Each year, J.P. Morgan releases a helpful document they call their Guide to Retirement. Each edition is packed with lots of insightful charts and data that are all focused on planning for retirement.

While I believe the entire document is valuable, I've handpicked eight charts that I think can help clear up some common misconceptions and enable us to make more informed retirement decisions. I've also added some commentary that I hope you'll find valuable. Here we go.

YOU’RE (PROBABLY) GOING TO LIVE LONGER THAN YOU THINK: It could be argued that the most important variable in all of retirement planning is how long you’ll live, and I’ve found that far too many people underestimate this number because they only think about individual averages. From a planning perspective, the problem with that is that most people should instead consider their joint life expectancy—or how long the “second spouse to die” will ultimately live—which far exceeds our individual life expectancies. Point in fact, there is nearly a 50% chance that the “second spouse” will live to age 90, and a meaningful chance they could live to age 95, or about 10 years longer than most people think they need to plan for. And the truth is, your life expectancy could exceed even that, given that these are population averages, and you are almost certainly “not average.” Here’s what I mean: There’s a good chance that you have earned a higher income, eaten a healthier diet, exercised more, received better healthcare, and worked a less physically demanding job than most people. That all adds up to a very real possibility that you could live much longer than average, which is why an increased life expectancy should (and does) help guide the planning and portfolio decisions we make in our work together.

THE THREE PHASES OF RETIREMENT SPENDING: Retirement is often divided into three distinct spending phases: They are the “go-go years, slow-go years, and no-go years.” The data suggests that this description is pretty accurate, as you can see below that spending tends to decline over time as we become less mobile or, perhaps, just less interested in travel and other expensive experiences. Beyond these declining averages, there are two other takeaways that I believe are worth noting. First is that spending more early in retirement is both to be expected and, in many cases, encouraged, so we plan accordingly. And second, the fact that housing costs remain by far the largest individual expense throughout retirement (approximately 40% of retirement budgets!) makes paying off a mortgage an increasingly attractive idea given the flexibility it could provide to retirement budgets over time.

RETIREMENT SPENDING IS NOT STATIC: While the aforementioned averages make spending look quite stable over time, the lived experiences of most retirees have been anything but. In fact, 63% of retirees experienced spending fluctuations of more than 20% per year in their first few years of retirement. And even after the first few retirement years had passed, more than 50% continued to experience the same level of spending volatility. This is why we advocate for maintaining sufficient emergency savings not just while you’re working, but throughout your retirement years as well.

SOCIAL SECURITY IS A LONG-TERM DECISION: Social Security has reported that more people are claiming their retirement benefits early, often to their long-term financial detriment. While there are certain situations where claiming early can make sense, the long-term benefits of delaying are much more significant than many people realize. In fact, for a maximum earner, which many of you are, the difference in monthly benefits between claiming at age 62 and age 70 can easily be more than $2,000 per month. That’s a difference of more than $24,000 per year, every year, for life. That’s not to say that waiting until 70 is right for everyone, but I point this out because far too many people are making their claiming decision based on headlines and emotions rather than doing the math to see how it might impact their lives over the long run.

THERE’S A GOOD CHANCE YOU WILL NEED SOME LONG-TERM CARE: According to the Department of Health and Human Services, an estimated 70% of people turning 65 are likely to develop a condition requiring long-term care. Surprisingly, this care may be needed for much longer than many people think. In fact, the data shows that, of those requiring paid care, more than 60% will need it for three years or more. And, given better longevity statistics, 41% of women who require care could need it for more than five years, which helps explain why the average lifetime cost for women is $350,000 versus $250,000 for men. Given that nearly three in four people may require some level of care and considering the expectations around life expectancy we previously discussed, this is something everyone should have a detailed plan to address so they are prepared if and when the time comes.

HIGHER VOLATILITY = BETTER LONG-TERM RESULTS?: For decades, investors have been told to reduce their equity allocations as they age, but the chart below shows why this might not be the best idea over multi-decade time horizons, which most retirements are. Despite the equity market’s notably higher volatility, meaningful equity allocations have historically reduced the probability of running out of money and/or allowed for slightly higher withdrawal percentages throughout retirement. This runs counter to much of the conventional retirement wisdom, but is incredibly logical given the differences in long-term rates of return these various asset classes have produced over time. All that said, sequence of returns risk is very real, which is why we set aside portions of your portfolio in cash and other short-term assets to cover your near-term needs so we can give your long-term assets the time and space they need to grow.

A STRATEGY TO SPEND MORE IN RETIREMENT: Many retirees understandably worry about spending too much of their portfolio assets, especially early in retirement. While this is a rational fear, it can unfortunately keep them from spending on things that could meaningfully improve their quality of life during the years when they are likely to be in the best health of their retirement. This emotional reluctance to spend is why I want to share the graphic below, which shows that having more guaranteed income can actually encourage more spending. While this may seem contrary to the previous chart on portfolio allocations, the two are really just different pieces of the same puzzle designed to help retirees flourish in retirement. So, for those who are generally fearful of spending, or who simply require more income than their current guaranteed sources provide, there are strategies we can consider to establish a higher baseline of guaranteed income.

DON’T RETIRE FROM SOMETHING; RETIRE TO SOMETHING: While money tends to be the primary focus of the retirement planning process, there is another topic that is at least as important, if not more so, when it comes to life satisfaction. That is, how you’ll spend your time. Research has shown that there are four pillars associated with greater happiness and well-being in retirement. They are (1) having a reason to get up in the morning, (2) using your time to help others and stay active, (3) spending time with friends and family, and (4) taking care of your health through exercise and other healthy behaviors. While these may seem too obvious to be helpful, we’ve served people who have made these four points the focus of their retirement and those who haven’t, and the difference in perceived life satisfaction is undeniable. If I leave you with any encouragement here, it’s to spend a few days crafting a plan for how you intend to spend your time once work no longer dominates your calendar.

As you consider the planning we're doing together, I hope these charts offer some insight into why we believe what we believe and plan the way we do.

And while I highlighted just eight charts here today, the entire Guide to Retirement is worth your time. If you decide to dive in and have questions about these charts or any others, please don’t hesitate to reach out.

As always, stay the course!