Everybody wants to retire with gobs of money, right? Well, maybe they shouldn't, says attorney and author Ralph Warner. While interviewing contented retirees, ranging in age from their 60s to 80s, he found that few considered wealth to be a priority. In his book,
Get a Life: You Don't Need a Million to Retire Well
, Warner delves into the issues that rank foremost among retirees' concerns. Below he talks about what works -- for both your finances and your social life -- and how you can start preparing for a happy retirement long before you leave the workplace.
For the people you interviewed, how relevant was money to their quality of life?
Having a moderate or modest amount of money, enough that you don't need to worry about it, tended to be on everybody's list of concerns. But I was surprised that in many cases, people in the older cohort -- say 76 or up -- took pride in not spending much money.
Some statistics show that as a rude marker, wealthy people do better in retirement than poor people. But I don't think that has as much to do with wealth or poverty as it has to do with habits. The biggest correlation is with education, for lots of obvious reasons.
So, leaving aside finances for the moment, what are some of those habits that help people in retirement?
Almost without exception among people I talked to, the first thing they said was being interested and excited about something in life. They would put it in different ways, but it was basically getting up in the morning and having the phone ring, getting up and wanting to do something.
What else did retirees recommend?
Certainly second on the list usually would be health stuff. You can invest in a lot of things during your life. One of them is money, but you can overinvest in money. Being 80 and unhappy with diabetes or high blood pressure and owning all the right mutual funds is not going to be as fulfilling as being 80, healthy and happy with half that much money. Most of the successful older people I interviewed were what I'd call older athletes; they walk or swim or jog every day.
Also, people felt it was important to have younger friends. Think about your own life for a moment, and think about how you would feel if a close friend died. Depressed, right? That's not going to change when you're 75. So reaching out, staying involved in activities with friends who are younger than you is good, if for no other reason that they are less likely to die on you.
But it turns out that that's one of the hardest things to do. It's hard to believe it when you are in the early or middle part of your life, but older people over and over again get shy. America is not kind to older people. When you're out of the workplace, it's very easy to feel like you're not worth much and people aren't really interested in you. If you're a little shy in the first place, learning how to make new friends is a real art. Isolation is a key word here.
So how do you avoid that?
If you wait until 65, the traditional retirement marker, to start learning to make friends and improve your health, it's probably not going to work. That isn't to say it's not a good idea to try, but habits are lifetime habits. One strategy is get involved with nonprofit activities early. Don't assume they're waiting with open arms for you to arrive, especially if you weren't involved before.
Education is usually beneficial. Another reason learning is so great is that there are all these studies on aging showing that older brains can continue to grow, the little dendrites and axons in there, but brains that are not stimulated will continue to shrink. And if you're in classes, of course, you meet people.
In your interviews, what did people tell you about their family relationships?
With family networks, what you invested in your 40s or 50s when you were raising your kids had very much to do with what you got back later. Especially for men, making choices so that you can be close to your family and have a real relationship with them has huge dividends later on. People come to see you, the phone rings, and they want to live near you.
I think if you talk to anybody in their 80s and asked: Is it better to have worked 60 hours a week, invest that extra money and have it compound for 40 years, so you end up with an extra couple hundred thousand dollars? Or is it better to have spent the time coaching your daughter's soccer team? I think everybody would choose the time with their family.
That said, most people worry about having enough money when they retire. You mention a couple of sources of money that tend to get overlooked.
Most financial magazines love to say, right after they make the point that Social Security might not be there, that you can't count on inheritances in retirement. But the best estimates are that something like $20 trillion is going to be passed on to the baby boomers over the next 20 years. It's nuts not to look at your family -- and not to necessarily change your life because, hey, you're going to inherit a million dollars -- but to take into consideration how likely an inheritance might be. And if there's some reason why you might not get one, disregard it.
Another factor that's often overlooked is houses. People may have a house they paid $30,000 or $50,000 or $100,000 for and it's now worth many times that. In the Northeast or California, it could be worth 10 times that. That house becomes a big piggy bank people can draw on if they choose to. Millions of people vote with their feet. They don't choose to stay living in Scarsdale (N.Y.) where the school taxes are $20,000 a year; they sell and buy a condo in a warm place. Millions of older people choose to live in a small place without a big yard.
But the biggest source of outside income for people over 65 is continuing to work. One strategy increasingly is to choose to work part time. You can make friends and stay active doing it.
Last question: With the tax deadline coming up, any advice on investing for retirement?
You should max out tax-advantaged retirement plans, especially if your employer is contributing to it. Sensible savings, so that you can fill the gap
between Social Security and your income needs, is just part of a good plan.
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