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Most retirees worry about running out of money because of spiralling inflation and unexpected medical costs as they age.
However, after studying the spending patterns of five million retirees, JPMorgan has uncovered something surprising: Some of these concerns might be overblown.
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Perhaps the biggest shocker is that some retirees might not need as much savings as they believe to retire comfortably. Here are three reasons why.
1. Inflation isn’t as scary
Most financial planners assume your retirement spending will rise annually with inflation. Historically, inflation averaged 2.9% from 1982 to 2024, according to JPMorgan.
But that’s a general figure. Retirees tend to shift their spending as they age — dropping more on healthcare but less on clothes, dining out and commuting.
As a result, some retirees with modest wealth often see their overall expenses gradually decline over time. Their inflation experience differs from those in their peak earning years.
“Looking across the range of households in our dataset, our key finding is that people generally spend less than expected,” notes a previous JPMorgan report.
“For partially and fully retired households with $250,000 to $750,000 in investable assets, the annual inflation-adjusted change in spending is just 1.65%.”
Still, inflation remains a constant reality — especially over a retirement that could last decades. That’s why it’s important to protect your purchasing power. One proven strategy is investing in gold, which has historically served as a hedge against inflation and currency erosion.
Even better, the price of gold has jumped by more than 40% since 2023. JPMorgan projects that it will hit the $4,000 mark by 2026.
If you buy into gold’s long-term value, you don’t have to find and store the bars yourself. Instead, you could opt for a gold IRA to hedge against inflation by investing directly in precious metals.
One way to invest in gold that can provide tax advantages is to open a gold IRA with the help of American Hartford Gold.
Gold IRAs combine the tax benefits of an IRA with the inflation-resistant nature of investing in gold. This can make them an attractive option for those looking to potentially hedge their retirement against economic uncertainties.
Even better, you can often roll over existing 401(k) or IRA accounts into a gold IRA without tax-related penalties. To learn more, get your free 2025 information guide on how to invest in precious metals.
Qualifying purchases can also receive up to $20,000 in free silver.
2. Big, temporary bump in spending
JPMorgan’s analysis revealed an interesting trend: Spending tends to rise noticeably in the few years leading up to and following retirement. Retirement marks a significant life transition. It’s perhaps unsurprising for people to spend more during these early years — whether on healthcare, relocating, traveling, wining and dining or finally enjoying long-anticipated leisure activities.
After this surge, spending typically levels off and declines over time. It’s important to factor this spike into your retirement planning so your finances stay on track.
To help manage this transition, it’s wise to maintain a cash cushion in a high-yield savings or checking account, such as those offered by SoFi. A high-yield account can help your savings grow while still keeping funds accessible.
SoFi offers up to 4.00% APY and doesn’t charge account, monthly or overdraft fees.
The best part? You can get up to $300 when you sign up with SoFi and set up a direct deposit.
As you near retirement, try to keep at least one year’s worth of living expenses in cash. For added peace of mind, some experts — like Suze Orman — advise setting aside up to five years’ worth to ensure greater financial stability and flexibility.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
3. Everyone doesn’t spend the same way
Retirement planning isn’t a one-size-fits-all endeavor. Your senior years could look very different depending on your health, life goals and personal relationships.
To account for this, JPMorgan places retirees into six different categories depending on their spending patterns.
These categories range from “Steady Eddies” who spend a consistent amount of money, to “Upshifters” who enhance their lifestyle post-retirement and “Rollercoasters” who have a more unpredictable lifestyle.
One unexpected expense that can catch you off guard in retirement is insurance. U.S. homeowners insurers have hiked premium rates by double-digits over the past two years, with the largest calculated increase occurring in Nebraska at 22.7%, according to S&P Global Market Intelligence.
It could pay to take a closer look at your home and auto insurance, especially if they’re up for renewal. Shopping around is one of the best ways to find better rates, but calling individual providers can be time-consuming and tedious.
OfficialHomeInsurance.com takes the hassle out of shopping for home insurance. In just under 2 minutes, you can explore competitive rates from top insurance providers, all in one place. OfficialHomeInsurance.com can make it easy to find the coverage you need at a price that can fit your budget.
But home insurance premiums aren’t the only thing coming out of homeowners’ pockets. If you own a car, you have another cost to deal with.
Car insurance rates rose an average of 16.5% in 2024, according to ValuePenguin. Like with home insurance, shopping around and bundling can lead to substantial savings.
OfficialCarInsurance.com lets you compare quotes from trusted brands — including Progressive, Allstate and GEICO — to make sure you’re getting the best deal. Their matchmaking system takes into account your location, vehicle details and driving history to find the lowest rate possible for you.
Deals start at just $29 per month and you can switch over your policy in only a few minutes.
Planning for tomorrow, today
Considering all the research, creating a retirement plan based on broad assumptions probably isn’t the best approach. For a truly comfortable retirement, your plan needs to be customized to your individual needs.
For example, you could be planning to travel during your golden years or downsize to reduce housing costs. These choices will significantly impact how much money you’ll need and your investment plan.
Being up front in accepting what you want is one thing. Figuring out how to get there is another.
A trusted, pre-screened financial advisor can help you develop a solid retirement strategy — whether you’re downsizing to take better advantage of city life or you’re beachward bound.
Those who work with financial advisors see a 3% increase in net returns, according to research by Vanguard. This difference compounds over time. For instance, you could potentially retire with an extra $1.3 million after 30 years of professional guidance if you start with a $50,000 portfolio.
Finding the right advisor for your needs is simple with Advisor.com. Their platform connects you with an experienced, qualified financial professional in your area who can offer personalized guidance and support in managing market fluctuations and optimizing your portfolio mix.
Once you match, you can book a free consultation call to see if they’re a good fit for you. After all, a good financial advisor is a lifetime partner in making the most out of your money.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
