Most planners see a correlation between retiree happiness and the retiree's sense of control over his or her life. Regarding the work-retirement transition, individuals who retired voluntarily are happier than those forced out of their job. (Gallo et al. (2006); and Szinovacz and Davey (2005)).
According to Keith Bender, a University of Wisconsin economics professor and co-author of What Makes A Retiree Happy (2005), "The biggest impact on how satisfied people were with their retirements ... was whether they wanted to retire at the time they did." The "voluntariness" of retirement plays a big role even after researchers control for other factors like income.
I'll get back to some of the numbers relating to retirement readiness in my next column. In the meantime, while you are helping your clients figure out how to pay for their retirement, it may be more helpful if you can engage them in some conversations about what a "successful" retirement means to them beyond having money. The rest of their life could be a long time. It would be great if it were as happy a time as the commercials suggest.
Dan Moisand, CFP, is one of America's top independent financial advisors. He has spoken to advisor groups on five continents on topics such as managing investments and navigating tax complexities for retirees; retirement readiness; and most topics relating to the development of the financial planning profession. He practices in Melbourne, Fla. You can reach him at [email protected].