When people call my radio show (“Money Matters” on WSB Radio) or come to my office for retirement planning consultation, they are usually expecting a conversation centered entirely on how much they need to save, and how that money should be invested. While we do spend a lot of time on such things, I try to explain that the size of one’s retirement fund is just one determinant of whether you will be happy in the second act of your life.
In researching my book “You Can Retire Sooner Than You Think,” I discovered several behaviors that are common to happy retirees, regardless of the size of their savings. A few of these might surprise you, but according to my survey data, living by these rules can go a long way toward ensuring a satisfying post-work life.
1. Skip the BMW. The happiest retirees own cars that are comfortable, reliable and affordable. These are mostly Asian brands, including Lexus, Honda and Toyota. “Unhappy” cars to be avoided: Chrysler, Dodge, Kia and Mercury.
2. Stay the course on investments. Too many bored retirees start playing the stock market, looking to cash in on the next “hot stock.” This usually has an unhappy outcome. You funded your retirement on years of regular saving and strategic investing. Stick with that. Want the emotional jolt from a big score? Budget a trip to Las Vegas.
3. Give back. Find a cause you care about and contribute your time, expertise and/or money. Such efforts create a sense of purpose and fulfillment, which are key to a happy retirement.
4. Don’t move or renovate. Make sure you are happy with your home before you stop working. Moving and renovating are both extremely expensive and stressful undertakings that can drain resources and lead to unhappiness in retirement. Buy that dream house or remodel the kitchen while you still have a job and the money it provides.
5. Buy the big stuff before you retire. My research showed that happy retirees are smart about not only how much they spend, but when they spend it. For example, they make big purchases — cars, upgraded appliances, et cetera — while they are still working and have paychecks to cover them. On the flipside, many of the unhappy retirees in my survey seemed to have terrible timing. They made significant purchases in retirement, thus straining their finances and stressing themselves.
6. Start now. Nearly half (44 percent) of the unhappy retiree group in my research reported that they were “Not Satisfied” with the amount of retirement planning they had done, compared to only 3 percent of the happy group. There is no getting around it. Retirement is like most things in life: You get out of it what you put into it.
7. Know your rich ratio. The rich ratio is an easy formula that will help you understand your financial situation. It’s simply the amount of money you have in relation to the amount of money you need. Happy retirees have a rich ratio over 1. To calculate your rich ratio, take the income you have coming in every month (Social Security, pension, investment income, etc.), and divide it by the amount you need to cover your monthly expenses. So, if you have $8,000 monthly income from all sources, and you need $7,500 per month to live the dream, you have a “rich ratio” of 1.06.
8. Stay positive. The road to retirement and beyond looks awfully rough these days. I hear from lots of people who think they will never be able to retire, let alone retire early. And they probably won’t, if they hold onto that negativity. Fear and pessimism are well-known dream-killers. The happiest retirees envisioned a future and worked consistently toward that future with optimism — secure in the knowledge that while the economy and stock market can be a crazy ride, the long-term trend has been decisively positive.
Read the original AJC article here.