Yahoo Finance Retirement: Your Ticket to a Happier, Healthier Life
The news seems to be filled with doom and gloom predictions about what baby boomers will face in retirement. Study after study says those who are heading into their final working years have skimpy savings which will, undoubtedly, lead to unsatisfying golden years.
However, a study from researchers at George Mason University and Utah State University offers hope for boomers who are worried they are facing a dismal retirement. Using data from the University of Michigan Health and Retirement Study, researchers discovered retiring is associated with not only a marked increase in happiness but also improved health.
"In some ways, it is surprising," says Sita Slavov, a public policy professor at George Mason University and co-author of the 2014 report. "You hear anecdotes of people who end up hating retirement. But ... it's also important to keep in mind that we are looking at the effect of retirement for the average person."
Happiness Is Immediate, Health Takes a While
One of the chief takeaways of Slavov's research is that people report an immediate uptick in happiness after retirement. While other research has recorded the same phenomenon, those studies typically indicate that happiness regressed and flattened over time. However, the George Mason and Utah State University research found the positive impact of retirement still remained four years after a person left the workforce.
Good health, on the other hand, took four years to arrive for retirees. "We suspect it's because health changes slowly," Slovav says. "It takes time for lifestyle changes to show up in the form of improved health."
Slovav adds that her team looked into whether health and happiness outcomes differed based on a person's type of work. However, there were no significant differences between those who reported having physically demanding jobs and other workers.
"One other interesting thing." Slovav says, "[is] we didn't find any evidence of long-term changes in health care utilization -- i.e. doctor visits and prescription drug use -- after retirement. So the improvements in health do not appear to be associated with increased health care costs."
A Happy Retirement Without Much Cash
While Slavov's findings seem to make a strong case for early retirement, doing so may feel like an unattainable dream for workers with limited savings. Fortunately, finance experts say you don't need a huge nest egg to have a happy retirement.
"Happiness is a positive cash flow," says Ken Moraif, founder and senior advisor of Dallas-based financial firm Money Matters. He argues that people with modest means who keep their expenses low can be happier than those who have more money coming in each month but spend it all. "You can have fancy cars and fancy houses, but you're going to be miserable all the time," he says of the latter group.
Feeling in control of the future may also be a factor that helps fuel retiree happiness, regardless of the size of a bank account. Andrew Meadows, vice president of brand + culture at Ubiquity Retirement + Savings and producer of the documentary "Broken Eggs," says he sees seniors getting creative with figuring out how to stay happy while also make ends meet after quitting their jobs.
"When I worked on 'Broken Eggs,' I found so many people living in their RVs in semi-permanent spots," he says. While living out of an RV saved money, Meadows says it wasn't a desperate move for the retirees he met. "It never seemed like [they] were forced out of their homes. It seems like people planned on that life in retirement."
Take Steps Now to Ensure Happiness Later
Although the research is promising, you shouldn't expect retirement to magically improve your life. Taking some small steps while working may help boost happiness and health once you exit the workforce.
Joe Heider, president of Cirrus Wealth Management in Cleveland, advocates for having a plan for retirement, and he doesn't mean a financial plan. "Many people think of retirement as a permanent vacation, but it can lead to boredom," he says.
To prevent long days spent doing nothing, Heider suggests pre-retirees create a plan for what they expect to do on a daily basis. A light daily schedule may be a welcome change at first, but as retirement progresses, staying engaged in a variety of activities can be key to happiness and healthiness.
Staying active is almost important. "You can have a positive cash flow, but if your health is poor, you're going to be unhappy," Moraif says. To that end, Moraif says his firm counsels clients to plan to live to 100 and take care of their bodies and bank accounts accordingly.
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