More money doesn’t hurt, but health and relationships with peers matter just as much to retirees. If you’re looking for happiness in retirement for your clients, you can forget relationships with adult children, buying a slick car to cruise the cul-de-sac or lounging at a beach cabin in Mazatlán, Mexico.

Instead, there are only three categories that lead to satisfaction—when you have enough money, when you have relationships with your peers and community, and when you have your health. These three things might seem different, but they have one critical thing in common: They all require investment before retirement.

This was the upshot of a panel dedicated to finding happiness in retirement held at Morningstar’s September Investment Conference in Chicago. The panel took the unusual tack of not just presenting thought leaders (although they were there), but also giving first chair to an actual retiree who could verify or dispute the points raised.

“I wish I had heard this [discussion] 10 years ago, because I probably wouldn’t have as many marks and scars on my shins from bumping into things finding these things out,” said Jim Linday of Chicago, who is now a retired individual investor but was once a financial professional and teacher. “The one thing I can add from somebody who has been through that transition is that when you plan for retirement, it’s like staging a very beautiful still photograph. And the very first day you’re in retirement it becomes a full-motion video. And you have to accept that retirement is not going to be exactly the way you planned it out because of a whole host of reasons. That’s not to say you were wrong, or you didn’t get it right. It’s just like when we were at work: Things change.”

Given that financial advisors are being called upon more and more to not just help their clients reach their financial goals but also to help them reach their life goals, it’s important to see the two inexorably intertwined, the panelists agreed.

What Makes People Happy?
In order to assess trends in what’s important in retired life, Michael Finke, professor of wealth management at the American College of Financial Services and a researcher in the areas of retirement spending, life satisfaction and cognitive aging, looks to a data set known as the “Health and Retirement Study.”

“This is a study of 20,000 retirees that began in 1994, and we can follow them up to 2018. When we run analyses … what we see is that there are three core elements to life satisfaction. I like to call them the Three Pillars of Life Satisfaction in Retirement,” Finke said. “The first pillar is money. Having more money does make you happier, and it seems to have a relatively linear effect up to about $4 million.” (With $4 million, most people will experience peak happiness, he said.) The second pillar he mentioned is relationships with peers and community, and the third is health.

“All of these three things are investments. And what I mean by an investment is it’s anything you sacrifice during your working years in order to live better in the future. So our health is an investment when we exercise and eat better,” he continued. He said relationships are an investment too. But no pillar leads to happiness on its own, especially not the simple accumulation of money during one’s working years. It’s an investment in all three—money, health and community—that leads you there.

Cheryl Holland, the third panelist, a CFP and president of Abacus Planning Group, agreed that beyond the financial aspect of retirement, clients’ happiness often depends on their social networks. “That’s their spiritual community,” she said. “Sometimes it’s their neighborhood community, sometimes it’s their families, but for an increasing number of clients I see creative fulfillment as very important. They’ve always wanted to paint or draw, or they’ve always loved music and want to go back to singing in a chorale.

“The main thing I want [clients] to do is have a vision. I think as humans we all value purpose, mastery and autonomy. In retirement you’re probably going to autonomy in spades if your health is good for you. So what’s your new mastery going to be and what’s your purpose going to be? Some people struggle and never get there, and to be honest, they are depressed and they are not having their best retirement.”

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