Seems, like a weird question to ask: “Can you find happiness in retirement?” But, it’s not as obvious as it may appear. If you’re not retired yet, you’re like “WTF, of course”. But if you’re recently retired, it’s a transition that takes a lot of getting used to.
Different Strokes for Different Folks
There are many differences in the way people choose to live in retirement: adventure seeking, world travel, hobby pursuits, extreme fitness, volunteering, golfing, fishing, obsessing over grandchildren, etc. It’s definitely personalized. But you’re in life’s 3rd chapter, how can you heighten your happiness and find eudaimonia?
It’s Not Going to Be Your Grandparent’s Retirement
Because of medical breakthroughs during the 20th century, what has emerged is a whole new stage of life between the ages of 60 to 90. The extended mortality added, on average, a full 1/3 to life over our grandparents, hence the 3rd chapter. And that is uncharted territory, but we know for sure that it offers far more than the limited retirement arrangements that our parents and grandparents pursued.
Bye, Bye Pensions
One differentiator from your parents and grandparents is that many of them had pensions. So, the only money they had to manage was their spending. Today, most new retires have, in addition to social security, an IRA. So, new retirees have to properly manage the income side as well as the spend side. If they mess up, it will have severe consequences on their remaining life and that of their life partner.
See our post on proper retirement savings asset allocation: Don’t Outlive your Money in Retirement
Yes, Money Matters – But Only Somewhat
Probably first and foremost what most people believe governs their retirement bliss is their finances.
The Employee Benefit Research Institute recently surveyed 2,000 retirees between the ages of 62 and 75 with that were ordinary people, not millionaires. There were 5 levels:
- Affluent
- Comfortable
- Average
- Just getting by
- Struggling
Although the “Struggling” group had low satisfaction, there was little difference in overall satisfaction in the other 4 groups, including those “just getting by”.
All you really need is to have enough money to get by and you can have as almost as much happiness in your retirement as your affluent peers. So, you most likely have enough money in your retirement to be truly happy.
Your Wealth Has Most Likely Peaked
What is a difficult pill to swallow is the fact that, now that you’re retired, your net worth is not going to go up appreciably. In fact, as you make withdrawals from your savings account, it’s going to go down. After, decades of wealth building there’s a natural tendency go feel a little angst.
Unless you have a wealthy relative that will leave you an inheritance, this is going to be as good as it gets.
No Crazy Risk Taking in The Stock Market
If you’re managing your own IRA, be smart about risk taking. Yes, it may be exciting to bet on the next Facebook or Google, but if we have a crash like we did in 2008, you could lose up to 60% of your stock value and it could take up to 8 years for it to recover. (Assuming you don’t panic and sell at the low in which case you’ll never get it back).
By all means, have a separate small pile of investments for aggressive growth as long as you have another larger pile for income and safety.
OK, so now you’re parking a significant apportionment of your IRA into wealth preservation like high quality bonds, real estate, even cash which will be far less volatile that risky stocks. Doesn’t that remove a lot of stress?
Richness Redefined
So, if we’re financially “getting by” or perhaps even better, and we’ve removed risk from eroding our IRA, what then should be our life focus? It’s a concept called “psychological richness”.
Regardless of how much money they have in the bank, many retired Americans are psychologically bankrupt, missing an entire dimension.
America only scored 17th place on Natixis 2021 Global Retirement Index. It measures older population’s attitude toward: material wellbeing, health, finances in retirement, and quality of life. Iceland, Switzerland and Norway garnered the top 3 spots.
Covid dampened most peoples’ sense of security because it reminds us that there are many unknowns that can spring up most unexpectedly, but that was a worldwide concern and not solely felt in the US.
Some of America’s low ranking may be explained by the severe wealth disparity in the U.S. but a significant portion may be wanting to “keep up with the Joneses, aspiring for a wealthy lifestyle that’s beyond our reach” and feeling bummed out about it.
Experiences, not Things
New retirees need to embrace a shift in awareness toward diminishing materialism. We no longer need the latest expensive toys. Driving a Prius over a Maserati is just fine. Bigger is not necessarily better. Maybe even downsize the house to something more manageable.
Now, experiences trump things. That trip to Iceland, making your grandchildren’s graduations and so forth. It’s all about collecting memories.
Becoming Your Authentic Self
Probably the best part of eschewing the chasing of material wealth in retirement is you can finally become your authentic self. When you’re not brownnosing to get a job or keep a job, being politically correct regardless of your true beliefs, you can finally become you. You no longer have to prove anything. You’re finally comfortable in your skin with who you are.
According to Aristotle, “eudaimonia” is the highest human good, the only human good that is desirable for its own sake. As a retiree, it means you have arrived you are at last your true self, no airs. It’s a great state to be in. When you commit random acts of kindness toward others, it gives you a lasting feeling of elation that mere money cannot achieve.
Purpose in Your Later Years
New retirees experience the sudden deceleration of life’s hectic pace. It’s like when you’re landing in a jet and the brakes take you from 300 mph to zero in seconds. Retirement simulates that. No more frantic gulping of coffee and commuting into a traffic tie up – aka the rat race.
The initial rest and relaxation are a welcome relief. But soon you psyche recovers and you wonder: “What’s next?” Retirees were recently polled and a full 56% viewed retirement as a “new chapter” in their lives.
The Previous Chapter Has been Written…and Closed
Full-time work is over, you need to turn the page and start your next chapter afresh. Many of you have developed both hard and soft skills that can benefit society. Although it could be at a paying job, it could be at a non-profit organization, just doing it for fun.
You’ve accumulated a lifetime of knowledge and wisdom, it’s time to pass it on to the younger generation (if they’ll listen). Your grandchildren adore you, and they’ll listen, pass on your wisdom.