Over the course of our careers we have helped hundreds, maybe even thousands of local people plan for retirement.  Most settle into retirement successfully and enjoy higher life satisfaction as they age. But we have also seen some retirees really struggle with retirement, and never recover their sense of identity outside of their career.

So, what’s the secret to living well in retirement?  And is there anything we can do to increase our happiness?

If you ask someone what they think the key to their happiness is, they will usually answer health and wealth.  And to an extent that is true. Certainly, the absence of wealth or multiple debilitating illnesses can be a fast track to misery. But money and health don’t affect life satisfaction nearly as much as we would think.

More than money

A ground-breaking study by Richard Easterlin first formulated in the 1970s, but revisited in 2014, showed that over a 70-year period, people’s happiness in the United States fell despite real incomes increasing three times over. 

How we feel about our money is more important than how much money we actually have.  Do we feel we have enough?  

And that depends on whether we compare ourselves with others.  This is encapsulated by HL Mencken’s ‘Brother-in-Law Rule’: wealth is any income that is at least $100 more a year than the income of one’s wife’s sister’s husband.

If we’re like Mencken, constantly looking for signs that that we’re better or worse off than others, we won’t be happy. It’s better to focus on our own situation, and if we have confidence to spend, then we have enough.

Not health either

A recent academic study found that people who become visually impaired experience emotional distress, but they’re subjective well-being and happiness are unaffected.   Like money, how we feel about our health is more important than our actual state of health. 

Good health on its own is taken for granted, and only severe or multiple illnesses actually lower people’s normal level of positive feeling.

Strengths and character

According to academic psychologist Martin Seligman, happiness is a choice and it must be earned.

When we choose to develop on our strengths through will and determination, we feel pride in our accomplishments, we gain satisfaction in life, and happiness that is genuine.

Similarly, authentic happiness arises through the slow development of what Seligman calls ‘character’.  Character in this sense includes universally admired virtues like wisdom, courage, justice and spirituality.  

It seems there are no shortcuts to genuine happiness and life satisfaction.  The good news is our circumstances like wealth and health don’t really matter.

We can choose to be happy, by living consistently with our values, and leveraging our natural strengths with grit and determination.

At When Financial Solutions, we take the time to understand what’s most important to you. We will align your financial strategy with your values and give you confidence to spend.  

You will then be free to live purposefully, spending your time and money with the people most important to you, on the causes you’re most passionate about.  

So, it won’t be a matter of ‘if’ you have a happy retirement, but ‘when’.

Michael Bowman and James McMaster are co-founders of When Financial Solutions.  This article is general and does not consider your personal circumstances so it may not be appropriate to you.  If you would like advice specific to you, please give us a call.