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Financial Insights



Enjoying Your Retirement


The challenges of being retired

One challenge of being retired is that you may suddenly move from a structured routine with numerous social interactions to literally none of that and having to find other drivers to keep yourself motivated.

You may have worked five days or more a week and always had your job as a purpose to move you forward into the next day, to motivate you to get up out of bed, and get on with fulfilling your work-related tasks. Steady employment usually also brings a sense of self-worth and strong personal connections that are often long-term.

So, once all that stops, what should you do with your time? Research undertaken by Tao Guo, Yuanshan Cheng, Philip Gibson, and Louis Pantuosco was published in the Journal of Financial Planning (USA) to show details of the factors which really drive happiness in the retirement phase of life.

Retirement Planning Process

Their first point is an obvious one, that it is a big help to have enough money to meet your regular living costs, capital needs, and unexpected costs. But there needs to be more. As I have written in previous blogs, having enough money to be comfortable with how you want to live your life is a very important goal of the retirement planning process. However, the key point of this phrase is ‘how you want to live your life’. It’s a personal choice.

In the Kitces Report (an advanced educational newsletter for financial planners), Michael Kitces cites research results which indicate that retiree satisfaction is more driven by what retirees actually do with their time in retirement than by anything else. The author uses data from the American Health and Retirement Study (HRS), published by the University of Michigan, to evaluate what American retirees actually do with their time, in relation to the state of their well-being. Their data is gathered from a sample group of approximately 20,000 American retirees. Activities were broadly divided into two groups, including “passive” activities like staying at home and watching television, versus more “active” activities like socialising, walking, exercising, working, and volunteering.

Outside of sleeping and essential daily activities like eating, housekeeping, and dressing, there are roughly eleven hours of daily time available for other activities. The researchers found that retirees spend an average of 3.05 hours watching television and 2.81 hours staying at home alone, which are actually the activities least associated with happiness. By contrast, retirees who spend an average of 100 minutes per day socialising, and an average of 40 minutes per day walking or exercising, are much happier; these activities were acknowledged as the highest and second-highest happiness activities.

Generally, the results found that retirees who engage in active pastimes are happier than those spending longer on passive ones. Which in turn is important, because the researchers also found that as passive activities increased, and active pastimes decreased, retirees themselves aged and ostensibly became less mobile and less able. Accordingly, the researchers suggested that as retirees age, it actually becomes exponentially more important for them to remain social and engaged.

I find the irony here fascinating. The choice between active and passive seems quite simple: go for a walk, do some exercise or socialise, versus watching TV or staying home alone. But making each choice is actually really important because it’s these basic things that make up most of our days, weeks, months, and years. Sure, there are other things, like big holidays, be it traveling around Australia or overseas, going on a cruise, or exploring a foreign country. These big trips can be all-consuming, both in the planning phase and during the actual trip. But for most retirees, the traveling periods are generally a small part of a year or only once every few years.

In contrast, the daily choices continue to arise everyday. For most people, money doesn’t have too much of a large impact on either choice when it comes to the day-to-day things. Maybe Netflix is just a little cheaper than joining a gym or having a regular meal with friends, but not by enough that it should be a deciding factor on general lifestyle choices.

The research results also make a good point about the flow-on effect of each set of activities. Exercising and socialising, in addition to bringing more happiness, also add to mobility and physical health. There is also separate research on how exercising and socialising can benefit our mental health, which is important at any age, but especially so in retirement when natural decline can bring on aging conditions like dementia.

Each of us has the ability to identify what is important in our own personal lives and to decide how we enjoy spending our days. Structuring our life around this awareness of Self helps bring greater daily happiness during retirement. We just need to make these activities easy to undertake, then commit to others to meet for a walk, meal, workout, to go to the theatre or movies, listen to some live music, or see a live show. Or even plan a trip together with friends to keep your lives exciting by visiting favourite locales and exploring new places. But keep it all easy, attainable, and motivated by joy and your passion for the things you love in life.