RETIREMENT AND HAPPINESS

By Emily Brandon

Most people focus on saving as much money as possible before they retire, assuming that more money leads to increased happiness. And while studies show it is true that income and wealth do increase retirement satisfaction, they do so less than you might think. "Dollars are nice, but they don't have a large marginal impact," says Keith Bender, associate professor of economics at the University of Wisconsin-Milwaukee. He found that a $10,000 increase in pension income per year increases the probability that people are very satisfied with their retirement by only 1 percentage point.

Retirees with defined-benefit plans, like company pensions, or those with both defined-benefit plans and defined-contribution plans, like 401(k)'s, are generally happier than those with only defined-contribution plans.

But here are some other things that will help make your retirement a happy one:

TAKE CARE OF YOUR HEALTH. Your physical well-being is the single most important factor in retirement happiness. Quite simply, the better your health is, the happier you are. If you or a relative is sick, every other concern takes a back seat. Conversely, better health allows for more fulfilling participation in all the activities that make you happy. Eating healthful foods, exercising regularly, and getting routine checkups throughout your life will increase your well-being during retirement.

John Trojanowski, a physician and Ph.D. who directs the Institute on Aging at the University of Pennsylvania, recommends exercising mentally and physically, socializing with friends and family, maintaining a low cholesterol level and low blood pressure, and eating a heart-healthy diet rich in antioxidants.

PICK YOUR RETIREMENT DATE. People who choose when they retire rather than being forced to quit because of illness or a layoff enter retirement much happier, and the effects continue for many years. Employees forced to retire are significantly less happy. This gap persists for up to 10 years after retirement, Bender's research shows.

However, if you are laid off, you can regain control of your happiness. "Don't sit at home and mope," advises Bender. "Go back out and get a job. There's something about the nature of work that can increase your enjoyment in retirement." Being productive can help re-establish your autonomy and again let you set your own retirement date.

PLAN WELL AHEAD. The time to be thinking about retirement is well before the date arrives. "So key to post-retirement happiness is to plan earlier in one's life cycle," says Debra Dwyer, assistant professor of economics at SUNY-Stony Brook. "Even if you don't have a lot, you can plan your preferences and needs and invest the resources you have efficiently." Figure out what you might like to do when you retire and where you might want to live. Try different hobbies and learn about other types of work. Retirees who work part time or volunteer report feeling happier. Also, if you are married, research shows that you will probably be happier if you and your spouse retire at about the same time.

You may not have total control over when or how you retire. But with planning, you will be better prepared when the time comes. And that is likely to mean a happier retirement.

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