Why Traditional Retirement Advice Is Wrong: Uncover the Truth!

Rethinking Retirement Spending: 3 Surprises That Could Make—or Break—Your Plan
For decades two simple rules have dominated retirement math:
- The 4 Percent Rule – withdraw 4 percent of your nest egg in Year 1, adjust that dollar amount for inflation each year thereafter, and your money should last 30 years.
- The 70-to-80 Percent Replacement Rule – plan to live on roughly 70-80 percent of your final salary because spending supposedly falls once the commute ends.
They’re easy to remember, easy to run through a spreadsheet … and increasingly disconnected from real life. JP Morgan’s latest deep-dive into household data reveals three spending patterns that punch holes in those old heuristics. Ignore them and you risk over-saving, under-living, or—worse—running out of money just as medical costs spike.
Below you’ll learn:
- The Lifetime Spending Curve – why average spending naturally falls as we age and why broad-brush inflation assumptions can exaggerate future needs.
- The Retirement Spending Surge – a multi-year spike that often hits the moment you clock out for good.
- Spending Volatility – the reality that eight in ten retirees see double-digit swings in expenses well after the honeymoon phase ends.
We’ll close with a practical checklist so you can blend these insights into your own plan and build flexibility instead of fear.

1. The Lifetime Spending Curve: Your Costs Don’t Rise in a Straight Line
When planners inflate every expense by the Consumer Price Index, they assume you’ll buy the same basket of goods at 75, 85, and 95 that you bought at 65. Real life doesn’t cooperate.
- Early adulthood (20-40). Spending climbs as careers grow, homes are purchased, and children arrive.
- Peak earning years (late 40s to 50s). Mortgages, college bills, and family experiences all converge.
- Early 60s. Costs begin to drift lower. Kids leave the nest, debt falls, and big-ticket purchases fade.
- Mid-70s and beyond. Discretionary spending shrinks further—less travel, dining, and shopping—while health-care costs start to eat a larger slice of a smaller pie.
JP Morgan’s research shows that, after age 65, the true inflation-adjusted change in total spending is roughly one-third lower than the long-term CPI that most planners plug into software. Translation: if you model expenses with a flat 3 percent inflator, you might postpone retirement or pinch pennies unnecessarily during the healthiest years.
Action step: Break expenses into “Needs” (utilities, groceries, insurance), “Wants” (travel, hobbies), and “Health Care.” Apply higher inflation only to the medical bucket and lower—or even negative—real growth rates to the rest. Re-run your projections and see how much earlier, or more comfortably, you could retire.

2. The Retirement Spending Surge: The Hidden Five-Year Bump
Swipe your badge for the last time and spending drops, right? Not exactly. When JP Morgan tracked households from two years before retirement through three years after, they saw:
- A pronounced spike peaking in the year of retirement, tapering over the next 36 months.
- The surge driven by relocation expenses, celebratory travel, wardrobe upgrades, and newfound free time to tackle long-deferred projects.
- A stronger effect among partially retired households—those who still earn some wages while also tapping Social Security or pensions—perhaps because they feel confident spending extra as long as a paycheck continues.
Ignoring that bump can wreak havoc if markets turn south just as withdrawals jump. A classic “sequence-of-returns” nightmare: big portfolio hits at the same time you’re yanking out more cash than planned.
Action step: Build a separate “Launch Fund” for the first three retirement years. Label it for travel, home updates, a sprinter van—whatever fuels the dream. Keep it in cash or ultra-short bonds so the money is immune to market swings. Your core portfolio can then follow a steadier withdrawal path.

3. Spending Volatility: Retirement Budgets Are Anything but Static
Even after the initial surge fades, expenses refuse to settle into a neat, downward slope.
- Twenty-four percent of retirees see permanent spending changes of at least ±20 percent—sometimes up, sometimes down.
- Fifty-six percent experience temporary swings of similar magnitude.
- Volatility is highest between ages 70 and 80—often triggered by family events, health shocks, or spontaneous splurges on grandkids.
Rigid withdrawal strategies struggle in that environment. Sell-offs force painful cuts; bull markets tempt overspending. A portfolio that could endure 30 years on a flat trajectory might crumble if the first decade morphs into a roller coaster.
Action step: Adopt a guardrail approach instead of a hard-coded percentage. Set a comfortable baseline income, but give yourself a band—say, ±10 percent—tied to portfolio performance. Markets soar? Nudge spending to the top of the band or fund one-off dreams. Markets tank? Dial back to the lower rail until balances recover.

Putting It All Together: A Flexible Framework
- Segment inflation: Apply medical inflation to health-care costs, a lower rate to discretionary categories, and revisit each bucket every five years.
- Fund the surge: Carve out cash for the three-year honeymoon so your core assets stay invested through any storm.
- Use guardrails, not rigid rules: Let portfolio value dictate small adjustments rather than following an inflexible 4 percent trajectory.
- Stress-test often: Run Monte Carlo scenarios that include a 30 percent spending surge in the first three years and random ±20 percent shifts every decade.
- Review annually: Health, markets, and passions change. So should your plan.
Remember, retirement isn’t a straight-line spreadsheet; it’s a series of evolving life chapters. Recognize the curve, anticipate the surge, embrace the volatility—and design a strategy that bends with reality rather than breaking under it.
Need help translating these trends into your own numbers? Use the link below to set up a quick call with our team, and we’ll show you exactly how a dynamic model could unlock more freedom—and fewer worries—in your next chapter.
Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC.– Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. – Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. – Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. This communication has not been reviewed for completeness or accuracy, does not necessarily reflect the views of Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and is not a recommendation or endorsement of any product, service, or issuer. Third party posts do not reflect the views of Theorem Wealth Management or Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and have not been reviewed for completeness and accuracy. All further communications from this representative must be sent from and received by johnathan@theoremwm.com. For additional information, please refer to one of the following consumer websites: www.FINRA.org, www.SIPC.org.