The Science Behind a Happy Retirement
While most of what I write here is dollar and cents data, there is more to a happy retirement than “Can I afford to?” A second question that every pre-retiree should ask themselves is “What will I do with my time and will it be fulfilling?”
I often encourage clients to take an extended leave of absence from work when they are a year or less away from retirement. I think trying out what you think you’ll do next and seeing how it goes is well worth the cost of losing some leave. Can you really enjoy playing golf 4 days a week or sitting on a beach for a month straight? Are those grandkids you wanted to free yourself up for bringing you endless amounts of joy, or are you reminded how much you cherish peace and quiet?
Many retirees actually end up going back to work part-time not for the money but for the purpose it gives them. A study from the Federal Reserve Board found that 1/3 of retirees did a full “retirement reversal” and went back to work, many part-time. The irony is that if they had figured this out sooner and planned to work part-time, they could have retired earlier!
An article in the American Psychology Association titled “Having Too Little or Too Much Time Is Linked to Lower Subjective Well-Being" outlined the diminishing effect of free time. For example, when it comes to interacting with friends and family, they found that “...despite socializing being among the most enjoyable ways to spend time, time spent on social activities has been shown to have diminishing returns for subjective well-being. Indeed, excessive access to enjoyed activities leads people to savor them less.” Put another way, a happy hour with your neighbors is fun once a week but it loses its luster if done 3-4 times a week. The same goes for golf, time at the beach, reading, etc.
In addition, having complete discretion over your time has diminishing effects. The study found the sweet spot to be somewhere around 6-7 discretionary hours in a day. Less than that and you feel stressed, more than that you feel like there isn’t much purpose to your day.
This might mean a few hours to yourself in the morning, followed by a few hours of obligations (church volunteer, part-time work, helping with the grandkids, doing laundry, etc), and then followed by a few more hours with friends in the afternoon or evening or playing a few holes of golf before dinner. This is going to look different for each person – I encourage you to do your own “retirement happiness study” to see what works best for you.
Thank you for reading,
Alex
This blog post is not advice. Please read disclaimers.