What Makes Retirees Happy

A large nest egg won’t guarantee a happy retirement. Yes, wealth does increase retirement contentment, but not as much as you might think.

While retirees with $1 million or more in household investable assets are the most likely to feel satisfied with their retirement, those with between $750,000 and $999,999 saved are among those most likely to be disappointed, even more so than respondents with $500,000 to $749,999, according to a recent survey of retirees by money management firm MFS Investment Management. “This may reflect the fact that this group in the middle, with three quarters to a million dollars in assets, has higher expectations but not quite the assets to realize them,” says William Finnegan, senior vice president and director of global retail marketing for MFS.

The survey of retirees between ages 55 and 75 with at least $500,000 in investable assets who retired in 2003 or earlier also found that those who said they were satisfied with their retirements citied that they:

• Retired when or later than they had planned (89 percent)
• Have $1 million or more in household investable assets (88 percent)
• Had a detailed saving plan (88 percent)
• Have a detailed retirement income plan (88 percent)
• Retired voluntarily (86 percent)
• Have a pension (85 percent)
• Don’t support parents or children (84 percent)

Those who expressed disappointment with retirement spoke of retiring involuntarily (21 percent), having debt (13 percent), and retiring sooner than expected (11 percent). And seniors who find retirement challenging include those who are supporting children or parents (18 percent), have debt (16 percent), are under age 65 (16 percent), have no detailed retirement income plan (14 percent), and have no savings plan (14 percent). About 57 percent of the affluent retirees carry debt, which on average is above $100,000, and 28 percent are supporting their parents or children.

Most of the well-off retirees in the survey left the workforce because they no longer wanted to work or because they reached an age where they qualified for full retirement benefits. But 30 percent of the retirees had retirement forced upon them because they became ill, disabled, lost a job, or needed to care for a sick relative. These involuntary retirees say they are less happy in retirement, are more likely to have dipped into income sources earlier than expected, feel ill-prepared financially, and are very concerned about healthcare.

[Check out Happiness Isn't for Sale, but Some Planning Helps]