In our working years, the idea of retirement may seem like a dream: the opportunity to finally do the things we’ve been deferring for decades. We’re bombarded with images of happy people traveling, playing golf and walking on the beach, a permanent vacation. The reality is much more mundane: the average retiree spends most of their waking hours watching television.
It doesn’t have to be that way though. Retirement can be an active and fulfilling time rather than a boring and lonely one. The happiest retirees are those who take on their later years with the same mindset that they maintained during their working years.
For those preparing for retirement (and even those already retired), there are three keys to getting the most out of your retirement years, and each requires investments (of a sort) before you get there.
It shouldn’t be a surprise that satisfied retirees have enough money to do the things they want to do. You don’t have to be rich, you just have to feel comfortable that you can afford to spend money on the things that make you happy. Studies have shown that retirees with stable, secure incomes (like pensions) tend to be more satisfied than retirees with less stable incomes.
Research also shows that many retirees don’t spend enough money in retirement. After saving for retirement for many years, that saver mindset is a hard habit to break. As you prepare for life after a paycheck, you need to remind yourself that all of the saving you’ve been doing during your working years is so that you can spend that money during your retirement years. However, you also need to know what you can afford to spend, so that you don’t burn through your nest egg too fast. Most people need to get comfortable with the idea that they can’t ‘just live off the income’, especially in today’s low interest rate environment.
Good health is critical to satisfaction in retirement. You could have all the money in the world, but not be as happy in retirement as someone with less money but in better health. This requires investments and sacrifice during your working years, only a few of which are financial. Exercising, eating well, and avoiding things that lead to poor health like smoking and drug use pay off in better health in retirement, and a longer life expectancy. In fact, life expectancy in the U.S. is steadily rising, even faster among the top 10% of households (by income). Why? Beyond simply having access to better health care, higher income households in general tend to do things like exercise, eat better and avoid bad habits like smoking (and sitting around all day watching TV!)
Research shows that those with strong friendships (and strong relationships with a spouse) are more satisfied than those who do not have them. It’s also correlated with longer life expectancy. In fact, good relationships with friends is a more reliable predictor of retirement satisfaction than close relationships with your children.
This is probably the hardest part, at least for many men. In general, women build strong social groups and work hard to maintain those networks over time. Men’s networks tend to be built more around work, resulting in a loss of social support at retirement. For men, a good investment in retirement satisfaction is building non-work social networks before retirement, either with friends or through clubs, church, or charity work.
Retirement is a huge change, but one that most of us will face eventually, and the experience will be different for everyone. Like any journey, planning and preparation go a long way toward making that change smoother and easier. Planning ahead for things like where you will live, big trips you will take, etc., can help take some of the stress out of the transition. Test-driving some of your grand adventures (like renting an RV for an extended trip before buying one) can help you determine if you will enjoy something that looks like fun from a distance.
Investing in yourself (beyond just saving money for the future) will pay huge dividends later in life, and help prepare you for a long, healthy and enjoyable retirement.
At Blankinship and Foster, we help you organize your finances and plan for retirement, so that when you do retire, you can be free from worry about your finances, and concentrate on your new job: enjoying life!