Now that I’ve shared How to Have a Happy Retirement from the great retirement book You Can Retire Sooner Than You Think, it’s time to look at the other side of the equation — what makes people unhappy in retirement.
The book shares a whole host of facts from a comprehensive survey they completed, some of which were mentioned last time (as a contrast to what happy retirees experienced).
Today I want to share a section of the book giving the author’s thoughts on how to avoid an unhappy retirement. I’ll add my own perspective and comment along the way.
Eight Ways to Avoid an Unhappy Retirement
1. Ditch the BMW and stick to the Asian brands.
Thoughts from the book:
If you are retired and drive a BMW, chances are you are not happy. My survey results found that BMWs are the top luxury car in unhappy retirees’ garages across America.
My guess [is BMW owners] are still competing. They buy the “Ultimate Driving Machine” because they are looking for a distinction — a high-end status symbol to make them feel better about themselves. But in purchasing such a car, they have opted, either knowingly or unknowingly, to add an additional financial burden to their lives.
[Happy retirees] tend to prefer Asian luxury brands by a three-to-one ratio. Happy retirees are looking for two things in the cars they drive: comfort and cushion. Anything else is just a well-polished money sump.
Haha! Maybe BMWs should be called the “Ultimate Money Suck.” LOL!
Personally, I’m not a car guy, so I don’t go ga-ga over one car versus another. I know some of you are car people and if that fits into your retirement plan, that’s fine with me. It’s just not something I’m into.
It seems the author’s main issue is that these retirees are unhappy because they bought a car they couldn’t afford. That’s a problem, for sure. It’s also an issue that we’ll see pop up a few more times in points below.
So the real way to avoid being unhappy in retirement is less about buying a BMW and more about spending within your means. But that’s not as sexy sounding, is it?
So IMO, if you can afford it, get whatever car you want. You’ll probably be happier that way.
We have never owned a luxury car and I can’t think of a situation in which I would. It’s just not something that appeals to us.
Since we’ve been married we’ve owned two Subarus, four Toyotas, two Hondas, and a Nissan (BTW, these numbers include two cars my wife totaled).
They have all lasted a long time (could have been longer — we gave many away to needy relatives or our church once they hit 100k miles) and been very reliable which is what we look for in cars.
As far as the author’s advice goes, we have certainly stuck to the Asian brands and it’s worked out well for us.
2. You don’t need a second career as a stock trader.
Thoughts from the book:
I can’t tell you how many unhappy retirees I’ve met who decide to “play the market.” They have more time on their hands than ever before, so they think they’ll become investment experts and active stock traders overnight. Big mistake.
If you’re constantly tweaking your algorithms, frantically receiving Google alerts about the highest dividend-paying stocks, or making major investment choices because you read an obscure article in the Wall Street Journal, chances are you’re going to end up disappointed.
File this under “too much time on your hands.”
It kinda goes back to the post about happy retirees. One of the keys is having what the author called “core pursuits” (activities you’re passionate about/involved in). If you have enough of them (at least 3.5), you are likely to have a happy retirement.
If you have no outside interests (or just a couple), not only are you unhappy but you’re also looking for something to do with your time. So why not start day-trading. That sounds like it’s both fun and profitable, right?
Ugh. I don’t know what gets into some people.
Needless to say, we have not been tempted to day trade in retirement or even to buy an individual stock. We’re sticking with stock index funds for the long term.
3. Give your money a purpose.
Thoughts from the book:
For many unhappy retirees, the only purpose of having money in retirement is to have money in retirement. Happy retirees, on the other hand, know their money is merely the means for living a happy life, not the end goal.
The kind of legacy you leave is entirely up to you—but here are some possible ideas to get you executed:
- Get active in a local charity that rings true to your heart.
- Open your own charitable fighting account, also known as a donor-advised fund.
- Explore crowdfunding organizations.
Ok, now he’s getting into people’s business!
He’s talking about giving — both time AND money.
If you do these, you tend to be happier. If you don’t do them, you aren’t.
We talked about volunteering in the previous post — how it give you something to do (core pursuit), allows you to help others (providing purpose), and involves others (it’s a social activity.) Lots of great stuff associated with volunteering in retirement.
But now he adds giving money to the equation. There have been numerous studies on the benefits of giving money. Why would those benefits be any different in retirement than pre-retirement?
I’ve talked about giving quite a bit so I’ll let this idea stand on its own and sink in for those who are receptive.
4. Don’t move, and don’t renovate.
Here’s an interesting one:
Mistake #1: Never make a big move at the beginning of retirement. Sure, they had a nice new place, but they also had a nice new mortgage.
Mistake #2: Now is not the time for costly renovations. Each one engenders one more. [Many have] learned the hard way that home improvements is a slippery slope: it quickly starts to feel like a retiree’s full-time job.
Mistake #3: [These house changes] eat into a significant chunk of the very new egg that was supposed to last in perpetuity.
This is interesting to me for a couple reasons.
First, we have been considering both moving as well as home renovations. Does this mean we’re either unhappy or about to be?
Second, it sounds like the people who are making these moves (and are thus unhappy) don’t really have the funds for what they want to do. So they spend money they don’t have, putting a strain on their retirement and making them unhappy. Is this what he’s saying? It’s the same issue as the BMW point IMO.
If so, I think the “Don’t move, and don’t renovate” advice should be “Don’t move, and don’t renovate unless you can afford it.”
For instance, if we did either of these, we would have plenty of money and our retirement would not be impacted in any way (other than we may like the new place/renovations more or less than what we had before, but that’s the way it is with any purchasing decision.)
The author’s solution for these is to do them (move and/or renovate) before you retire — while you still have a job and money coming in.
Again, I don’t see this as a retirement issue as long as you have adequate funds.
5. Make big-ticket purchases before you retire.
Here’s another tip that’s related to the previous one:
Unhappy retirees are prone to making big purchases, and worse, making them at precisely the wrong times.
Happy retirees have a much healthier relationship to spending. It’s not that they don’t spend money. It’s that they know when to do it: when they’re still drawing a paycheck.
I don’t get this. What’s the issue if you have the money in retirement?
The main problem is people spending money they don’t have. I agree with that. Just wondering why it’s not phrased that way…
6. Plan and budget for your retirement.
The book’s thoughts:
44 percent of the unhappy group reported that they were “not satisfied” with the amount of retirement planning they had done, compared to only 3 percent of the happy group.
Almost all happy retirees have done their homework: they’re enjoying their retirement because they planned to enjoy it. They did adequate legwork and preparation to ensure their reality would match their expectations.
Unhappy retirees, on the other hand, just don’t take the time. Here’s a scary statistic: less than half of Americans plan for retirement at all. That’s right: Only 46 percent of workers have even tried to calculate what they need to save for retirement.
Happy retirees are typically better budgeters than unhappy ones. They spend more time with their financial planners. They are more comfortable with the level of planning they’ve done. My survey shows that 79 percent of the happy group is comfortable with the amount of time they’ve spent planning for their future. Conversely, 87 percent of the unhappy group feels they haven’t done enough to plan.
Lots of thoughts on this one:
- I’m not surprised that so many don’t plan for one of the biggest financial moves of their lives. Americans never disappoint me when presented the opportunity to underwhelm with financial statistics.
- We planned for our retirement (of course), the main part of which was developing a retirement budget for the first two years. Turns out we made more and spent less than I estimated, but the budgets did give us confidence that we had more than enough to take the leap.
- One thing I didn’t think much about was what I’d do with my time in retirement. I “knew” I had enough interests to keep me busy and that I am a disciplined person, so I figured it would work out — and it has. That said, I think most people need to consider the non-financial issues associated with retirement when they are in the planning stage.
- “They spend more time with their financial planners.” Haha! I’m wondering if this was impacted by the fact that the survey was of the author’s clients (not sure that’s the case, just wondering.) We, of course, spent zero time with our planner working on retirement. Why would we need to?
- We were certainly comfortable with the amount of planning we did. I had been seriously considering retirement for two years before we actually made the leap, so a lot of thought had gone into it.
Some questions: Why didn’t the unhappy group plan more? Is it that they felt they planned enough and once they retired realized they hadn’t? Or did they just blow off planning and now their retirement stinks?
7. Make sure your Rich Ratio is over 1.
This one puzzles me a bit:
The Rich Ratio is simply the amount of money you have in relation to the amount of money you need.
Take monthly income you will have coming in, including what your nest egg should produce, and divide it by what you expect to spend each month to live the retirement you want:
Have / Need = Rich Ratio
Any ratio over 1 is fantastic. Any ratio below that [and] you have some work to do.
I think the name is wrong. Since when did we begin to define “rich” as “having just enough income to cover our spending”? The answer: never.
Changing the name to the “Retirement Readiness Ratio” or something similar would be more accurate. Basically at “1” all it means is that you have enough to cover your retirement needs (i.e. you are ready financially to retire.) That’s it.
If you want to add levels, you could have “retirement readiness” be 1 to 1.25, “retirement surplus” be 1.25 to 1.5, and “rich retirement” being 1.51 or higher. The names are corny, I know, but you get the idea. To me you are rich when you have more than enough to cover spending, not just barely enough to cover it.
I wouldn’t call a ratio of 1.01 “fantastic”.
This was not one of my favorite parts of the book.
8. Check your pessimism at the door.
More thoughts from the book:
Pessimism can be costly, and fear is almost always financially devastating. Don’t let pessimism lock you out of a stock market and economy, that, despite the road bumps, will flourish over time.
I think pessimism is a killer while preparing for retirement as much as it is in retirement.
Here they use it as crippling the retiree with their investments, and certainly the same thing can happen before you retire.
Case in point: my dad took all his money out of stocks in 2013 or so because he felt the market was due for a correction (we’d just had a massive one in 2008, so this was fresh in his mind). Needless to say, his portfolio would be twice as big today if he had left the money in.
Bonus Number 9
Here’s another finding that wasn’t on the book’s list but was contained in another section. I felt it was worth including here.
9. Don’t limit your core pursuits to solitary activities.
Here’s a quote from the book:
The unhappiest retirees almost always reported the same core pursuit in the number one place: reading. There’s nothing wrong with reading, of course, but it’s a very solitary activity.
These unhappy retirees like spending time with their grandchildren, which the fundamental retirees would applaud, but they also enjoy fishing, hunting, and writing. What do all of these pursuits have in common? You guessed it: they are often solitary endeavors.
We talked about the need for both core pursuits as well as social activity in my happiness in retirement post.
We noted that unhappy retirees have far fewer core pursuits than happy retirees.
We also noted that even if they had enough core pursuits, unless some of them included social aspects, the retirees were unhappy. That’s what the point above is saying.
Personally, I love reading. I read while walking (listening to books or podcasts), read at my computer (mostly financial articles, but some sports and news too — not too much news or I get depressed), and read at my desk/in the living room chair (mostly books on money.) Yes, this is a solitary activity, but I do have enough social ones to make up for it.
Same thing goes for writing.
I don’t fish so I can’t comment on that. As for hunting, my dad and his brothers were active hunters in Iowa (quail and pheasant mostly) and I went a few times when I got older. I always considered hunting a social activity since there were lots of people involved and a strong camaraderie among us. Maybe we hunted differently than others?
That’s the list of things to avoid if you want a happy retirement. What do you think of these? See any that are a problem (or could be a problem) for you?
Backpack Finance says
Hey there, thanks for sharing. I deeply resonate with avoiding solitary activities. Even though I consider myself an introvert, I can’t imagine being alone all day. It’s just plain depressing. For sure this is something I will have to work on very hard before ER.
Cheers!
Xrayvsn says
The loss of social interactions at work when you retire can not be emphasized enough.
Unless you replace them with other activities that keep you socially active you can find yourself withdrawing and start spiraling down.
I agree that having money coming in just meeting your expenses would not make me feel rich but rather worried that I am cutting it too close.
Dave says
One more: Don’t wait too long. I know too many retirees whose pursuits were interrupted suddenly (stroke, early dementia, cancer, mom broke hip – no more travel) or worse (heart attack death a 3 years before pension).
Recommend retiring while life is good. No guarantees how long it will last.
Steveark says
I couldn’t agree more. Especially on the no spend ones. We’ve got the money so why not? I’m a little bit of a car guy but I have found I can get older Asian sports cars for under $10,000 that will out run and out handle BMW’s as long as you don’t mind having a lot of mileage on your ride. My current one cost $7k and has 200,000 miles on it. But it looks great and drives like new. It hasn’t failed me once in the year I’ve driven it putting another 25,000 miles on it. I feel like you can still have an elite driving experience on a Corolla budget if you choose carefully. As for fishing, my wife and I do that together often as a favorite hobby. In fact we caught a lot of bass yesterday and had so much fun together! And today we’ll have fresh fish to dine on, yum.
The Wealthy Weasle says
Lot’s of good points in this one that are relevant to my planning for retirement in a few short years.
1. BMW factor. I worked as a mechanic long ago, mostly German cars and motorcycles. I noticed the same general malaise amongst BMW owners. As my later exec career developed, I noticed it more and more, especially amongst high performing sales execs that were spending what I perceived as crazy amounts on BMW 7 and 8 series leases.
I have pretty much stuck with Japanese higher-end luxury cars, mostly bought used with releatively low miles, 3 to 4 years old. Usually for less than 60% of new price. Current SUV for me (2002 vintage) has about 300,000 miles on it, runs and drives like new. Total cost of ownership, including gas, insurance, maintenance and depreciation since purchase has been about $0.42 per mile for Toytota’s best. Bought a later model of the same vehicle for wife; it now has about 60,000 miles on it. Both should last through our retirement needs with relatively low miles driven per year.
2. Relocate prior to retirement. I have been blessed with a job that I really enjoy, that also let’s me work from where-ever I want, as long as I can get to an airport relatively quickly. We took advantage of this and moved to AZ. We have been setting up our new home with the idea of staying in it as long as possible. (1 story, low maintenance landscape, plenty of room for guests or live-in care, decent weather climate, decent tax climate, reasonable access to mountains, decent access to first rate health care, organic food, etc.) One of the happiest days in my life was selling my snow-blower and seeing my New England house in the rear-view mirror for the last-time!
I am not ready to pull the trigger on retirement, but it is nice to already be where we want to be when that happens. The move was expensive, especially when tailoring the new house to our tastes is considered (maybe $250k, all-in). However, I think it will help with the next point to already be established in an area, in that we can begin to form some of the social bonds now, instead of relocating into a new area and trying to jump start them in retirement. The good news here, financially, is that the new house has appreciated about enough to cover the move cost, while the old house has stayed flat in New England. Not a huge hit to overall net worth.
3. Social vs. Solitary activities. This is one that we need to consider more. Many of my favorite activities are solitary, but there are facets that can also involve groups (i.e. shooting clubs vs. individual range time, group MC rides vs. solo trips, etc.) I think I will make more of an effort to join a few of the interst groups that align with my hobbies. Meetup.com has been a great source of like minded people to get together with.
4. Planning. I think we have been “over planning” (at least I have, wife, not-so-much) for the past 20 years. We are at a point that is about at “retirement parity” or a little better when you look at the post’s expense to income ratio. The Monte Carlo simulations on some of the online calculators all say we are fine or better than fine.
However, I started a new job a little less than two years ago. It has me learning things relevant to the modern economy while I earn the most I have ever made, interacting with people I mostly like. It is an extreem contrast to the last role I held, where I was about ready to pull the retirement trigger to get out of an unpleasant role. No reason to leave the new gig, just yet. Nice to know I could, though. No delusions about work relationships carrying over into retirement, but it is fun now.
5. Not much mention of debt vs. no-debt in corollation to happines. However, I think “no-debt” has to have a positive influence on happiness going into retirement. No mortgage will be a huge factor in being able to breath easier. We are not there, yet, but mortgage balance is less than 30% of home value, and could be paid off any-time. Will likely do that at or before retirement.
Overall, ESI, one of your best posts! It is causing me to think…
JayCeezy says
“He’s talking about giving — both time AND money.
If you do these, you tend to be happier. If you don’t do them, you aren’t.”
+1 Totally valid. In my own case, my ‘pushback’ is on those who TELL ME what I ‘should do.’ The attempt to ‘shame’ someone into behavior is ineffective, and also tells me the person believes their opinion and values supersede mine. Nah.
Back to the point in ESI’s post, ‘giving time and money’ ties in very nicely with a book he recently covered, Scott Adams’ “How To Fail…” Adams boils down contentment/happiness to this: “be useful.”
And for those interested in the subject of ‘happiness’, another excellent book I found applicable is “Happiness Is A Serious Problem” by Dennis Prager. I love to read, and get most of my ideas for books from blogs and comments. Maybe like-minded readers will enjoy this book.
Phillip says
My hunch is that Mr. ESI isn’t the typical survey respondent, which I think explains many of the differences between the author’s thoughts (monetary related) and ESI’s personal experiences. I suspect that if the survey had a large sample size of people with $4M net worth, things would align much more to ESI’s thinking when there is a deviation.
indio says
Saw this article recently about the psychology involved in being a luxury car owner.
https://www.fastcompany.com/90457589/science-proves-it-men-who-own-mercedes-and-bmws-are-more-likely-to-be-assholes
It seems to me that #2 and 3 tie into this mentality as well.
Bob says
How do you deal with solitary pursuits when you retire early if everyone else your age is working in the day? Even more so if you’re in a society that has a lot of male breadwinners, and some stay at home moms?
Working just for social interaction is a bit pointless as it isn’t real friendships, and also as a FI person, I have little in common with people in huge debt, stress, etc that typifies the corporate world of work. Any thoughts for the young, or should we still be working?
ESI says
I’d suggest making friends according to interest, not age.
For example, I have a lot of friends from playing pickleball, though most are older than I am.
If you find a large enough group, you’ll discover some your age (several retired military and public service workers my age play as well).
yslwl says
Agree completely with ESI. As a single person, I participate in many activities that appeal to my interest in art, cooking, reading, skiing, biking and hiking. Meetup.com is a great place to find groups that enjoy doing the same interests.
Jay says
I want more explanation of rich ratio. Does income just include interest, dividends, rental income, social security type income? Specifically is selling an asset like a stock or bond to create cash to live on … NOT considered income?
In any case, much resonates with me. I seem to be ready for retirement financially, am 58 and have a heart problem, I hope to improve. So I don’t want to harm myself by working too long, but tough to cut the cord still. Thanks
Benny Squirrel @ The Wine Squirrels says
I worry also about the loss of most social interactions after retirement. But also agree that working for social interaction is not a good approach either. Consciously working on your social network, prior to retirement, is critical to avoiding this, but it will be work. Something that we have to put dedicated effort into.
Also not waiting too long is a good add on. The fear of the unknown will keep many of us trading time for money in ways that don’t make us happy far too long. A sound, logic and fact based approach, that utilizes the FI principles is the key to overcoming that fear. Know that your early retirement has been thought out, planned for and contingencies are in place (including the fact that you are still a potentially productive human who can still go out and earn) and make your plan to move on!
Chris says
I love reading your blog, but thought the comment that your wife totaled 2 cars in point one was unkind. Did you really need to put that out there in public? It didn’t really add to what you were trying to say, IMO. I don’t know your relationship with her, but it would upset me if my husband made a comment like that in a public forum. This comment, to me, was very out of character for you, and I was surprised to read it. ( I have been reading your blog for several years now, but rarely comment). Family loyalties are important.
Vigaro says
I don’t know, in some ways retirement, social isolation (or distancing), global shutdowns, recessions, pandemics and the like, post-divorce or just daily affairs in a regular world actually come a little easier to introverts, assuming you’re reasonably prepared. This despite a shrieking world of blowhard extroverts, just another common hazard to be managed. All issues are human issues; hell is other people. Choose your loved ones carefully, find your own way and most of it will be fine; absorb natural beauty, create your own idea of entertainment, culture only as you wish, block out huge chunks of nonsense, be skeptical of common sense, presumptions of normalcy according to others, etc. Working life and sometimes just being alive, witnessing . . . that’s the hard part (lol).
Vigaro says
Nevertheless, I look forward to hanging out with local old-timers at Mickey D’s, a better game than the senior center from the looks of it. Just parking their caboose, jawboning as they sip on bottomless $1 coffees, nothing sacred, everything worth a light chuckle. That’s the spirit . . . THOSE guys are hilarious. No females, though; I suppose they micro-manage the senior center.
Vigaro says
As for BMW’s, talk about an old crush . . . then again, haven’t seen a really cool new one in a couple of decades, just not down with many modern designs at all. Same with Mercedes and others–excepting all those bitchin’ neo-muscle cars, NICE! If forced to purchase new or something, just one midnight blue Camaro would do. Never liked them at all until about 2018, and they’re pretty cheap compared to all the rest. One and done, then, though I shudder to cheat on my beloved old SUV, best gal for almost twenty years. No car payment! Much sexier.