According to JP Morgan Asset Management, about 35% of retirees experience this surge, often spending 5% to 10% more than usual—sometimes up to 25%. The cause? Travel, home upgrades, supporting kids or grandkids, healthcare catch-up, and finally having the time to enjoy hobbies you’ve been putting off.

Take, for example, a couple that usually budgets $90,000 per year in retirement spending. If they surge to $110,000 for a few years, that’s an extra $20,000 annually—or $100,000 over five years. That extra spending needs to come from somewhere, and it can jeopardize portfolio longevity if not planned carefully.

Why the Surge Matters

Withdrawing too much early—especially during a market downturn—can reduce future compounding and increase the risk of running out of money. This is known as sequence of returns risk, and it’s a real threat for retirees who aren’t properly allocating their resources.

Smart Ways to Plan for the Surge

Financial expert Aaron suggests building a cushion of cash—$45,000 to $100,000 depending on your goals—set aside specifically for this spending bump. This money should be kept liquid and outside of long-term investment accounts. It gives you the freedom to spend without constantly worrying about what the markets are doing.

In addition, adjusting your retirement date or temporarily boosting your savings rate in your final working years can help fund this surge. Another option? Implementing a bucket strategy, where you keep different tranches of your retirement savings in varying levels of risk based on when you’ll need them.

Where the Money Goes

Retirement surges are often bucket-list driven. Travel ranks #1: extended trips, family vacations, or even purchasing a second home. But the surge also includes:

• Home improvements (new kitchens, roof repairs, etc.)
• Healthcare spending (finally addressing long-delayed issues)
• Family support (college help, weddings, down payments)
• Lifestyle upgrades (new hobbies, club memberships, etc.)

Things Settle Down Later

The good news? The surge doesn’t last forever. Most retirees slow down after the initial burst of activity. Health changes, lower energy, and a settled routine help curb spending. You travel less. You cook more at home. Your financial priorities shift.

That’s why it’s smart to plan for more in the beginning and let things normalize later. With a flexible, well-organized financial strategy, you can spend freely when it matters most—without worrying about blowing up your entire retirement plan.

Final Thought

Retirement should be joyful, not stressful. Anticipating a spending surge and budgeting for it on purpose helps you spend with confidence. You’ve earned this time—so don’t let unplanned expenses or guilt keep you from enjoying it.

Want to make sure your retirement budget includes the freedom to travel, remodel, or just breathe easy? Start planning for the surge now.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post How to Plan for the First 5 Years of Higher Costs in Retirement appeared first on ROI TV.

The Truth About Life Insurance: Term vs. Whole Life
According to Ric, life insurance isn’t an investment—it’s protection. Most people only need term life insurance, especially if they have temporary dependents like kids. Whole life insurance might be appropriate if you have a lifelong dependent, like a spouse who relies solely on your income. But for the average person, it’s better to skip the expensive whole life policies. If you’re single and no one depends on your income, you probably don’t need life insurance at all. The goal isn’t to build wealth through insurance—it’s to cover real financial risk.

Don’t Get Scammed: Avoiding Investment Fraud and Ponzi Schemes
Investment fraud has been around since the 1700s and hasn’t slowed down. Ric cited Bernie Madoff’s scheme as a classic example—he promised consistent 1% monthly returns even when the stock market dropped 40%. Red flags like unrealistic returns, secrecy, and vague explanations should immediately raise concern. Also be wary of advisors who emphasize religion or claim to be overly trustworthy. If someone can’t clearly explain how your money will grow, don’t invest with them. Simple, transparent investing is always safer than too-good-to-be-true promises.

How to Handle Sudden Wealth and Trust Funds Wisely
Ric warned that sudden money—like inheritance, settlements, or lottery winnings—can cause more harm than good without a plan. Define what you want the money to do before spending it. Trusts are powerful tools when used correctly—for tax efficiency, asset protection, or special needs planning. He shared a cautionary tale about an 18-year-old who inherited a trust, bought a house, and burned through the money in months. Without a plan, even a well-intentioned trust can go wrong. Always work with a qualified financial advisor and estate attorney.

Negotiation Advice That Works in Real Life
Guest Bob Barnett shared smart tips for negotiating, whether it’s a job offer, a business deal, or a major purchase. Start by knowing what you really want—and what you can live without. Negotiation isn’t about crushing the other party. Success means both sides walk away feeling like they got something. Understand the other person’s perspective, and you might discover shared goals. And don’t overreach. Use a fiduciary if needed, but always check references and make sure they represent your interests, not just the deal.

Don’t Skip Your Vacation Days—Here’s Why
Americans left 436 million vacation days unused last year, worth $63 billion. Ric pointed out that skipping vacations doesn’t help your career or health. Taking time off improves productivity, happiness, and even long-term earnings. So if you’re sitting on unused PTO, use it—it’s one of the few benefits that can recharge both your wallet and your well-being.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post Smart Money Moves: Cash Reserves, Life Insurance, and Spotting Financial Scams appeared first on ROI TV.