Financial and Emotional Planning Key to Happy Retirement

Many pre-retirees’ fears are unfounded, according to a MassMutual survey, “The Hopes, Fears and Reality of Retirement.”

Seven in 10 retirees say they are extremely or quite happy, and the experience of being retired turns out for many to be better than expected. Only about one-quarter of pre-retirees (24%) predicted a very positive experience in retirement, but almost half of actual retirees surveyed (41%) rated the retirement life as very positive.

“The happiest retirees provide us with a roadmap for success, which is especially instructive for those who are close to embarking on the journey,” says Elaine Sarsynski, executive vice president of MassMutual Retirement Services.

Preparing for retirement is less akin to running a race and more of a long-term commitment, Sarsynski tells PLANSPONSOR.

The study finds a strong correlation between happiness and planning. The retirees who express the highest levels of contentment are the ones who took concrete steps to order both their emotional and their financial lives at least five years before retirement.

Sarsynski stresses that even retirement plan participants who are not currently on track to achieve what they might think is a necessary accumulation can still take action. One key factor is calculating the best time to start Social Security, she notes, and about three-quarters of the survey’s respondents took this step in planning their financial future.

Ten to 15 years away from retirement is a time when people can still take stock and make substantial changes, Sarsynski notes. “They may have to work longer, downsize, look at their living situation and curb expenses,” she says. “They also have to examine expectations, but they have time to save more under ERISA [Employee Retirement Income Security Act] catch-up rules and enhance savings opportunities.” 

Taking concrete financial steps helped retirees to feel more financially secure in retirement, the study finds. Six in 10 (58%) retirees who were most satisfied with their situation worked with a financial adviser before retirement.

Jean Setzfand, vice president of financial security at AARP, encourages retirement plan participants to dig deeper and think of saving for retirement the way they think about exercise, and focus on more than simply accumulating assets. However, “It’s not just about the money,” she tells PLANSPONSOR, noting that the research points out necessary steps for planning people’s emotional as well as financial lives.

The survey’s results are a prescription, Setzfand says, for people to see what successful retirees have done, but it is critical for people to know first what they want and need in order to get the money right. “Planning your life first and understanding what you want out of retirement often propels people to make the money work for them,” she says.

While retirees in the study had household assets between $250,000 and $600,000, they tended to report that their satisfaction and happiness stemmed from spending time with family and grandchildren. “Retirees told us they cherish the newfound time they spend with their grandchildren,” Sarsynski notes.

According to the study, those who began focusing on their relationships—building stronger connections to their spouse or significant other, reaching out to old friends or making new friends, and pursing new interests—were more likely to enjoy retirement.

“MassMutual’s research on retirees and pre-retirees tells us that retirement can be and should be an extraordinarily happy time in our lives as long as we start to strengthen our emotional bonds and exercise financial planning discipline well before we plan to retire,” Sarsynski says.

The study was conducted by Greenwald & Associates, on behalf of MassMutual, examining pre-retirees' expectations and preparations for retirement, and how those plans and visions compare to the actual experiences that people have after they retire. The research was conducted in two parts: a survey of pre-retirees and retirees, and four focus groups (two of retirees only and two of pre-retirees only). The study surveyed 1,817 pre-retirees and retirees who were either one to 15 years into retirement or one to 15 years away from retirement. Respondents were required to be at least 40 years old, have at least $50,000 in savings and investments, and at least share a role in the household’s financial decision-making.

“The Hopes, Fears and Reality of Retirement” can be downloaded from MassMutual’s site.