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Elite Retirees

Elite Retirees

April 09, 2024

Are people happy after they retire? Why or why not?

Retirement in the U.S. has changed a lot in the past 100 years. Due to improvements in longevity, many of us can expect our years in retirement to exceed our earning years! With retirement taking up a much larger portion of our lives, it’s only natural for people to have more in depth questions about their retirement years. Is all the scrimping and saving to accumulate retirement assets really worth it? Are people really happy after they retire? What are the primary contributors to a happy, healthy retirement? Having provided financial advice to hundreds of households over the course of 8 years, I can attest that people’s retirement experiences are just as varied as the households they live in. So, what does the data tell us about the potential for relaxation, travel, time with loved ones, or the ability to pursue that special hobby that is so often associated with retirement?


Most retirees are pretty darn happy, but…

According to the 2002 Health and Retirement Study, 61.5% of respondents reported high levels of satisfaction with their retirement (not bad!), but why are 38.5% of retirees not highly satisfied with retirement? What are the highly satisfied retirees doing or experiencing that the others are not? According to the same study, retirees who are engaged in paid work, volunteering, or caregiving are more likely to have a high level of satisfaction during retirement. So, it would seem that the activities people tend to look forward to in retirement (travel, time with loved ones, etc.) are not the activities that lead to a high level of satisfaction during retirement. It SEEMS that continuing to engage in meaningful work, not leisure time activities, contributes to greater fulfillment in retirement.  At the very least, these interesting findings suggest that to gain fulfillment from the latter season of life, we need to adjust how we think about our retirement years.


Be an Elite Retiree

In their book, "Retire Right: 8 Scientifically Proven Traits You Need for a Happy, Fulfilling Retirement," Dr’s Fraunfelder and Gilbaugh, subspecialists in geriatrics, interviewed about fifteen hundred of their patients and found that a happy retirement is not dependent on gender, marital status, children, hobbies, or even time with grandchildren! They found eight traits that had strong statistical significance among the top 20% of respondents, a group I’ll refer to as the "elite retirees." The eight traits of elite retirees are:

  • The ability to plan ahead
  • A positive attitude
  • An acceptance of change
  • A support network
  • A sense of purpose
  • A healthy lifestyle
  • Enjoyable leisure activities
  • An expression of spirituality.

Interestingly, these traits are not concerned primarily with money. Elite retirees don’t appear to be checking their portfolios first thing in the morning, calling their broker for constant updates, or chatting incessantly about the shenanigans of the Federal Reserve or Congress. In short, the world is not happening to elite retirees, and they’re certainly not worshipping the "alter of net worth." Rather, elite retirees embody a mindset of "adulting." Of the eight "adulting" traits of elite retirees, the ability to plan was by far the strongest indicator of a happy retirement. As popular financial commentator Dave Ramsey says, "One definition of maturity is learning to delay pleasure. Adults devise a plan and follow it. Children do what feels good."


Planning? What Now?

Unfortunately, most of us are not taught the importance of planning, and even if we happen to value planning, very few of us understand what planning with regard to finance looks like or how it can empower us. While Mike Tyson was right when he said, "Everyone has a plan until they get punched in the mouth," the value of planning can’t be understated. The act of planning is powerful for a number of reasons: First, it creates a sense of agency that can help us weather the difficulty and uncertainty we all face over the course of our lives. Second, planning helps us focus. As a financial advisor, I will often start a conversation with, "When it comes to your life and your money, what’s most important to you?" This question frequently reveals that households are running in circles, pursuing a number of goals, albeit poorly. For example, a household may be trying to fund the kids’ education accounts (because Susie just has to go to a private school) and saving for that VRBO while interest rates are low, all while trying to take full advantage of their 401(k) match (who wants to leave money on the table?). This juggling can lead to a lot of frustration and, unfortunately, missteps and oversites. The process of identifying personal values, goals, and a subsequent plan can create a great deal of clarity and momentum. Instead of trying to figure out what investment markets will do next, planning helps focus people’s attention on what actions THEY will take to make meaningful progress towards what’s most important to them.

The importance of planning in Fraunfelder and Gilbaugh’s study, combined with the results of the Health and Retirement study suggest that engaging in meaningful work during retirement because you PLANNED to and WANT to results in the most meaningful retirement experience.  Adulting, that is, making hard decisions early so that you can spend your retirement years engaged in a work optional setting is the key to becoming an elite retiree.


Good news and bad news

The good news is that anyone can choose to do more adulting. To have a healthy retirement, you don’t have to be a great stock picker or understand what a variable annuity subaccount does (at times, I’ve wondered how many annuity salesmen know). All you have to do to improve the likelihood of a happy retirement is develop healthy habits, meaningful relationships, emotional and spiritual maturity, and so on. The bad news is that if adulting were easy, more people would be doing it. The first step to becoming an elite retiree is changing how one thinks about retirement. Instead of focusing on the perks of retirement or even the mathematics of retirement, we must first concern ourselves with cultivating maturity and purpose, a pursuit that will create elite citizens long before we ever become elite retirees.