Broker Check

Let's Define Retirement Happiness

Michael Finke, professor of wealth management at the American College of Financial Services, has scoured a data set known as The Health and Retirement Study.  “This is a study of 20,000 retirees that began in 1994, and we can follow them up to 2018.”


Statistical analysis identifies three core elements to life satisfaction in retirement:

  • The first pillar is money and, yes, more money does make you happier. Interestingly, there is a linear effect up to about $4 million where most people experience “peak” happiness.
  • The second pillar is relationships with peers and community.
  • The third pillar is… health.

The study suggests that “no pillar leads to happiness on its own, especially not the simple accumulation of money during our working years.”  Instead, happiness in retirement requires an investment in all three—money, friendships, and health!  Obviously, the accumulation of money can take years for compounded growth to reward the investor.  Likewise, it can take years for relationships to mature and become meaningful and life sustaining.  Finally, our health in later years will be enhanced with consistent exercise and a proper diet. 


What about material acquisitions?  Some people might dream of purchasing a get-away destination like a mountain cabin or beach house.  “The problem with the working years is we want to get away from social interactions because we get enough of it during our weekdays, but in retirement we can easily become more socially isolated to the point where we actually crave more social interaction.”   


Another study conducted in 2003 by Von Boven & Gilovich published in the Journal of Personality and Social Psychology demonstrated the more money you have, the less material goods make you happy.  But when material goods are purchased, the study confirmed a greater boost in happiness when it contributes to more social experiences.  For example, a new bicycle so you can join a bike club, or athletic clothes to participate in an exercise class.  This also suggests traveling with a group of old or new friends may prove more enriching compared to travelling solo. 


Of course, my role as a financial advisor is to help clients achieve lifelong financial security for themselves and those they love.  But that is only the first core element for life satisfaction in retirement.  Hopefully, you will embrace the joy and satisfaction found in the other two core elements by “investing” in them with consistency and enthusiasm!