How to be happy in retirement

The March 2010 issue of Consumer Reports Money Adviser has an interesting article on how to avoid regrets during retirement. The article, which draws on a survey of nearly 25,000 subscribers, is simultaneously comforting and cautionary. While only about 20% of folks who haven't yet retired are highly satisfied with their current retirement planning, 70% of actual retirees report they're highly satisfied. According to the author, the lesson is:

While many of us tend to fret about whether we're properly prepared for retirement, once we're actually there we tend to adjust our situation and even thrive.

In fact, the author argues that the survey reveals money isn't everything. Sure, it plays a large role in contentment during retirement, but other factors matter, too. The article says that to be satisfied in retirement you need to:

  • Save early. Forty percent of retired respondents wish they'd started saving earlier. I know I say this over and over again, but you should save as much as you can as soon as you can. Even starting with $10 a month is better than nothing.
  • Save often. As important as it is to save early, it's also important to save often. In other words, save as much as you can afford to. You don't want to live like a pauper now so that you can live like a king in retirement, but don't sacrifice your future for unnecessary spending today. Do what you can to boost your saving rate as time goes on. (My wife saves over 25% of her income!)
  • Stay healthy. Your health is your most important asset. Without it, you've got nothing. And health is so easy to take for granted when you're younger. I'm just now entering middle age (I'll be 41 next month), but I've been a fool and neglected my health, so I'm beginning to see the mental and financial costs associated with being overweight and out of shape. (Just this morning I took a tumble on my bike that might not have happened if I were 40 or 50 pounds lighter.) Adopt healthy habits, and they'll repay you in the long term.
  • Build friendships. Social capital — those connections we build when we spend time with neighbors, friends, and family — is almost more important than financial capital. Your relationships play a larger role in your happiness than your wealth does. Be positive, outgoing, and an active member of your community.
  • Have hobbies. Finally, the Money Adviser article recommends actively pursuing hobbies and interests that keep you engaged with life. Share your hobbies with others. And if you don't have hobbies, get involved with volunteer and community organizations.

As I wrote Your Money: The Missing Manual over the past few months, I tried to target the J.D. of 20 years ago: the spendthrift and layabout. My goal was to write the book I wish I'd had when I was 20. This process made me think about what I ought to know now. What will my 60-year-old self wish he'd known when he was 40? As a result, I've started paying attention to retirement articles like this one. I'm doing my best to glean hints and tips from folks who are already in retirement so that I won't be caught unaware.

Most of what I've learned matches this article: To be happy in retirement, I need to save, I need to be active and eat right, I need to have close friends, and I need to do things I enjoy. In other words, to be happy at sixty, I need to do the same things that make me happy at forty.

I'd love to hear from GRS readers who are at or near retirement: What do you wish you'd known when you were younger. And those of you who are still decades away from retiring, what have you gleaned from those around you? What leads to a happy, healthy retirement?

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ctreit
ctreit
10 years ago

I am not near retirement, but I think I am on track to hit all five points. Recently I met a former colleague of mine who was still working. He has had a great career and I admire him for it. Now he has more money than he can spend in the years left in his life. (He is well over 70.) When I asked him why he has not retired yet, he told me that he had no hobbies. “What else should I do with my life?” While I do admire that man for his success, I found it… Read more »

NowaNana
NowaNana
6 years ago
Reply to  ctreit

So very true. I took voluntary early retirement because I simply knew I would love it. I have less that half my previous income but feel and am so much richer in so many ways.

David
David
10 years ago

I am young, and just finishing up graduate school, so I haven’t joined the normal working force yet. Nevertheless, I’ve been saving for the past 6 years. Despite knowing the truth about retirement, it is really hard to save sometimes. I blame it on something I’ll call “the illusion of youth.” Off the top of my head this is: 1) I’m special. The normal rules don’t apply to me. 2) I’m not like my parents / grandparents / older people around me. I’m smarter than them and won’t make the same financial mistakes. 3) I’ll be rich. When the world… Read more »

Kate
Kate
10 years ago

J.D. As someone who also wil be turning 41 next month, I like your statement that you are “just now entering middle age.” It makes me feel younger. 🙂 I would add to David’s comments above: “I don’t make enough to save for retirement. Saving will have to wait.” I felt that way for many of youthful years. The sad thing is, my workplace has been putting 10% of my income into a retirement account since I was 27 years old, and while there were many years where I saved NOTHING on top of that, I have done some saving…… Read more »

fantasma
fantasma
10 years ago

I wish had studied more, partied less. Instilled more self discipline in myself.

Mike
Mike
10 years ago

JD, I just wanted to mention that when you said that your “goal was to write the book [you] wish [you’d] had when [you were] 20”, it really resonated with me.

Thanks.

frugalscholar
frugalscholar
10 years ago

I’m 56 and am beginning to wonder if one should ever retire if one has a fulfilling job. Unlike the commenter above, I don’t pity the person who is near 70 and doesn’t want to retire. I’m a teacher and I get a lot out of working–interaction with others, including people younger than I am, problem-solving opportunities every day, etc. Warren Buffett is still working and no one feels sorry for him. Steve Jobs, who is a few years younger than I am, is also still working. The people at Habitat for Humanity want me to volunteer there when I… Read more »

John Help
John Help
6 years ago
Reply to  frugalscholar

That’s right….don’t volunteer for anything……….but then remember when you need help maybe nobody else will volunteer either………how thoughtful of you tohelp others…hmmmmmmmmm

Luke
Luke
10 years ago

J.D. – good fundamentals for retirement in this post – some of which are sadly disregarded all too often! As a student, I used to live in a run down part of Glasgow (the biggest city in Scotland) and there were few things more depressing than watching the long line of folk snaking out of the local Post Office once a week waiting to collect their state pensions. I couldn’t help but feel that the small amounts they were collecting wouldn’t go very far and to that aim I’ve been saving into my pension from as soon as it was… Read more »

Nicole
Nicole
10 years ago

heehee… save early, save often… just like word processing! Re: Working forever, if you’re happy, then do it. But don’t plan on it when you’re making your retirement saving decisions. Your company can go out of business, you can be laid off, even in a university with tenure your unit can disappear (like at Arizona recently) though that is much less likely, or you can be offered a great early retirement package that you decide not to refuse. After leaving your career job (around age 50 or so) it is very difficult to find a job in the same field… Read more »

Two Tightwads
Two Tightwads
10 years ago

When I was 21, my parents cashed in my savings bonds I had acquired when I was a baby and helped me open an IRA. I became more interested in retirement, personal finance and investing than ever before. The importance actually resonated with me. This is by far one of the biggest financial advantages I was given…starting early and my mother/father recognizing the importance for me to learn, save and invest. As for the health aspect, I couldn’t agree more. My uncle was a cardiologist making a lot of money and came down with a disease that is so rare… Read more »

Cleopatra, queen of denial
Cleopatra, queen of denial
10 years ago

Dude – love GRS, but 41 isn’t middle age!

Is it…?

namesarehardtopick
namesarehardtopick
10 years ago

I think that if I was running my own business, I would never desire to retire. When people work for themselves, they may see retirement as unnecessary, but that’s because they are doing what they love.

Still, it’s good to have a solid plan in the instance that something goes wrong. And I love the comments above – reminders to me, the young person.

Adrienne
Adrienne
10 years ago

I read a great article somewhere (Money??) that said research showed we vastly overestimate how much we know about our future selves. (This seems reasonable to me as my 20 yr old self would probably not recognize me now….) It suggested we save and plan for retirement as if for an uncle we don’t know that well. That would mean saving for many possibilities (work not work, healthy not healthy etc.) so the “uncle” would have options. So often we think we know more about the future (“I would never retire”) than we actually do. Save for future possbilities not… Read more »

Meredith
Meredith
10 years ago

I have one big question. I am *poor*. Family of 8 and under 13,000 a year income. I do NOT want to grow old and be like my parents, who are 60 and are still paying off old debts, still paying for their home, my mom JUST finished paying off her college loans! Plus, they have NO savings. My mom keeps cashing out her retirement to pay for big ticket items instead of working a couple of extra shifts (she’s very highly paid nurse). So they’ve got nothing, and no fall back. We are working on getting our income up,… Read more »

Tyler Karaszewski
Tyler Karaszewski
10 years ago

The list of bolded items in this post could easily be titled “how to be happy” with no “in retirement” at the end. Being financially secure, healthy, and surrounded with friends and interesting things to do applies to pretty much everyone, not just retirees. I don’t really even know what “retirement” is supposed to mean. I have no particular desire to stop working just for the ske of avoiding work. I could define it as “moving to a central American beach and surfing and fixing old sailboats for the rest of my life,” which would be fun, but who knows… Read more »

DreamChaser57
DreamChaser57
10 years ago

I was taken aback by Ramsey’s brazen and unconventional advice in The Total Money Makeover where it was suggested that families address debt first and then refocus their efforts on retirement, that’s radical to say the least. To some extent I agree, if a household is suffering under the crushing weight of consumer debt, living from paycheck to paycheck, scrambling to pay minimum payments on multiple cards, relying on credit cards to handle basic necessities, then the power of full engagement on consumer debt is necessary. Such households typically cannot put anything aside for retirement anyway. I don’t think it… Read more »

Crystal
Crystal
10 years ago

@Meredith You have lots of options that I’m sure everybody will suggest. The one that pops to my mind is that you can save up $20 a month in a regular savings account (maybe ING Direct or Smarty Pig). When it hits an investable amount, you can throw it in as a lump sum. I love my Roth IRA, but I’m sure there are a billion options. You don’t need thousands of dollars to invest in your future. I’d get started on that savings account today. Good luck! To the article, thanks for the reminder of the post and for… Read more »

Rich
Rich
10 years ago

@ Meredith (#13) I too began as a VERY small-time investor. $20 at a time tucked away in a savings account is actually great, especially if you can do it regularly. Over time that will become $100, then $500. It can be a fine “emergency fund” when something breaks down; meanwhile it is gradually building up steam for the future. I am a big fan of Vanguard mutual funds, especially index ones (S&P etc.): very low costs, very stable management. However, most of their funds require $3000 minimum. The exception is their STAR fund, but that is still $1000 minimum.… Read more »

M
M
10 years ago

@Meredith – hmmm…I think if I were you I’d focus less on trying to save $10 or $20 now, and more on developing a plan to drastically raise my income in 5 years. For the sake of my comment, I’m assuming you have 6 children, one income, and are a SAH parent – are any of those correct? Will some of your children be old enough to do paper routes, walk dogs (or scoop poop!), work as lifeguards, or start a business that interest’s them? If you’re like most of the mom’s I know of large families, you love children… Read more »

reinkefj
reinkefj
10 years ago

(1) If life expectancy is 80, then 41 is the start of the second half. If 90, the second third. If 50, carpe diem!

(2) Unfortunately, I didn’t expect a RIF at age 62 with no hobby, family illnesses, and a depression. Save, save, and save some more. Money worries sap all your happiness.

Argh!

John Jupin
John Jupin
10 years ago

I am a federal special agent who is reaching mandatory retirement(Age 57). It used to be we had to retire at 55 so I feel fortunate to have been able to stay another two years in a job I really enjoy(working cases)! But all good things must end and as most who are forced to retire or lose their job, we go through the grieving process. I am doing that now. I have 5 more months of my law enforcement life ahead of me, I will miss it, but I have been preparing for the last 5 years with saving,… Read more »

Kevin
Kevin
10 years ago

Regarding #17. I have an account with Prosper, and would suggest investing only money that you can afford to lose, not money that may represent one’s entire nest egg. A return of 9.65% looks good on paper, but with 5 year treasuries returning 2.33%, this return is RISKY.

One loan that really bothered me was someone with a AA (best) rating who made ONE payment before defaulting. This loan has been in collections for > 1 year without recovery. My portion of the loan was only around $60, but others invested over $500.

Caveat emptor I guess…

Carrie
Carrie
10 years ago

I retired at age 51 and have loved my second life. I agree that excellent health makes everything else a lot more enjoyable. Hobbies and relationships are important, but I am surprised that “contribution” wasn’t specifically mentioned. My husband will be retiring soon (he lasted 30 years with one company) and he is in the grieving / doesn’t want to let go phase. We will have many challenges (e.g. where do we want to live, what do we want to do) but finances are not one of them. That is because we started contributing the max to our 401Ks as… Read more »

LiveCheap.com
LiveCheap.com
10 years ago

J.D., I’ll make a comment on this article at the bottom, but I want to caution anyone that is looking at people touting 9.65% returns with Prosper. The reality of these peer to peer lending sites is that they are beginning to see enormous losses to principal. So you may get a good rate, but ultimately if the loans go south, you lose all your principal. There have been recent articles how the losses of these loans have not been fully articulated and the returns are nowhere near the promised rates. As @Kevin says in 21, a spread of 7.3%… Read more »

Beth
Beth
10 years ago

I just finished reading “The Number” by Lee Eisenberg and it is really about this very thing — how to figure out how much money YOU need to retire. He spends a lot of the book talking about how money is a part of it, but the Number involves fulfillment and satisfaction with the life you are living. And, Dreamchaser, I’m on the Dave Ramsey plan and it works well for me — I want NO debt now and then I can focus on serious investing. At age 44, I feel like I have time to get debt free and… Read more »

Linda
Linda
10 years ago

A great example of happy retirement was modeled to me by my grandpa. He worked as a cobbler in Long Beach, CA. When 4 of their 5 kids moved out on their own, my grandparents sold their shop and moved to a rural California town. There, with the support of social security and the proceeds from the business, Grandpa became a gentleman farmer. Between income to make ends meet and a bit extra from growing avocados, my grandparents were very comfortable. Besides that, my grandpa was realizing a long-time dream to work the land. It happened to also keep him… Read more »

Lynn
Lynn
10 years ago

Although I was lucky enough to retire after 35 years of service at 55, I wished I had had the wisdom I have now of saving more and living a more frugal lifestyle.

Michael Crosby
Michael Crosby
10 years ago

Hey Linda, I too am from Long Beach. I wonder if I knew your grandpa. I also like the idea of farming. To be a steward of the earth, partaking of its bounty, it doesn’t get better than that.

Anonymous
Anonymous
10 years ago

I’m only 47, but I’m retiring in five years. That’s only because I lucked out with the finances and ended up with the same employer for many years and the employer has a defined-benefit pension. I’ve been saving the max in a Roth IRA ever since they were invented, but that turns out to still be not much (60K). I’m great with the friends, hobbies, and health, though. What I wish I knew when I was younger: * It’s better to put some extra money into retirement than to rush to pay off my extremely low-interest student loans. * Continuing… Read more »

Carol Howell
Carol Howell
10 years ago

My husband worked for 33 years at a job he hated so he could have a “secure” retirement. After 5 years of being retired, He still does not know what he wants to do with himself, is miserable and depressed. Make plans for your life after work. Do all the things you planned on. It costs less than you think. But if you are a penny pincher for all those years it is hard to see the account balances start to go down. Remember, there is a time to spend it. I like the comment from the guy who said… Read more »

elisabeth
elisabeth
10 years ago

To Meredith: Series EE savings bonds are currently paying 1.20% and you can buy one for as little as $25.00. That’s better than a lot of savings accounts, though you do have to hold the bond for a year and there is a 3-month interest penalty in the first 5 years… see: http://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds.htm I also wanted to say that while health is really important in making one’s retirement happy, it’s not as important as good health insurance and good relationships. I’ve been retired since July 2008, and in a challenging cancer situation since March of 2009, but I’m still really… Read more »

Doctor Stock
Doctor Stock
10 years ago

Oh, and might I add… don’t wait for retirement. I had a close family member make it to retirement, but not long after. A real loss…

Crystal
Crystal
10 years ago

Quick FYI:
ING Direct Savings (www.ingdirect.com) is at 1.2% right now.
Smarty Pig (www.smartypig.com) is at 2.01% right now.

Both are FDIC insured up to $250,000. They are online savings accounts that are great for storing money that you don’t have to use monthly. It takes about 3 business days to electronically withdraw your money from ING Savings. I don’t have a Smarty Pig account yet, so I don’t know how long it takes, but I know several happy customers.

DreamChaser57
DreamChaser57
10 years ago

#30 (Elisabeth) – thanks for your post, i found it to be quite profound, so many people have this pre-determined list of ingredients of ‘happiness’ – happiness is definitely more nuanced and elusive than that. human beings have the ability to create and sustain a measure of happiness in the most difficult of circumstances. to your continued health, liz.

ami | 40daystochange
ami | 40daystochange
10 years ago

I’m with Doctor Stock #31. I think retirement is taking on a new meaning that includes some form of working/earning money AND that, given the trend towards needing to extend our work years, we might as well do work (or play!) that means something to us TODAY, rather than waiting until our “retirement.”

zumba
zumba
10 years ago

I am in a very unique situation when it comes to this subject. My husband and I retired a few years ago in our late 30’s. His software startup company was sold in a very lucrative acquisition deal. I am very happy spending my retirement days and have the luxury of taking care of our two young children (no nannies for us). I schedule time to do things for me which make me happy like my dance (Zumba) classes twice a week and believe me these classes have shed the weight right off! Also, at age 41 I have started… Read more »

Brenda
Brenda
10 years ago

My only regret is that I didn’t choose a career that paid well. I chose to “do what I loved”, which was a huge mistake. Never ‘do what you love’, if it’s not going to pay the daily bills. I’ve always been frugal and a saver since I was a child, but when you’re making poverty-level wages, it’s not much good. Any young person…make sure you get into a stable career that pays an actual real living wage and has plenty of jobs available. Don’t just get into something because ‘you’re good at it’, or ‘you love it’, because if… Read more »

Tony
Tony
10 years ago

I retired from the Navy at 39…. Good deal and still able to make it in a second career that pays me double. Lot’s of options out there.

EscapeVelocity
EscapeVelocity
10 years ago

My uncle says my grandfather told him years ago that when he retired, he needed to find a hobby so he wouldn’t go crazy. He seems quite happy with his woodworking. My grandfather did leather work. I think in both cases they gained a feeling of being productive, the ability to give really nice gifts that didn’t cost them all that much money, and connections with other people with the same hobby.

Daddy Paul
Daddy Paul
10 years ago

You really nailed something. Stay healthy! Eat healthy and get exercise. I am semi retired and if I am not working I bike 4 miles or walk 1 mile briskly every day before the NASDAQ opens. Many my age have a hard time getting out of their chair to get a beer.

Jan
Jan
10 years ago

My brother and sister in law died days from each other at 54—that really made us both take a step back and re- evaluate! They sure had great pensions for their retirement at 58- neither child got any of it….
Keep those envelopes going – especially for travel or hobbies. Do the travel anytime the envelope is ready!

David/Yourfinances101
David/Yourfinances101
10 years ago

Also,

I would say to learn to enjoy solitude. Some consider it loneliness, however, it is all in your mind.

A certain amount of retirement will be spent alone (i.e. no kids, spouse passes, etc.) Learning to function well alone I would think would be a good skill to learn

Deacon
Deacon
10 years ago

I am not even close to retirement, however, I would like to comment on the point you made about building friendships. There are two things that come to mind when I think of this:

1. A quote from the movie Into the Wild: “Happiness only real when shared.”

2. The Roseto Effect – Where people lived longer because of their sense of community.

I think that this is a huge part of planning for retirement as well. I hope to have plenty of people around to share the last years of my life with.

Bridget
Bridget
10 years ago

The Retire Early Homepage and Early Retirement Board have lots of information regarding retiring in general and retiring early specifically. Many of the comments here have the right idea. Most oft quoted advice: save early, save as much as you can – 20-50% of income, live below your means (corollary to saving as much as you can), know your lifestyle costs and work to have those covered in retirement, have an asset allocation in mind and manage your assets with that allocation, stay healthy. As for happiness in retirement, I will quote Lincoln: Most people are as happy as they… Read more »

Sara
Sara
10 years ago

#36- Brenda – I guess I have the opposite viewpoint. I’m about to be 29 and I really don’t like my job or even my career field. I make great money but watching my bank balance climb just doesn’t make me happy. It’s really hard to get up in the morning and go somewhere I don’t want to be an pretend to care for 9 hours. I practically jump out of my chair 5 minutes before I leave. I choose my field (economics, finance) because I was good at it and I knew I could make good money doing it.… Read more »

Money Reasons
Money Reasons
10 years ago

Although I’m not at or near retirement, I think that a strong social network is the most important thing to build when you are younger! I know a few elderly men that died soon after their wife died. But not my grandfather… He enjoyed life to the end! His secret was that he had an excellent social network (and a small dog too). It helped him that he owned a store and was a spectacular saleman. His routine was, to meet a group of guys for morning breakfast, then at lunch he did the same, but with a different group… Read more »

Ely
Ely
10 years ago

Timely post. My MIL just passed away at 82 after slowly declining for 20 yrs. I like the idea of saving for retirement as if for some relative you don’t know well. I don’t know who I’ll be or what I’ll want in 30-40 years. I would love to keep working, but what if I can’t? I would love to live healthy and die quickly, but what if I don’t? I will need money for living, money for health care, a social network to keep me going, people I can trust in case my mind goes before my body. I… Read more »

Brenda
Brenda
10 years ago

@Sara #44 – If you have a husband and a safety net, than yes, you can do what you love. You already have money enough to live on. But if you’re single, and “doing what you love” doesn’t pay enough enough to even make rent or basic utilities, then it’s folly. It’s better to go to a job you hate and be able to keep a roof over your head, then have no work at all, or work that pays minimum wage, and constantly be fearful of ending up homeless due to not having enough money to even live frugally… Read more »

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher
10 years ago

J.D:

I’m 40 years old and I’ve been “retired” for 3 years. My definition of retirement, however, is “to do what I want, when I want, within reason.”

This definition is not money centered, which, in my opinion, is why I am the happiest I’ve been in my life — because retirement, for me, has nothing to do with the acquisition of financial wealth — it is a state of mind, primarily of contentment, in doing what you want to do, at least “most of the time.”

Charlie Boy
Charlie Boy
10 years ago

John Jupin (#20): * Brown bag your lunch AMEN! I can’t believe how much money I used to spend before I started bringing left overs. It’s a fortune over time. * find positive supportive people My wife, bless her heart. Without a supportive spouse, it would be an uphill battle. * turn the negative people into chairs If you mean keep on doing your thing and ignore them, that’s what I do when I hear people say that paying off your mortgage early is not a good investment. In the culture of debt, there are those who think that there… Read more »

mike
mike
10 years ago

I’m with Brenda – although I don’t love my job, it pays fairly well and provides excellent benefits. My salary also allows my family to lead a frugal but fulfilling lifestyle, and my wife can be an at-home mom for our kids, at least until the youngest starts school in a few years. Being less than thrilled to show up at work for 8 hours a day is a small price to pay for the benefits it provides. Plus, if I can make it another 20 yrs at this job, I’ll be eligible for retirement with full benefits and only… Read more »

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