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You might assume that millionaires are all living extraordinary, luxurious lifestyles. After all, what's the point of being in the seven-figure club if you're not enjoying retirement on a private island that's within range of your private jet, right?

But in reality, many retired millionaires end up spending a surprisingly modest amount. It's higher than the average American budget, but not as much as you would imagine.

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Here's the "sweet spot" for most U.S. millionaires and why that range may be within your reach.

According to JPMorgan's analysis (1) of its own affluent customers, most millionaires are spending low in the six figures per year during retirement. For example, households headed by someone aged 60 to 64 and with investable assets worth between $1 million and $3 million spent just $127,320 on average per year.

That's higher than a typical retiree, for sure. As of 2024, the average annual expenditure by a retired person was just $59,616, according to the Federal Reserve (2). So, millionaires are spending more than average, as expected, but not by much.

In fact, millionaire households gradually reduce their spending as they age. According to the same JPMorgan analysis, millionaires between the ages of 90 and 94 spent just $88,980 on average per year. That's just 49% higher than a typical retiree, despite the huge difference in wealth.

It's worth noting that households with $1 million to $3 million in net worth represent roughly 69% of all U.S. millionaires, per the latest Survey of Consumer Finances by the Federal Reserve (3). In other words, two-thirds of people in the seven-figure club fit into this narrow band.

Simply put, multimillionaires aged 60 and over are settling into an income sweet spot between $88,980 and $127,320.

This raises an interesting possibility: If you can figure out why these wealthy retirees aren't spending lavishly, you might uncover a deeper secret that can shape your own retirement planning.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going

There could be three key forces that structurally constrain spending in retirement, regardless of your wealth.

The first is simply the income replacement model. The general rule is that a worker probably wants to aim to replace 80% of their active income with passive income to enable retirement. But Fidelity (4) suggests that high-income, affluent workers can aim for replacement rates far lower — perhaps 55% to 65% for those who have an annual income of $120,000 or more at retirement.

The reason for this lower replacement rate is that high-income individuals spend much of their gross income on things like long-term investments and paying taxes at a higher marginal rate — which are no longer necessary in retirement, according to JP Morgan (5). In other words, someone earning $300,000 while working was probably already living on just $150,000 or less after accounting for taxes and investments.

Taxes after retirement are another force constraining spending in retirement. A multimillionaire retiree may decide that withdrawing just $120,000 or $130,000 is the most strategic way to avoid excessive tax liabilities and special surcharges.

Finally, natural aging could be another key factor limiting retirement spending. Most retirees, regardless of their wealth, are likely to be less active and spend less money in their 80s and 90s as compared to the go-go years of their 60s.

This phenomenon is known as the "retirement spending smile," first proposed in 2014 by David Blanchett (6), who was the head of retirement research at Morningstar Investment Management at the time. And the spending pattern observed in JP Morgan's analysis seems to confirm this gradual, age-related reduction in spending for multimillionaire households.

Simply put, spending in the low six figures seems like a natural sweet spot for retirement.

It also means a comfortable retirement could be within your reach, even if you're not a millionaire.

If the sweet spot for retirement spending is $88,980 to $127,320 per year, that's a lot more realistic than accumulating multiple millions in retirement.

To be fair, hitting this target is easier when the math is on your side. For someone with a $3 million nest egg, for example, pulling $88,980 to $127,320 a year is just a 3% to 4.2% withdrawal rate. That's on par with the classic 4% rule. After all, wealth does have some advantages.

But for a middle-class retiree, the challenge is greater. Withdrawing $88,980 from a $900,000 portfolio is nearly a 10% rate of withdrawal — far higher than the 4% rule.

This might mean that instead of stretching withdrawals, the goal will become lifting returns.

That's where the importance of income-focused assets like real estate funds, which have historically targeted returns, can help you close the gap. Rental properties have long been a proven source of steady, passive income for investors. However, the time, effort and costs involved in managing and maintaining multiple properties prevent many from investing.

If you're looking for an easier way to get into real estate investing, platforms like Arrived can help you easily access this market.

Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.

To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning monthly dividends.

Plus, for a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.

If you're a millionaire or accredited investor, you can also look into more niche real estate opportunities. For instance, multifamily residential or industrial properties could give your portfolio the diversification it needs.

Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT's direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

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JPMorgan Chase (1), (5); Federal Reserve Bank of St. Louis (2); UC Berkeley School of Information (3); Fidelity Investments (4); Financial Planning Association (6)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.