JPMorgan studied 5 million retirees across America — and found 3 surprising spending shockers. Is your 7-figure nest-egg actually hurting you?

Perhaps the biggest shocker in their report 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 make some basic assumptions about inflation. Put simply, they assume that your spending in retirement will probably increase every year in line with the cost of living in recent years.

According to JP Morgan’s analysis, inflation has averaged 2.9% from 1982 to 2024.

However, that’s the general rate of inflation for all categories, while retirees tend to shift their spending patterns as they age.

For instance, a retiree may have to spend more on healthcare as they get older, but they spend less on clothes, eating out and transportation since they don’t have to go into the office everyday.

In other words, higher costs in some categories are offset by lower spending in others. Overall, a typical retiree with modest wealth should see annual living expenses gradually decline over the course of their retirement, which means their experience of inflation is different from someone in their peak earning and spending age.

“Looking across the range of households in our dataset, our key finding is that people generally spend less than expected,” says a previous report from JPMorgan.

“In fact, for partially and fully retired households with investable assets of $250,000 to $750,000, the annualized inflation-adjusted change in spending — is just 1.65%.”

2. Big, temporary bump in spending

JPMorgan’s analysis also uncovered a curious surge in spending in the few years before and few years after a person’s retirement. In other words, there’s a temporary bump in spending around this period, mostly on healthcare, apparel, housing, food and beverages.

Retirement is a new chapter in your life and it’s likely that you will spend the first few years moving to a new location or indulging in leisure activities that you always dreamed of.

However, after this initial surge, spending tends to stabilize and gradually decline as mentioned above.

Nevertheless, your retirement plan should account for this temporary bump in spending.

3. Everyone doesn’t spend the same way

Retirement planning isn't a one-size-fits-all endeavor. Depending on your health, life goals and personal relationships, your senior years could look very different from the average person’s.

To account for this, JPMorgan places retirees into six different categories depending on their spending patterns.