Much of the discussion between advisor and client is how to use financial resources to create happiness in retirement. In this month’s blog post, I provide a map you can use as the foundation for your discussion.

What are the keys to retirement happiness? I hear this question often. Many people are under the assumption that the concepts of happiness and financial security are inextricably combined.

When we talk with pre-retirees, the majority say they believe the key to retirement happiness is having enough money to enjoy their lives.

However, when we talk with those already retired, they say the key is having good relationships and good health. With retirees, money becomes less important and other things — such as nurturing and supporting relationships and fulfilling activities — become more important.

There is a relationship between happiness and feeling in control. Retirees who believe that they are responsible for their own positions and decisions generally feel more life satisfaction than those who do not.

Have you ever had a day where you didn’t get enjoyment out of an activity that would normally really excite you? I am an inveterate golfer, but I confess that some days I would rather not be out on the golf course! When we forget why it is that we like doing the things that we do, they become empty activities.

Rather than simply throwing up our hands and saying that there is no single formula for retirement happiness, let’s look at some of the latest research done in positive psychology.

A Formula for Retirement Happiness

Scientists have had a very hard time predicting levels of happiness based on the good or bad experiences in someone’s life. Instead, a far better predictor are our beliefs and attitudes. Our happiness is inextricably bound to the things in life that we value. Too often, however, we base our dreams of our future on activities or events that we would like to have happen without really understanding the real reason why those dreams would make us happy.

What is it that makes you happy? It stands to reason that if you could find a way to be happy every day for the rest of your life, you would lead a fulfilling life. We all strive to be happy, but do we all really know what lies at the root of our happiness?

It’s not the events that make us happy; it’s how they make us feel — the emotions they create inside us. And our emotions are stirred the most when we engage in activities directly linked to our core values.

Retirement Happiness Values: The Concept of PERMA

PERMA is an acronym that describes five conditions said to lead to “authentic happiness” at any age1:

Positive Emotion: We know that optimists do better in retirement than pessimists. As you look at your retirement, are you excited or are you apprehensive? As someone once said, happiness is the way you live your life and not a desired state of being!

Engagement: In retirement, it is easy to become disengaged from day-to-day life if your concept of “being involved” comes from your day-to-day work. Those who are more likely to go out with friends, undertake activities, and remain mentally active feel more “alive” and enjoy more successful retirements.

Relationships: Human beings are not meant to be on their own; we need other people. In retirement, the strength of our social network will be a major determinant in life satisfaction. However, relationships need to be positive to have the most impact on our overall retirement happiness. While men may have more relationships, women tend to have deeper relationships, and it is those nurturing, supporting relationships that matter.

Meaning:  There is a big difference between fulfilling activities in retirement and time-filling activities. Maslow said that the peak of the needs pyramid is our need for self-actualization. Retirement is the time to look at the meaning of life and to focus on living a life of value. That is why we have adopted the concept of Retirement Transition rather than treating retirement as perpetual leisure.

Achievement:  Self-image has a significant impact on our mental outlook, our relationships with others, and our desire to continually feel good about ourselves. In retirement, it is easy to look in the mirror and to consider our physical age and the chronic physical conditions that we may have. It is also easy to reflect on our work success that has disappeared now that we are retired. We need to win small and large victories, no matter how old we are.

Remember, the PERMA model isn’t just for client discovery or re-discovery for those in or nearing retirement. Share these ideas with anyone to bring a little happiness to their lives today.



1 “Flourish: A Visionary New Understanding of Happiness and Well-being,” Mark Seligman, PhD, 2011