Wes Moss Q & A With ESI Money On The Happiest Retirees

Here’s an excerpt of Wes’s interview and some of the questions asked by ESI Money

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Let’s begin with a tricky one. Hahaha. How do you define retirement?

I would define retirement as a place of economic and financial freedom.

It’s a time in your life when your favorite things in the world, or as I like to call them your core pursuits, your family and social network can be the focus of your time and energy rather than a job that you might not love.

I loved You Can Retire Sooner than You Think and liked this book just as much. Can you tell my readers how the two are related? Is this one simply an expanded version of what you covered in the first book?

My first book, Retire Sooner had a larger focus on the financial habits of happy retirees and touched on a variety of lifestyle and family habits as well. What the Happiest Retirees Know focuses on the entire roadmap for a well-rounded retirement which includes the financial side, but the book has a larger emphasis on the lifestyle habits that can lead to happiness.

I have now studied the habits of happy vs. unhappy retirees for almost a decade. What the Happiest Retirees Know expands on the fundamental financial principles of the happiest retirees, but we dive much deeper into some of the non-financial related habits that surround the happiest retirees.

For instance, we discuss family and social relationships, how a financial relationship with our children impacts our retirement years, and even faith, marriage, and health habits.

In the start of the book you say that these habits can help people retire both happier and sooner. We’ll talk a lot about the happiness side of things in this interview, but for now can you let us know why these habits will help people retire sooner? And any idea of how much sooner (a year? more?)

It was clear to me early on in my financial planning career that happy retirees were typically better off financially than many of the unhappy retirees. And even for my happy retirees who hadn’t amassed the same level of wealth as the unhappy retirees, they had much more financial peace rather than the financial anxiety that I saw with my unhappy retirees.

It was a lightbulb moment for me. I believe there’s an inherent optimism in happy retirees which allows them to look towards tomorrow, and you see that come through with their finances. They save for retirement, they invest for the next 10, 20, 30+ years, they pay off their mortgage because they know they’ll enjoy not having those monthly bills. That optimism and faith that tomorrow will be a good day allows them to make (oftentimes) wiser financial decisions and gives them financial peace of mind.

When I wrote You Can Retire Sooner Than You Think, my goal was to help people retire closer to 62 instead of 65. I’ve had people call into my radio show or send me emails through my website telling me that they’re retiring as early as 58, 55, and even early 50s after reading my book, though! I think those folks might be more of the exception rather than the rule, but I do believe that by using these strategies, many people can shave off more time than they originally expected when planning for retirement.

Do increases in happiness taper off once you reach a certain number of the habits (like it does for savings)?

In a word, no. This is certainly a case where more is better.

However, I don’t think retirees should feel pressured to be perfect with this list and should instead focus on what matters most to them so long as they get the key pieces right like finances.

Let’s take the 30 habits I mention in the appendix as the example for our base number. It’s hard for me to say that if you have 29 out of the 30 habits, that you’ll be less happy than a retiree that practices 30 out of all the 30. I do think the more of these habits that a retiree has, the more likely they are to find that happiness within retirement.

Do you have a recommended timeline for preparing for retirement (what to do 20 years out, 15 years out, etc)?

My research shows it’s never too late to be a happy retiree. I think Americans get the message they need to start saving in a Roth IRA in their 20’s.

While ideal, that’s not realistic for most. I’ve seen a lot of happy retirees that didn’t start saving for retirement until their mid to late 40’s. We can climb enormous mountains if we give ourselves 10-20 years.

Of course sooner is always better, but you can wake up one day at 50 very much behind the ball, but within 10-20 years you can end in a strong position to be a happy retiree. I think the message and steps outlined in the book can help people get there in an effective and efficient manner.

Happy retirees have a minimum of $500k in savings. Using your own rule of thumb, that’s about $2k of income per month. Even with SS added in, that doesn’t seem like a lot of money. So is $500k really enough (and if so, why)?

The short answer is yes. $500,000 in savings is ABSOLUTELY enough to help people be happy in retirement.

We think that $500,000 in savings is an attainable figure for many retirees can reach and doesn’t feel like an overwhelming number like $2 million or $10 million. It may not sound like a lot of money, but for retirees without a lot of debt and extravagant spending habits, it’s more than enough to retire happy.

I’m interested in details around having multiple streams of retirement income. You note that it’s better to have more than just one or two, but how many more is ideal?

I don’t have a specific number that people need to reach necessarily, but I will say that more tends to be better.

When you think through all the different income streams people tend to have in retirement, it’s clear that as long as you plan ahead, you’ll like have more than one or two.

Social Security, while constantly under scrutiny, oftentimes is one stream or two for retirees. In addition to Social Security, I’ve seen most married retirees have an investment savings income stream, then maybe a pension or two, and even income coming in from a rental property.

I think as long as you hit above that one- or two-income stream mark, you’re much more likely to fall in the happy camp.

Any thoughts on the spread of income sources in retirement (for instance, if you have five but one of them makes up 80% of your income, how does that impact happiness, if at all)?

There is not an exact percentage that needs to be in each income category, but the more diversification on the types of income streams (real estate income, pension, social security, investment income, etc.) the more formidable your overall income becomes.

That said, I also say that having ten $1,000 checks coming in every month is going to make you sleep easier than having one $10,000 check every month. There’s no specific percentage split you should hit, but if you’ve got one $8,000 check per month and then four $500 checks coming in, I think you’re more likely to reach for a Tylenol PM occasionally.

Do you have a recommended order for creating streams of income (ones that are preferred to others)? How do you advise clients to create some if all they have is Social Security?

Happy retirees typically have at least $500,000 liquid retirement savings which is invested. As a financial advisor I’m biased, but investment income is my preferred income stream after accounting for Social Security.

Pensions are another one that tend to be high on the list when thinking through this order of operations. However, these aren’t as common anymore.

From there, it’s more of an open and even playing field with figuring out which stream of income to move to next.

You don’t talk a lot about working in retirement other than to acknowledge that there’s a Retirement Grey Zone where people move from full-time work to part-time work to no work and to list part-time work as a core pursuit category. Can you share any learnings on whether or not happy retirees work and if so, what they do and how many hours a week they work?

There’s great power in the concept of the Retirement Grey Zone. The vast majority of America works for decades in jobs they don’t love. Finding any sort of income producing job or hobby that you love can be a fountain of happiness. This could be making and selling jewelry or wood carvings online, or maybe it’s working as a sales associate at Pike’s Nursery and sharing your green thumb knowledge with others, or perhaps you’d enjoy being a sub at the local elementary school.

Working in retirement can be a wonderful thing, but I’ve found most happy retirees make sure that it’s in an area that they’re passionate about and not just punching another clock.

Also, any thoughts on being able to disengage from work? Many people are so entangled in their careers that when they leave work, they don’t know who they are. Any findings on whether or not happy retirees are better or worse at making the transition, what they do to make it better (if they do), etc.?

Happy retirees understand that the life side of retirement is just as important as the financial. When planning for retirement, they account for both financial planning and the non-money side of this major life change. They nurture their core pursuits prior to leaving the workforce, and they know how they want to spend their new-found free time in retirement.

Having this sense of direction and plan seems to ease the transition into retirement.

For social interactions you recommend that people have at least three close connections — people they can confide in. The data says that unhappy retirees have 2.6 people and happy retirees have 3.6, so why didn’t you go with four (three seems to be between happy and unhappy)?

Head to the ESI Money website for the full article!