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How To Win The Mental Game of Retirement

7 key investments that can lead to greater fulfillment and happiness

Studies focused on retirement satisfaction report that people retiring today are unhappier than ever before.[1] Experts in the field of retirement psychology find that while some individuals transition smoothly into their golden years, others have a much more difficult time, and they typically don’t talk about it because they’re embarrassed.[2] Retirement is supposed to be about living the good life, but how do you set yourself up so that you also feel good?

Winning at retirement isn’t just about how much money you have saved in the bank; it’s also about preparing for the social and emotional issues that can arise. Most financial planners focus solely on financial health, but money alone does not guarantee you will have happiness or even satisfaction.[3] To achieve a true sense of fulfillment, you need to pay attention to seven key areas that require just as much if not more of your time and attention.

Investment #1: Identity: Who are you without your job?

Our identity can be looked at from two perspectives: how we see ourselves and how others see us. Transitioning out of a job during retirement can result in a kind of identity crisis, particularly for those whose identities are shaped by their careers. [4] If the satisfaction you get from a job well done goes beyond the paycheck you receive, then perhaps your definition of retirement needs an adjustment. More and more American’s age 65 and older are working during their golden years—and guess what? —it might also be good for you. [5] Volunteering, teaching, or working part-time during retirement has been found to stave off depression, dementia, and hypertension.[6]

Investment #2 Relationships: Who are the people you feel closest to outside of the workplace?

It’s common for retirees to see a decline in their social activities once they retire, in large part due to losing contact with work relationships. This transition can be especially difficult for individuals who don’t invest in their social life outside of work before they retire.[7] This can add stress to a marriage and increase a sense of isolation, both of which lead to greater dissatisfaction and unhappiness.[8] Psychologists suggest reserving time for face to face interactions with friends—as opposed to phone calls and digital communication—because those opportunities broaden your horizons and open your mind to new experiences.[9]

Investment #3: Experiences: What kinds of activities give you the greatest enjoyment?

An interesting study done by the Chicago Booth School of Business found that people reported greater happiness and satisfaction when they spent their money on shared experiences rather than on physical things.[10] Any experiences we plan for, be it a small outing or a trip to a foreign country, have the potential to become a lifelong memory. It’s our memories that go on to become in so many ways the richest treasures we own. Don’t just dream about new life experiences; set goals that spell out exactly when and how you will achieve them.

Investment #4: Satisfaction: How does where you live affect your overall sense of well-being?

People care deeply about how their standard of living compares to that of their neighbors, and if there is a gap between what you have and what you think you should have, unhappiness can result.[11] Consider this when choosing the neighborhood you will live in once you retire. Rather than looking out the window every day and feeling dissatisfied about what you don’t have, choose a house that you can comfortably afford. If possible, give yourself a view of nature to inspire feelings of satisfaction and contentment. Studies also suggest that once you reach age 80, renting may be preferable to owning because of the physical difficulties of taking care of a house.[12]

Investment #5: Health: What are you doing to protect your primary asset?

After all your years of hard work, the last thing you want is a retirement limited by health constraints. Not surprisingly, good health has proven to be strongly correlated with retirement satisfaction. Research by Center for Retirement Research at Boston College found that retirees with poor health report dramatically lower levels of happiness.[13] Staying active during your golden years can not only keep you fit, it can also give you the added benefit of increased social interactions. Make your health a priority by taking advantage of regular wellness visits. Most health insurance plans including Medicare don’t charge for annual wellness visits, and as the saying goes, an ounce of prevention is worth a pound of cure.

Investment #6: Meaning: What is your life purpose?

It was Henry David Thoreau who warned against the regret of going to the grave with a song still in you. If you’ve spent the majority of your working years making a living, retirement may be your opportunity to focus on making a life. Each of us has a unique combination of talents and interests that no other human being has. Ask yourself, what have you always wanted to do? What gave you joy as a child? Reconnect to what gives your life meaning and it might also be part of the legacy you leave behind to your children, or to the world.

Investment #7: Peace of Mind: What is keeping you up at night?

Stress is a big indicator of retirement happiness and one thing that most retirees worry about is running out of money. This can happen due to improper asset allocations or unexpected health care costs. According to a Nationwide survey, the majorities of retirees—72 percent—fear not having the money to cover unplanned medical expenses, and half of them haven’t discussed health care costs with their family because they don’t want their kids to worry.[14] It’s important to be honest with yourself about what’s keeping you awake at night. Talk to your financial advisor about a holistic retirement plan that gives you not just returns, but peace of mind. This means taking a realistic look at how things might change in the future and addressing those concerns now so that financial hardship isn’t part of the picture.



[1] https://www.ebri.org/pdf/PR1160.Ret-Sat.26Apr16.pdf

[2] http://www.apa.org/monitor/2014/01/retiring-minds.aspx

[3] http://crr.bc.edu/wp-content/uploads/2005/02/ib_28.pdf

[4] https://files.eric.ed.gov/fulltext/EJ969555.pdf

[5] https://www.bls.gov/cps/

[6] http://www.apa.org/monitor/2014/01/retiring-minds.aspx

[7] http://blog.aicpa.org/2015/10/does-more-money-make-you-happier-when-you-retire-not-always.html#sthash.YTvBH5WQ.dpbs

[8] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2583428/

[9] https://www.marketwatch.com/story/retirement-is-making-people-more-miserable-than-ever-before-2016-06-30

[10] https://newschicagobooth.uchicago.edu/newsroom/why-experiences-inspire-more-gratitude-stuff

[11] http://online.wsj.com/ad/article/jh_secret_happy_retirement.html

[12] https://scholar.google.com/citations?view_op=view_citation&hl=en&user=93e6Sm0AAAAJ&citation_for_view=93e6Sm0AAAAJ:hFOr9nPyWt4C

[13] http://crr.bc.edu/wp-content/uploads/2005/11/wp_2004-241.pdf

[14] https://nationwidefinancial.com/media/pdf/NFM-16070AO.pdf

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