Why Money Alone Isn’t Enough: The Surprising Drivers of Retirement Happiness
Many of us spend decades saving diligently and investing wisely, believing that a happy retirement will naturally follow. But the research tells a more complex story. While money matters, it is only part of the equation. A fulfilling retirement depends on financial confidence, meaningful daily structure, strong relationships, and a sense of purpose.
We’ll start by taking a closer look at what can truly influence your retirement satisfaction and how to use these insights to help create a life you enjoy.
1. Guaranteed Income Can Support Greater Happiness
Research shows that retirees who receive steady and predictable income tend to feel more satisfied with retirement. Income from Social Security, pensions, or annuities help provide stability that can be more difficult to replicate consistently through market‑based withdrawals. Retirees who receive a guaranteed income stream from annuities were 43 percent more likely to say they were very satisfied 10 years into retirement when compared to retirees who rely heavily on drawing down their savings.
Predictable income can help reduce stress and simplify spending decisions. Retirees often feel more comfortable enjoying their money when they know their income will arrive regularly. This shift can make retirement feel less like a budgeting challenge and more like a relaxing life transition.
While incorporating sources of guaranteed income can help retirees feel more comfortable, it doesn’t mean you should rush to buy an annuity or trigger your Social Security benefits as soon as possible. It’s important to decide carefully, as these decisions are often permanent. This is why a personal financial plan matters so much. You should make these decisions in context to your overall plan objectives.
2. Emotional and Lifestyle Factors Matter More Than Many Expect
A surprising insight from recent studies is that many retirees struggle not because of money issues but because of emotional and structural changes. A 2023 study of pre‑retirees and retirees found that loss of identity and the absence of daily routine were the two most common challenges after leaving full‑time work. Only 10 percent of respondents cited financial difficulties as their primary struggle.
Retirement represents a major shift in how people see themselves. If your work has shaped your sense of purpose or provided your social community, the transition can feel disorienting. Creating a plan for how you spend time, connect with people, and maintain meaning can help make this new chapter more fulfilling. The work here should begin far before you retire. The common saying is, “what are your retiring to?”. If your community and personal interests are clear, congratulations. You may not have as much work to do to design your life post-work.
If your passions and personal connections took a backseat to providing for your family and advancing in your career, you may have considerable work to do on this front. The sooner you start considering this, the better. Not sure where to point your energies? Talk to your family, friends, or colleagues for input. Take a class. Spend more time considering what and who you would spend your time in retirement. Think about what constitutes your “favorite day” and uncover the clues that gives you.
3. Debt Can Undermine Retirement Satisfaction
Debt is another important factor that influences happiness in retirement. Research shows that higher‑income households are actually more likely to carry debt. The most affluent 25 percent of older households with debt owe about $230,000 on average.
Carrying debt can feel emotionally overwhelming because many retirees assume they should feel financially secure. Reducing or eliminating debt before retirement is one of the most powerful ways to help increase confidence and lower stress. A cleaner financial slate often leads to a stronger sense of freedom and flexibility.
In my career as an advisor, I have often had the conversation with clients about their mortgage balance in retirement. While it makes numeric sense that your portfolio may outperform a low-interest mortgage, it’s worth considering the psychological impact of making a monthly payment. Many individuals express a preference for entering retirement without a mortgage, provided it does not adversely affect liquidity and cash flow.
4. True Happiness Rests on Four Pillars
Research discussed in various studies suggests that financial security is important, but it does not stand alone. Retirees who thrive tend to have a combination of:
- Strong social connections
- Good physical health
- A sense of meaning and purpose
- A reliable income strategy that feels sustainable
Money can help support these pillars, but it cannot replace them. Social relationships bring joy. Health brings energy. Purpose brings direction. Together, they help create a retirement foundation that feels rich and fulfilling.
5. The Encouraging News: You Can Build a Happier Retirement With Intention
The most reassuring insight from the science is that happiness in retirement is not something you stumble upon. It is something you can create with thoughtful planning and small, consistent decisions.
A fulfilling retirement is not about having the largest nest egg. It is about having clarity, confidence, and a plan that allows you to live with purpose.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Source: Kiplinger, What Science Reveals About Money and a Happy Retirement
Robert E. Morrison
Chief Experience Officer
CFP®