows how powerful a small tweak in your assumptions can be over 3–4 decades.
J.P. Morgan also identified a unique window: the spending surge.
This happens around the retirement transition for partially retired households—people who reduce work hours but begin drawing income like Social Security or pensions.
During this phase, spending actually increases, especially on:
This group often carries more credit card debt and lower cash reserves, suggesting they may be catching up on delayed enjoyment—or misjudging how much they'll spend.
Failing to plan for this 2–3 year surge could throw off your entire withdrawal strategy, especially if markets are down at the same time.
Here’s surprise number three:
Retirement spending jumps around more than you think.
Why this matters:
If your strategy assumes a flat withdrawal adjusted for inflation every year, you’re using a rigid system for a flexible reality.
Some years you’ll replace a roof, take a trip, or help with a wedding. Other years will be quiet. Your plan needs room for both.
J.P. Morgan's findings suggest that retirement spending isn’t a slow uphill climb—it’s more like a hill:
Most financial plans are built on overly simplistic assumptions: constant inflation, linear withdrawals, and fixed lifestyles.
But retirement planning should be dynamic, just like real life. You need flexibility in both your withdrawal strategy and your income sources to adapt as life evolves.
If you're curious how we incorporate these insights into real retirement plans, schedule a free retirement assessment.
.png)
