top of page
  • Doug Oosterhart, CFP®

J.P. Morgan's Guide to Retirement Updated for 2023

Earlier this year, J.P. Morgan Asset Management released its annually updated Guide to Retirement. In this 52-slide/page guide, readers will find an abundance of information related to all things retirement.

Topics include:

  • Decision tree for claiming Social Security

  • Retirement savings checkpoints

  • The benefits of saving and investing early

  • Evaluating whether a Roth IRA makes sense

  • How retirement spending plays out in reality

  • The 4% rule

  • Medicare (when to sign up)

  • Long-term care planning

  • Impact of trying to time the market

  • Structuring a portfolio to match one's goals

  • IRA and 401(k) maximum contributions

  • 2023 tax rates

  • and much more!

Some of my favorite slides are:

Retirement Savings Checkpoints (pages 16-17)

These pages show a good frame of reference in terms of what someone should have saved for retirement based on their current age and current income. Interestingly, they use a 60% equity and 40% bond portfolio for all ages. My rough calculations on estimated returns for their calculations are somewhere between 5-6% annually. Below is a photo of the slide I'm referencing.

Retirement savings checkpoints for $100k+ income

The 4% rule: projected outcomes vs. historical experience (page 32)

This slide looks at how a 4% distribution rule over a 30-year retirement has played out over time. Spoiler alert: I would say mediocre at best! It's important to develop a strategy not only for the growth of one's portfolio but also for their income later. Imagine being a millionaire on paper with a high net worth, only to find out you can only take 4% of the portfolio as a distribution in retirement. A dynamic spending approach that is tailored to the individual is key!

4% rule: projected outcomes vs. historical experience

Dollar cost ravaging: timing risk of withdrawals (page 28)

I've written and spoken about sequence of returns risk being one of the biggest risks in retirement. When a retiree withdrawals assets in down markets at the beginning of retirement, it can destroy their portfolio and entire plan. The key is to have a segment of money that is protected from stock market risk (and there are multiple ways to do that). It's important that a retiree solved their retirement consumption/withdrawal puzzle with a solution that is tailored to them.

Graphic showing how sequence of return risk can harm a portfolio

Tax implications for retirement savings by account type (page 47)

A good amount of my work involves optimizing what type of accounts an investor or retiree should utilize. The current environment shifts a lot of consumers toward pre-tax accounts like Traditional IRA's and 401(k)'s touting the great current tax savings. While that may be true, pre-tax accounts have a looming tax liability upon withdrawal. And for those that don't "need" the money in retirement, they're forced to take it out via required minimum distributions (RMD's). RMD's can push retirees into higher tax brackets and cause problems later in life. All-in-all, it's important to stay diversified with what types of accounts an investor uses. As with everything in finance, there's an art and a science to all decisions.

Tax implications for retirement savings by account type

119 views0 comments


Commenting has been turned off.
bottom of page