Key Takeaways and Retirement Planning Tips from JPMorgan’s 2025 Guide to Retirement
Every year, JP Morgan puts together a research presentation around current retirement insights. They call it “Guide to Retirement”. It’s insight I look forward to every year, as it’s packed with interesting and useful information regarding retirement. This information helps details the current retirement landscape for Americans and the challenges they are facing, which can help us to plan more effectively for retirement and be more prepared for the obstacles they may face.
It covers a vast amount of retirement data, including areas like:
Current Life Expectancies
Average Retirement Ages versus Expected Retirement Ages
Savings Needs and Targets
Spending in Retirement
Inflation
Safe Withdrawal Rates
Investing in retirement
Social Security
Medicare
And much more. I can certainly see where this research may not be exciting to many, but as someone who enjoys financial planning and helping people navigate retirement for a living, this research is always interesting to read about.
I was curious to compare this year’s guide (2025) to last year's guide (2024) and see what changes, if any, have occurred in the retirement landscape. We’ll dive through some of the main topics and compare 2024’s numbers to 2025’s and discuss key takeaways and planning tips based on this information.
Life Expectancies
First up is life expectancies. I have their chart listed below. But essentially, they break down the likelihood that you’ll live to a certain age if you are either a 65-year-old in excellent health or the average 65-year-old.
As you can see, for a 65-year-old woman in excellent health, the likelihood of living to age 85 is 73%, while the total population average for women has a 52% chance of living to age 85. Then for age 90, the excellent-health 65-year-old woman has a 53% chance, while the total population average for women has a 31% likelihood.
For men, the life expectancies are a little lower. For a 65-year-old man in excellent health, the likelihood of living to age 85 is 64%, while the total population average for men has a 39% chance of living to age 85. Then for age 90, the excellent-health 65-year-old man has a 43% chance, while the total population average for men has just a 19% likelihood.
Compared to 2024, these numbers are pretty much the same (as you’d expect). Most categories were either no change or 1% change. The biggest change, surprisingly, was for excellent health women living to age 100. That was down 3% in 2025. Went from a 13% chance in 2024 down to 10% chance in 2025.
Image is from JPMorgan’s 2025 Guide to Retirement. Source (chart): Social Security Administration, Period Life Table, 2021 (published in the 2024 OASDI Trustees Report); American Academy of Actuaries and Society of Actuaries, Actuaries Longevity Illustrator, http://www.longevityillustrator.org/ (accessed December 2024), J.P. Morgan Asset Management.
Key Takeaways & Planning Tips:
Health is important. You can see the drastic difference in life expectancies for healthy 65-year-olds compared to the average population. I stress this in my retirement planning meetings with clients: start to define your ideal retirement and your day-to-day life in retirement. Have plans to stay active, socialize, continue learning, and eat healthily. It can be easy to fall into a trap of comfort and relaxation after 30+ years of hard work. And while that’s certainly a part of retirement, and a deserved one, it’s very important to have a plan to keep active and healthy in retirement as well.
Women tend to live longer than men. These charts show that pretty clearly. Because of this, it’s important to have a plan in place should one spouse pre-decease the other significantly. A lot of retirement plans I see always assume each person will pass at the same age. While that would be nice, it doesn’t usually work out like that. We need to make sure that we are “stress testing” our retirement plans for various life expectancies for both spouses. We need to make sure that the surviving spouse will be okay if their fixed income, such as Social Security, Pensions, or Annuities, is all of a sudden reduced significantly due to their partner passing at an earlier-than-expected age. What does your retirement plan look like if your spouse passes away in their early 70s? Early 80s? If an early passing throws the plan off course, we need to have a plan in place to cover that risk.
Age 100 life expectancies may be unrealistic. I was always taught to build retirement plans to a safe 100-year life expectancy. That way, if your retirement plan is on track to make it to age 100, you can feel confident your savings should last your lifetime. While that is all well and true, these stats show us this may be overdoing it a little bit. The likelihood for an excellent-health 65-year-old woman to live to age 100 is just 10%. The average woman is at 3%. An excellent-health 65-year-old man has a 6% likelihood of living to age 100. While the average man has less than a 1% chance. Shortening the life expectancy, or time horizon of your retirement plan will do a couple things. It will lead to an earlier “financial independence” or retirement date. It may also lead to a higher allowable spending amount in retirement. Both good things. If we are basing our target retirement date or our retirement spending on an age 100 life expectancy, we may be selling ourselves short and leaving extra spending on the table in retirement, or extra years of retirement. I personally plan for an age 95 life expectancy for most of my clients. And then we can adjust if needed as retirement progresses.
Expected Retirement Ages Versus Average Retirement Ages
This is an interesting one too. In JPMorgan’s research, they found that in 2025, 70% of Americans expect to work to at least age 65. When only 28% actually work until age 65. That’s a huge difference. The median expected retirement age is 65 for Americans, while the median actual retirement age is 62.
Not much change from the 2024 report. The percentage of people who expect to work till at least age 65 is up 2% from the 2024 report (68% to 70%). And the percentage of people who actually work to age 65 is down 3% from 31% to 28%. So, the gap is widening.
Key Takeaways & Planning Tips:
Be prepared to retire earlier than your target. In some cases, the earlier retirement is discretionary. Where you may find that you did a great job saving and are in a comfortable enough position to retire earlier than you expected. In other cases, it may not be discretionary. People entering the latter years of their career find different challenges / obstacles than younger workers. Such as changes at the company or downsizing, health problems or disability, outdated skills, or the need to care for a spouse or family member. These numbers show us that even though we may not retire earlier than expected, it’s important to be prepared too. Have an understanding of what retiring a few years earlier does to your retirement plan. Will you still be on track? Do you need to pick up a part-time job? Is the portfolio in a position to fund distributions if needed? Does our pension or Social Security strategy change? These are things you’ll want to think about and have a plan for just in case something happens in the years leading up to retirement that don’t allow you to work as long as you intended.
Spending in Retirement
The Guide to Retirement research includes statistics on the average spending in retirement. It shows this for both households that have investable wealth of $250,000 - $750,000 and $1,000,000 - $3,000,000.
For both wealth groups, you see that spending typically declines for Americans in retirement as they age. Not much of a surprise here. This is where the phrase “Go-go, Slow-go, and No-go” comes from. Commonly, we see that our highest spending years in retirement are our first years. This is when we’re out doing all the fun, exciting things we have been waiting to do while planning for retirement. As we progress through retirement, you start to see a reduction in average annual spending. This doesn’t occur in basic need expenses like housing, utilities, and health care. But more so, you see the decline in discretionary expenses, such as travel, entertainment, transportation, food & beverage (dining out).
Average spending in retirement per household by age
Partially and / or fully retired households with $250,000 - $750,000 investable wealth
Source: J.P. Morgan Asset Management, based on internal select data from JPMorgan Chase Bank, N.A. and its affiliates (collectively “Chase”) including select Chase check, credit and debit card and electronic payment transactions from January 1, 2017 to November 30, 2024. Check and cash distribution: 2021 CE Survey; J.P. Morgan Asset Management. Information that would have allowed identification of specific customers was removed prior to the analysis. Other includes: tax payments, insurance, gambling, personal care and uncategorized items. Asset estimates for de-identified and aggregated households supplied by IXI, an Equifax Company for data from 2017-2023 and Windfall for data from 2024. Estimates include all investable assets except employer-sponsored plans, home equity and other non-portable assets. Additional information on J.P Morgan Asset Management’s data privacy standards available at https://am.jpmorgan.com/us/en/asset-management/mod/insights/retirement-insights/gtr-privdisc/. Retired households receive retirement income only, including Social Security, pension and/or annuity payments.
Partially and / or fully retired households with $1,000,000 - $3,000,000 investable wealth
Source: J.P. Morgan Asset Management, based on internal select data from JPMorgan Chase Bank, N.A. and its affiliates (collectively “Chase”) including select Chase check, credit and debit card and electronic payment transactions from January 1, 2017 to November 30, 2024. Check and cash distribution: 2021 CE Survey; J.P. Morgan Asset Management. Information that would have allowed identification of specific customers was removed prior to the analysis. Other includes: tax payments, insurance, gambling, personal care and uncategorized items. Asset estimates for de-identified and aggregated households supplied by IXI, an Equifax Company for data from 2017-2023 and Windfall for data from 2024. Estimates include all investable assets except employer-sponsored plans, home equity and other non-portable assets. Additional information on J.P. Morgan Asset Management’s data privacy standards available at https://am.jpmorgan.com/us/en/asset-management/mod/insights/retirement-insights/gtr-privdisc/
Key Takeaways & Planning Tips:
Across both wealth groups we see a very steady decline in spending as you age throughout retirement. This tells me it’s okay to build in (conservative) spending reductions later in life when projecting your own retirement. It is likely that you will spend less on discretionary expenses as you age. While other expenses, like health care and charitable giving, may increase, we can see clearly that overall average annual spending tends to decline over time.
For both wealth groups, 80–84-year-olds spend ~27% less than what 60–64-year-olds spend. I will usually, not always, build in a 15% reduction in expenses between the ages of 80-85 in the retirement planning I do for my clients.
We always want to be conservative with our retirement planning, but it’s also important to be realistic. Similar to the life expectancies. If we build in an expensive travel budget for our retirement planning, it may not be realistic to continue that expense into our 90s. By being realistic with these expenses, it may open the opportunity to spend more and enjoy more during our early years of retirement, because we understand that we’re likely going to “slow down” in the later years.
Inflation Regarding Retirement Healthcare
Last topic we’ll look at here. Inflation regarding retirement related healthcare costs is averaging near 5.8% annually.
Image is from JPMorgan’s 2025 Guide to Retirement. Estimated future value total average monthly cost at age 95 is $3,282. Today’s dollar calculation used a 2.4% discount rate to account for overall inflation. Medigap premiums typically increase with age after purchase, in addition to inflation, except for the following states: AR, AZ, CT, FL, GA, ID, MA, ME, MN, MO, NY, VT, WA. For local information, contact the State Health Insurance Assistance Program (SHIP) https://www.shiptacenter.org/. Plan G premium is nationwide average for non-smokers. If Plan G is not available, analysis includes the most comprehensive plan available. Source: HealthView Services, December 2024; Kaiser Family Foundation, Key Facts About Medigap Enrollment, October 2024.
Keep in mind, these are monthly figures. This is saying a 65-year-old in retirement is averaging $572 / month, or $6,864 / year in health care costs (depending on certain plans and coverages of course). In the 2024 report, these numbers were $542 / month, or $6,504 / year. That’s a 5.53% increase.
Key Takeaways & Planning Tips:
It may be prudent to attach a higher inflation rate to your health care expenses in retirement compared to your other expenses.
At the time of this blog, we use a 2.54% long-term average for inflation on basic expenses in our planning. For a retiree’s healthcare costs, we may want to use a 5% or 6% average annual inflation to account for the fact that these expenses have been increasing at a higher rate than most other basic expenses.
One final interesting fact from the research: 9 in 10 households experience a “spending spike” where monthly spending is >25% of the previous 12 month’s median spending. This is something I’ve touched on in prior blogs, but it highlights the importance of a couple things:
Having appropriate levels of cash reserves heading into retirement. We want to avoid a situation where one of those “spending spikes” occurs during a period where our investments may be down, and we don’t have cash to pull from.
Building a “buffer” into our planned expenses. We want to be prepared for higher-than-expected expenses in retirement. We know that unknown and unexpected expenses are going to occur. We don’t want that to veer our retirement plan off track. For example, if we budgeted our monthly expenses out to be $7,000, I like to add a buffer to that and plan for $7,500 or $8,000 / month.
When looking at all this information from retirement planning lenses, I think it highlights the importance of being:
Conservative
Realistic
Flexible
We want to be conservative with our projections, so we don’t stress whether market returns are less than average, or expenses and inflation are higher than average. We also want to be realistic. If we see that there is a less >1% chance that both spouses live to age 100, we may not base our spending decision and Social Security claiming decisions on living to 100. And lastly, and most importantly, we want to be flexible. We never know what life will bring us. But we want to be prepared. We want to be prepared if we need to retire earlier than anticipated. We want to be prepared if our spouse has health issues or passes early in retirement. We want to be prepared if the stock market goes into a recession. We want to be prepared if our air conditioning stops working in the middle of August. Flexibility within a retirement plan is key.
As usual, I hope you found this helpful. If you or someone you know is looking for help with retirement planning and investing, please feel free to reach out. I am taking on new clients this year. You’re able to schedule an introductory call right on the website here.
Thank you and have a great day!
Sincerely,
Drew Schaffer, CFP®
Disclosures from J.P. Morgan Asset Management regarding their 2025 Guide to Retirement
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