Money may not buy love, but can it buy happiness? According to a study by Dr. Michael Finke, Director of Personal Financial Planning at Texas Tech University, yes, it can! Dr. Finke has put together a comprehensive study on Retirement Satisfaction. Part of this study involved dividing his data group into people with the lowest net worth in retirement to the highest, and charted this metric against each group’s Retirement Satisfaction. The results are summarized in the chart below.
As might be expected, as wealth grows, so does Retirement Satisfaction. Surprisingly, the wealthiest group (top 10 percent) does NOT have the highest level of Retirement Satisfaction, the next-to-highest group does. Why? Because those in the highest docile felt the burden of managing their wealth more than any other group, decreasing their level of satisfaction.
How long are you going to live? Who knows, but probably longer than you think. Data suggests that average longevity, globally, has been on the increase since 1950, with the probability of living from age 80 years to 90 years increasing about 200% for women and about 100% for men since 1950. In fact, the fastest growing segment of our society is people age 85 or older. We are also getting healthier, with the percentage of folks in the 79-88 age bracket that are able to walk at least a half mile increasing from about 70% in 1978 to almost 85% currently.
The outcome of these shifting demographics is a healthier, longer retirement. Researchers have found that, along with higher net worth, good health is an extremely important component of Retirement Satisfaction, if not an overriding one. As an individual’s health declines below the rating of “Excellent”, Retirement Satisfaction decreases rapidly, as the following chart depicts.
Another area of Dr. Finke’s study concerns relationships with family and friends. Not surprisingly, the importance of relationships, both positive and negative, with your spouse and children weigh most heavily on your degree of happiness. Dr. Finke also found that while satisfaction was higher with those in the study that had children, their degree of satisfaction turned markedly negative if they lived within a 10-mile radius of their adult children.
If Dr. Finke surveyed the children of the study participants, he might find a similar result, as the old Dutch proverb says: “A happy new home is one where you can’t see the smoke from your parents’ chimney”.
Although the following metric wasn’t actually included in Dr. Finke’s study, the chart below depicts our goal, which is to focus on our clients’ well-being and satisfaction.