Much happiness research has shown that money makes people happier, but only to a point. Once basic needs are met, additional money has a diminishing effect on happiness. Generally, an additional $10,000 in income has a bigger happiness effect on someone taking in $20,000 than it does for someone already drawing $200,000.

Some research finds retirees are happier with a defined benefit pension than they are with a comparable amount of wealth in a retirement account (Bender (2004); and Panis (2003)).  Apparently, the perceived certainty of a pension is stronger than the uncertainties that come with managing a lump sum.

Burr, Santo and Pushkar's work shows that an absolute amount of wealth or income is not as important as a factor in happiness as the perception that people are better off than their peers. They also found those with "outward orientation," the successful engagement with the world through friendships and activities, are much happier. People with high levels of "enhancement," which means they care a lot about status, power and what others thought of them, are less happy.

As one might expect, health has come up in several studies. Good health correlates with higher levels of happiness and poor health with lower levels. Functional limitations that lead to everyday hassles are particularly troublesome (Dulin and Pachana (2005); and Kosloski et al. (2005)).
Retirees who are married tend to be happier than those who are single (Bierman, Fazio, and Milkie (2006)). The death of a spouse, not surprisingly, significantly diminishes happiness (Cheng and Chan (2006)).

Oliver Robinson of the University of Greenwich notes, "Our most surprising finding was that retirees who had children and grandchildren were no more satisfied with life than the retirees without them."  In a talk to the British Psychological Society, he explained, "People think they will bring happiness, but childless couples are not worse off. This is dispelling the myth that happiness comes from spending more time with your children and grandchildren. Childcare commitments are an issue. There is a sense of enjoyment but a subtle burden."

Robinson found that friendships, not necessarily family, hold the key to happiness in retirement. Maintaining friendships through hobbies, clubs and shared interests was found to raise satisfaction levels by a remarkable 30%. This result seems to corroborate the conventional thinking that leaving the workforce can leave a huge social void. Filling this void is helpful to retirees.

Not all of the studies align well with the advice of planners. A common piece of advice given to clients is to retire gradually by reducing workload over time. This advice is often well-received because clients expect gradual retirement to improve their odds of achieving greater happiness or increasing their confidence that they can have a successful retirement.

But in "A Gradual Exit May Not Make For A Happier Retirement," Esteban Calvo, Kelly Haverstick and Steven A. Sass found "no evidence that workers who retire gradually are happier than those who retire cold turkey." They did confirm some of the factors affecting happiness in retirement that I mentioned earlier, and supported a recurring finding in studies that an individual's control over his or her retirement decision is a key factor.  

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.