How to Retire Happily: Lessons on Living Well Beyond the Numbers
- Travis Tsukayama, CFP® CFA
- Oct 23
- 6 min read
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Much of the work we do as financial advisors deals with numbers, charts, and projections about the future. Diving into data is necessary to help our clients make good financial decisions.
In my view, however, the numbers are secondary to our greater purpose as advisors, which is to understand our client’s wishes and instill in them confidence that our recommendations and guidance will get them where they want to go.
That philosophy that led me to pick up the book “How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement” by Christine Benz, Morningstar’s Director of personal finance and retirement planning. [https://www.amazon.com/How-Retire-lessons-successful-retirement/dp/1804090697]
The first chapter features an interview with Michael Finke, a professor of wealth management at The American College of Financial Services. From his bio: “Finke is a nationally known researcher in the areas of retirement income planning, retirement spending, life satisfaction, and cognitive aging.”
In this chapter, “Visualize your In-Retirement Lifestyle”, Finke shares the three pillars of happiness in retirement and explains how spending and happiness can co-exist once you stop working.
In today’s post, you’ll learn:
The three pillars of happiness in retirement
The types of spending that typically don’t increase happiness
How to plan a retirement lifestyle that supports long-term wellbeing
Three Pillars of Retirement Happiness: Friends, Health, and Financial Security
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It turns out that investing doesn’t end once you retire.
A happy retirement involves investing in three important pillars before and during retirement.
Long-lasting Close Friendships
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Studies show that social interaction is critical to longevity, boosting mental health, physical health, and cognitive function. For many people, however, the workplace is where the majority of their social interactions take place. Once they retire, they lose the structure of engaging socially.
Finke says it’s important to treat friendships as an investment in retirement; by dedicating time to keeping up with friends and scheduling regular meet-ups. It takes ongoing effort to maintain but is worth it for better longevity and health.
I see happy retirees maintain strong friendships by being active in organizations and hobbies they enjoy. They might travel with friends or meet up with a golf or cycling group weekly. Bottom line: they look for or create opportunities to engage socially with others.
Loneliness and social isolation are health risks for retirees. A recent U.S. Health and Retirement Study found that participants who “experienced persistent loneliness were at a 57% increased hazard of mortality compared to those who never experienced loneliness. For social isolation, the increase was 28%.” With television and social media always around as distractions, it’s become more important than ever to intentionally focus on building and maintaining close friendships.
Investing in Health
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Every morning, I go to the gym at a social club in Downtown Honolulu.
I see the same people working out there every morning. Everyone has their own routine. Some people play pickleball, some ride stationary bikes, and a few are lifting weights.
Most of them have been retired for years. But every day (including weekends), rain or shine, they are at the gym doing physical activity.
Investing in their health is a priority for these retirees.
Finke frames investing in health is like investing in the stock market: it’s a sacrifice requiring delayed gratification. You can’t eat the things you want to eat all the time. You need to work out, even when you don’t want to. It takes time and effort to stay in shape. You’re living a little worse today in order to be able to enjoy your health and resources in the future.
Many happy retirees invest in their health every day. They are happy to spend money on gym memberships, coaching, and nutritious food. Similar to investing, it’s beneficial to start early and build good health habits.
Investing in Financial Security
Money doesn’t guarantee happiness, but it is a critical tool to support relationships, good health, and financial security.
In a nutshell, investing in financial security means using the available resources of time, money, and discipline to be financially worry-free. Each person has their unique wants and needs. The money is a tool to achieve their goals. An investment in financial security is the key to reaching your goals and becoming resilient against life’s surprises.
I know retirees who have been investing in financial security for most of their life. They have a strong foundation with adequate emergency funds, insurance coverage, and low levels of debt. They have reliable income and do not overspend. They work with a professional to create a complete financial plan to achieve peace of mind that their family’s future is secure.
On the other hand, I have met retired people facing an income gap – their expenses are greater than their income.
I know people who rely solely on Social Security benefits – they do not have any retirement nest egg to fall back on.
Others attempt to “Do-It-Yourself” manage their investment portfolio. They run the risk of making a mistake that requires professional help to fix later.
Financial security reduces those risks and helps preserve happiness and quality of life.
The Type of Spending That Doesn’t Increase Happiness
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There are ways that people spend their money that does not lead to more happiness – and it may not be what you think.
Finke notes that unhappy retirees often spend their money on the wrong things.
According to Finke, the types of spending that do not increase happiness include:
Giving money to family and charity. This one was the most surprising to me, as many people report feeling better when they give money to a good cause or a loved one that needs it. The takeaway is that individual experiences will vary.
Buying more “stuff” without a clear idea of how it’s going to affect your level of happiness.
Moving to live closer to your children. Finke observes: “Living within 10 miles of your children makes you less happy on average.”
These findings about spending are about averages. Remember that individuals will differ. The key is to recognize what types of spending will lead to your happiness and what you can do without.
Spending That Could Lead to Happiness
In contrast, there are ways to spend that is tied to higher levels of happiness.
Finke says the type of spending that leads to happiness involves increasing opportunities for social interaction.
One example, which he describes as an anomaly, is buying a fun car in retirement.
Yes, it’s more “stuff”. But buying a fun or classic car also invites you into a new club, a group of owners. It opens more opportunities for social engagement – which is what can make you happier.
The same is true for club memberships, gyms, book and wine clubs, and any other expense that leads to more social activity.
How to Retire Happily
When planning for retirement, it’s critical to look beyond the dollars and data.
What can you spend your money on that will make you happier?
Have a plan for how to invest in the three pillars of happiness in retirement.
Create habits that maintain opportunities for social interaction.
Treat investing in health like investing in the stock market – start now and make regular deposits to your health by working out consistently.
Investing in financial security requires a plan – delegate this part to a professional financial advisor to truly create a worry-free retirement. The peace of mind you feel when you don’t manage your own investments is invaluable.
Thanks for reading. Have a great day everyone.
Listen to an interview Christine Benz did with Michael Finke on The Long View podcast here: https://www.morningstar.com/retirement/michael-finke-heres-what-makes-retirees-happy
Travis
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