In a recent Dynamic Wealth Report articles, Wes Moss gave 3 examples that unhappy retirees make that can truly separate them from having an early and happy retirement.
The mistakes Moss found were commonly reported when he conducted a study on the habits and traits of happy versus unhappy retirees for the book, You Can Retire Sooner Than You Think – The 5 Money Secrets Of The Happiest Retirees. Moss had 1,350 retirees across 46 states participate in my study, and learned a multitude of factors that unhappy retirees all have in common. The three most mistakes to avoid were:
- Unhappy Retirees Have 10 Or More Years Left On Their Mortgage
Through my research I found a correlation between happiness and retirees who had either paid off their mortgage or they are within five years of having it paid off when they retired. Unhappy retirees generally had 10 or more years until their house will be completely paid off. Removing a monthly mortgage payment from your budget is not only liberating, but also allows you to direct more of your retirement income towards your core pursuits.
- Unhappy Retirees don’t define the purpose of their money
After saving year after year, unhappy retirees seem to believe that the money from their retirement fund alone will create a happy retirement for them. Money itself, though, will not give you happiness; instead, it’s how that money is used that ultimately creates a happy retirement. Happy retirees go into retirement with plans to travel, volunteer, etc. and generally put their retirement fund towards following their passions.
In fact, I found that happy retirees have at least 3.5 core pursuits. These are essentially hobbies on steroids, and often what directs the purpose of happy retirees’ money. My unhappy retiree group only averaged 1.9 core pursuits, so if you find yourself with limited interests I suggest that you go out today and find a new sport, nonprofit or social club to join and enjoy.
- Unhappy Retirees Have A “Rich Ratio” That Is Under 1
I created the Rich Ratio formula several years ago, and have found it helps individuals and families easily understand their money. This formula is very simple: the amount of income you receive divided by the amount of money that you need. (This calculation should be done with after-tax amounts.)
To calculate your Rich Ratio in retirement, simply take the amount of monthly income you should or do have in retirement (Social Security + pension + any additional steady income streams) including what your nest egg should produce, and divide it by what you expect to spend each month to live the retirement lifestyle that you want: Have / Need = Rich Ratio.
Read the original article here.