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Secrets to Retiring Happy

These secrets come from a survey our team conducted on more than 1350 people in 46 states. The purpose was to determine the financial, investment, and consumer habits of “happy” vs. “unhappy” retirees and near-retirees. This May, be on the look out a book called You Can Retire Sooner Than You Think – The 5 Money Secrets of the Happiest Retirees, written by our Chief Investment Strategist, Wes Moss.

So there were several secrets and here are three that we chose to highlight today:

Remember TSL – Taxes Savings, Life: If you have trouble with an actual budget, this may be a simpler way to spend and save. If you can commit at least 30% of your gross income to taxes and at least 20% to savings, then you’ll have 50% left for your wants and needs. Why is this important? Even though it seems simple, it’s easy to get sidetracked with your “wants and needs”. So remember, this simple and powerful tool can dramatically increase your chances of an early retirement.

Work The Plan: According to our survey, happy retirees spend nearly double the amount of time each year doing financial planning than those who were in the unhappy group.  By creating a budget, you can have a clear image of your monthly and annual inflow/outflow. This year, we encourage you to set aside time at least once a quarter to review your saving and spending activities.

Max, Max, Max Out the 401k: Saving pre-tax via your employer’s 401k will actually leave you with more in your pocket than if you save after tax. Here’s why: If you take $200 from a $1,000 paycheck and contribute that $200 to a 401k you are taxed on the $800. Assuming a 20 percent tax rate, you are left with $640 in after tax dollars. So $200 in the 401k and $640 after tax leaves you a total of $840. If you save nothing in the 401k and pay taxes on the whole $1,000 at 20 percent, then put aside $200 in savings, you are left with $200 in savings, and just $600 in after tax dollars for a total of $800.

From Around the Web, we also gathered a few of the other secrets that others have discovered about “happy retirees”.

Good Health: According to a 2009 Watson Wyatt analysis. Retirees in poor health are nearly 50% less likely to report being happy. Taking care of your health now can contribute to your happiness later.

A Significant Other: The same study referenced above found that couples who are married or co-habitat tend to be happier than singles. For those enjoying retirement together, it’s an even happier occasion.

A Social Network: Having friends and a close social circle contributed to happiness way more than having kids.

Keep Your Mind Sharp: Finding lifelong learning opportunities that challenged the brain also contribute.

Here’s the takeaway: If you are happy living within your current means and adopt a few powerful financial habits, you have a very good chance of being in a position to retire when you want to – regardless of your income level. 


 

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