2024 Retirement Charts – The Retirement Manifesto

I’ve always loved charts.

Done well, they offer a great opportunity to learn a lot in a short amount of time.

If you’re a chart-lover like me, you’re going to love today’s post, which highlights some of the best retirement charts I’m aware of.

Today, I’m sharing the best retirement charts from J.P. Morgan’s 2024 Guide to Retirement. It’s one of my favorite annual publications, and I appreciate Jesse at Best Interest for making me aware the 2024 report is now available (BTW, Jesse produces some great content. If you’re not already subscribed to his email, I encourage you to do so here – for the record, I’m getting no compensation for the recommendation, I’m just doing it because I love his work).

Charts are a great way to learn a lot in a short amount of time, and these 2024 Retirement Charts are worth your time. Share on X

With that, let’s look at some retirement charts!

Below, I’ve selected my favorite charts from the 52-page J.P. Morgan 2024 Guide to Retirement, along with my commentary and major takeaways for each chart.   (BTW, Apologies in advance for the “Pinterest” tag that pops up with each chart.  I can’t figure out how to get rid of it, but if you wait a few seconds it goes away.)

With that, let’s look at some cool retirement charts! 

1. Know What You Can Control

We often worry about things we can’t control (e.g., market returns), but focusing your energy on those areas wastes time and effort.  Instead, focus on what you can control, like your savings rate, how much you spend, and your asset allocation.  It’s a mindset I’ve adopted for my retirement, and it’s serving me well.

2. You’ll Probably Retire Earlier Than Planned

I’ve written about this reality numerous times, and study after study continues to confirm the reality.  While you may expect to work until age 65, the majority of retirees never make it that long.  Be prepared for the real possibility that you’ll be forced into retirement earlier than planned.  It happens much more often than people realize, and you’d be wise to be prepared in case it happens to you.

3. The Longer You Wait, The More You Need To Save Per Year

I thought this was a handy matrix for anyone who has delayed saving for retirement.  Let’s say you’re 50 years old, earn $125k, and have $0 saved for retirement.  A quick glance shows you need to start saving 48% now to be able to retire at age 65.  Had you started at age 25, you’d have needed to save only 10% a year.  It’s a handy reference, so I decided to include it here.

4. Your Spending Will Likely Decline With Age

I found the chart interesting for two reasons: 1) it’s interesting to see what the “average” spending is per household, and 2) it’s surprising that average spending drops to the extent it does as we age.

* Data based on partially and fully retired households with $250k-$750k in investable wealth.  For a similar chart focused on folks with $1 – 3M of investible wealth, check out slide #32 in the original study.(TL:DR – the trend is similar for higher net worth households, but starts at $130k and declines to $89k in 85+ age bracket).

5. Sequence of Return Risk Is Real

While Dollar Cost Averaging is a proven method in the Accumulation Phase, consistent withdrawals can wreak havoc on a portfolio if a bear market strikes early in retirement. Consider dynamic spending strategies, where spending is adjusted based on market performance.  For an example, read my post “How Much Can You Safely Spend In Retirement.” It’s also helpful to have a few years of spending in cash, which is the approach I use in my Bucket Strategy, an approach that served me well throughout the market downturns of 2020 and 2022.

6. Health Care Inflation Hurts – Even After Medicare Kicks In

J.P. Morgan states “it may be prudent to assume an annual health care inflation rate of 6%, which may require growth as well as income from your portfolio in retirement.”  That’s the approach I took when I was determining When Can I Retire, using a 5% inflation rate for healthcare costs.  At age 61, my wife and I are paying for private health insurance and look forward to the day when Medicare kicks in.  However, it’s important to remember that Medicare costs are adjusted annually, and you need to have exposure to asset classes in your portfolio that will help offset inflation.  

7. Align Your Asset Allocation With Your Retirement Goals 

Determining the appropriate Asset Allocation in retirement can be a challenge.  It’s helpful to consider your retirement goals as you determine your asset allocation.  J.P. Morgan includes this chart as an illustration. If you don’t have a pension, it’s reasonable to consider adding an annuity to your portfolio to help cover your baseline spending.  At the other end of the scale, you need growth-oriented investments (e.g., stocks) to offset inflation and ensure you don’t outlive your money. 

For another example, the following is a quote from this post for how the Bucket Strategy can be used to determine an appropriate asset allocation in retirement:

For the sake of an example, let’s assume you hold 3 years of cash (Bucket 1), 6 years of bonds (Bucket 2), and everything else in stocks (Bucket 3).   If your portfolio equals 30 years of spending, the asset allocation becomes:

• • Cash       3 Years     10%
  • Bonds     6 Years      20%
  • Stocks    21 Years    70%
  • Total       30 Years    100%

Conclusion

I love the annual retirement charts compiled by J.P. Morgan.  I hope you find them as interesting as I do!

Your Turn:  Which was your favorite chart, and why?  Any surprises?  Finally, are there any other sources of good retirement charts that you’re aware of (if so, please share a link). Let’s chat in the comments…