Picture yourself enjoying retirement. Odds are you imagine yourself doing something you love—perhaps sitting on a beautiful beach, playing golf on your favorite course, or sitting down to an unhurried lunch at home instead of an office desk.
But here’s what you may not realize: Research has found that those types of leisure activities may not be the real sources of retirement satisfaction. “During our working years, we often view retirement as a long weekend,” says Dr. Michael Finke, a professor of wealth management at the American College of Financial Services who has studied retirement happiness. “The reality is that much of the reason these activities were so appealing on the weekends is because they provided a chance to relax from the stress of the challenges of the workweek. But how long can we really enjoy sitting on a beach chair and looking at the ocean? How much fun are we really going to have at a fifth round of golf this week?”
In his research,1 Finke used a survey of 20,000 retirees who were asked a variety of questions that measure life satisfaction. He found that the predictors of life satisfaction tended to cluster in 3 areas: Money, health, and relationships. “A fulfilling post-work life often means blending these three pillars of satisfaction into activities that provide fulfillment,” says Finke. In other words, it’s not about the amount of money you have to spend—it’s about the choices you make in how you spend it.
Below are 3 habits that Finke’s research found closely correlated with retirement happiness, as well as a few that make surprisingly little difference.
The habits of happy retirees
1. Engaging in social activities
Finke’s research looked at various categories of expenses for retirees, including housing, gifts, clothing, and transportation, and found the category “social spending” had the highest correlation with life satisfaction. “It’s important to think very carefully about the habits you can develop that will increase your opportunities for social engagement and lower the chances of becoming socially isolated,” Finke explains. An older Gallup analysis2 reached a similar conclusion, finding that nearly 70% of participants aged 65 and older who reported engaging in social activity 4 hours a day described a high level of enjoyment and happiness, compared to 44% of those with zero social time. Finke found that social happiness peaked at 6 hours a day, with 72% reporting high levels of enjoyment.
What about having a spouse, the most common social connection for many retirees? Finke’s research found that while a positive spousal relationship was greatly correlated with increased happiness, an unhappy marriage had a greater negative impact. For single retirees, investments in social spending may be even more important. “Think about who’s in your support network, and don’t be afraid to invest time and energy in those relationships,” says Finke.
2. Having sources of predictable income
In another study,3 Finke compared the spending habits of retirees who had a guaranteed income source (for example, a pension) of about $3,000 a month to those who had no guaranteed income, but enough saved to comfortably withdraw $3,000 a month from their investments. He found that the retirees relying on their savings spent far less—about half as much—as those who had a guaranteed income source. They also spent far less than was necessary to account for potential market fluctuations. His finding aligns with Fidelity’s view that having predictable income to cover essential daily expenses can help boost confidence that retirement savings will last. “This is likely because a retiree who gets a regular income payment that will last for a lifetime feels more confident that they have a license to be able to spend money,” Finke explains. “We know many retirees today don’t feel comfortable with the idea of spending down their savings. They would live better—meaning spend more—if they took part of their savings and used it to buy a source of guaranteed income.”
3. Investing in personal health
Given the importance of maintaining social networks and activities you enjoy, it’s perhaps not surprising that good health was among the highest predictors of retirement happiness in Finke’s research. Of course, there’s no way to guarantee health or longevity, but investing in healthy activities, foods, and medical care can potentially increase the odds. In his study, retirees who rated their health as good or excellent had a satisfaction rating 58% higher than those who said their health was poor. “By making an investment in your health, you increase the odds that you’ll be able to get the greatest amount of enjoyment from activities in retirement,” Finke explains. “If you save the money, but don’t invest in your health, then the chances are you will get less enjoyment from each dollar saved. That’s why health and financial investments are complementary, because they’re both inputs into activities that provide enjoyment.”
Habits that may not help
There are several things—including some that are a dream for many—that may not add significantly to retirement happiness.
- Staying in your own home. Surveys4 have found that continuing to live in their current home is a priority for older Americans. However, Finke believes the positive impact of independent housing often declines as we age. “Initially people who live in their own homes are happier than those in a shared living environment such as a condo or an apartment—until they reach their 80s. At that point, most of us begin to experience physical and cognitive changes that affect mobility and can limit the ability to experience regular social interaction with others,” he points out. Moving to an isolated area—even if it’s a place or a climate you’ve always enjoyed—can have a similarly depressing effect on happiness. “A way to circumvent this is to plan ahead for a transition into a shared living environment later in your retirement years,” Finke says.
- Living very close to your kids. Unlike friends and spouses, Finke’s research found that more frequent interactions with children did not have a significant impact on happiness. While he isn’t sure why this is, he hypothesizes that it may stem from the complexities of managing time with grandkids, challenges of in-law relationships, or sacrificing long-term friendships to move to a different location. If you’re considering relocating in retirement solely to be closer to your children, consider having an open conversation first about expectations, Finke suggests.
- Buying the big-ticket item of your dreams. A grand vacation or special set of golf clubs might or might not make you happy. But it’s more likely to do so if it expands your social circle, says Finke. “So if you’re debating whether to spend money on, say, an RV or a classic car, think about whether it might create opportunities for social engagement. If the answer is yes—it might be worth it!”
Looking ahead
While your retirement lifestyle choices will ultimately reflect your unique goals and circumstances, it's important to understand the financial implications ahead of time. Doing so can help you make the most of your retirement years. Consider meeting with a financial professional, who can help review your investments, estimate your future income and expenses, and test your plan against various market and life scenarios.