There’s so much today about the financial side of retirement. Save more, invest more, have more, but for what? For you the answer may be financial independence, or maybe just the ability to stop working at a job you don’t like. There are legions of experts out there to help you figure out your asset allocation, how much you need to save, how much you can safely withdraw etc etc etc.
There’s more to retirement than just saving a certain amount of money, though, as there are people out there who seem to have more money than most, but are still not happy.
How can you avoid an unhappy retirement, and what can we learn from happy retirees?
In my experience, happy retirees have five things:
Health trumps wealth. This is an obvious one, isn’t it? The happiest retirees seem to be the healthiest. Whoever said “If you have your health, you have everything,” was probably retired.
The message for retirees is that health has a major impact on satisfaction with life in retirement. We need to focus on our health as much as possible so we can enjoy life to the fullest extent in our later years. While none of us can predict how healthy we will be in the future, we can help influence the outcome by making lifestyle choices that promote good health.
Happy retirees keep fit.
Most of us are identified by our job. Often, the first question we ask when we meet someone is, “So, what do you do?”
What do you say when you aren't tied to a job anymore?
In addition to providing income, a job is also an easy way to feel good about ourselves. We feel like we are contributing to society and accomplishing something every day. There are problems to be solved and new things to learn constantly. Without a career, we are left to fill the void ourselves.
Happy retirees keep growing.
Want to live longer? Get some friends.
If we are not heading to an office or getting out and about each day, we miss out on important social interaction that we need to keep good physical and emotional health and cognitive function.
Social interaction stops your brain going rusty.
Research also shows that people with strong social relationships increase their odds of survival over certain time periods by 50 percent. That's on par with quitting smoking, and nearly twice as beneficial as physical activity in terms of decreasing your odds of dying.
Happy retirees are not isolated. They stay socially active and maintain relationships.
A lot of people moving into the retirement years are under the (false) impression that the money that they have saved alone is going to make them happy once the big day comes. This is a common misconception, and one that I like to alert people to before they fall into the trap of thinking that money alone is going to make them happy.
The happiest retirees understand that the point of saving is to enable them to enjoy the things that they love doing. Whether this is traveling or donating to causes closest to their heart, happy retirees have a purpose for their money- and unhappy retirees do not.
Happy retirees have a plan.
5. A rich ratio of better than one
What Is The Rich Ratio?
The Rich Ratio is an easy way to understand money. Simply put, it is the amount of income you have in relation to the amount of income you need.
The maths is, “Have” divided by “Need” should be greater than 1.
For example, if you have the ability to generate $10,000 a month and you need only $5,000, you have a rich ratio of 2 (10,000 divided by 5,000). You’re rich!
By that same logic, if you have the ability to generate $1 million a month, but you need $2 million, you have a rich ratio of 0.5. You’re not rich. So it’s a very personal thing. And it will change with age as well. Any ratio over 1 is fantastic.
Happy retirees honour the rich ratio.
Retirement ought to be a happy time. It should be a time when you are able to fully devote your energy and finances to doing the things you love. So make sure you have a plan before you retire and by following these few simple rules, you too can maximise the chance it's a happy one.