Preparing for life changes during your golden years can be an unforeseen challenge of retirement. Planning for physical and financial health changes during working years can help ease the transition.
MassMutual’s 2024 Retirement Happiness Survey found that pre-retirees are more likely to take care of their health, increase savings, and reduce expenses than retirees. The study also found that most retirees feel happier (67%) and less stressed (75%) than when working full-time.
Related: Social Security benefits report confirms major changes are coming
However, there is a gap between how many workers think they’ll be happy in retirement (77%) compared to how many retirees actually report being happy (67%). Additionally, almost two in three workers (61%) think they’ll be excited during retirement, versus just 41% of retirees who report excitement.
While retirees generally report feeling happy, workers overestimate their happiness and stress levels in retirement.
Financial security strongly influences retirement happiness
One key indicator of retiree happiness is financial stability. 61% of those who report being happier in retirement note that they worked to pay off all debts at least five years before retiring. Less than half of those unhappy in retirement note that they did not pay off all debts before retiring.
More on retirement:
- The average American faces one major 401(k) retirement dilemma
- How your mortgage is key to early retirement
- A few simple tasks can can help you thrive in retirement
Happiness and contentment in retirement also impact physical health. Nearly half of those who report being happier in retirement indicate they prepared for such life events by prioritizing their health by eating well and exercising.
Happier retirees also tend to prioritize social activities more than those reporting unhappiness, such as spending time with loved ones (76% vs. 58%), pursuing hobbies (64% vs. 44%), and traveling (62% vs. 44%).
However, the overall retirement outlook is more positive than it is negative. Most retirees (78%) note that they have what they need, if not more, in retirement savings.
While workers may be overestimating their level of happiness in retirement, they may also be overestimating their anxieties in retirement. Improving physical and financial health during working years can pay off in the long term.
Shutterstock
Pointers for optimizing retirement savings and happiness
Adjusting to a new phase of life is often challenging, regardless of age. Therefore, it’s important that your finances are aligned with your planned expenses and that you budget for leisure activities that will contribute to personal happiness.
Related: The average American faces one major 401(k) retirement dilemma
Tips for workers:
- Consider your current asset mix: To protect against market volatility, maintain a healthy mix of stocks, bonds, mutual funds, and any other assets you may be interested in. Meeting with a financial professional can also help gauge your risk appetite and identify whether asset allocations should be updated accordingly.
- Calculate when you’ll start collecting Social Security: How much you made during your working years and the age you start collecting Social Security impact how much money you’ll receive. Review your retirement savings and determine the optimal time to receive Social Security payments.
- Estimate retirement income: Identify how much you’ll withdraw from retirement accounts like a 401(k) or IRA and how much you’ll receive in Social Security each month. Having a rough idea of your monthly income can help you stick to your budget.
- Estimate retirement expenses: Some expenses, like healthcare or travel, may be more expensive later in life. Make sure you budget for these higher costs in your retirement plan.
- Identify where you’ll live in retirement. Where you live impacts the cost of living, taxes, and mental health. Living in low-cost states or near family can help ease the burden of retirement.
Tips for Retirees:
- Keep a daily routine: A daily routine can help give you a purpose, keep you on track, and add a sense of predictability. It can also help prevent mindless spending.
- Resist the urge to overspend: Without the structure of a full-time job, it may be tempting to overspend on leisure. Make sure recreational spending is built into your monthly budget.
- Stay active: There is a correlation between happiness and regular exercise, especially for those in retirement. Staying active can help retirees maintain a positive outlook on life and healthy habits, physically and financially.
- Keep in touch with friends and family: regularly seeing friends and family can help keep your mind sharp and prevent loneliness. Those feeling lonely during retirement may be more susceptible to emotional spending. Staying connected with your community can help avoid overspending.
Related: Veteran fund manager sees world of pain coming for stocks
