Money doesn't guarantee happiness.
But, it sure can make retirement better according to Michael Finke, Chief Academic Officer, of The American College of Financial Services.
Retirement and happiness was the subject of one of the many panel discussions at TheStreet's Retirement, Taxes & Income Strategies Symposium, held recently in New York City. TheStreet's Robert Powell, editor of TheStreet's Retirement Daily spoke with Michael Finke, Chief Academic Officer, of The American College of Financial Services, who revealed three pillars to happiness in retirement.
Finke says the three pillars include money, friendship and health. Watch the video or read the transcript below for more.
Michael Finke: What's really surprising is that there seems to be three pillars of happiness in retirement. The first pillar is money, which is good news for those of us who are actually saving for retirement. So, money is a pillar.
The Key to Happiness in Retirement
Michael Finke: It shouldn't be any surprise that health is also a pillar of happiness. You can have all the money in the world, but if you're not healthy, you're not actually gonna enjoy your retirement. But most of my newest research is on social well-being. So the extent to which you have good relationships with your spouse, which by the way is one of the strongest predictors of happiness in retirement, so make sure you invest in that as much as you're investing in your 401(k).
Friendships and Happiness
The other predictors of happiness in retirement are friendships and the depth of friendships and the number of friendships that you have with other people, and even when we look at spending what we see is that social spending is what really makes people happy. Spending money on all sorts of other stuff that we think are gonna make us happy in retirement doesn't really make us that happy. It is social spending that makes us happy.
Retirees Should Invest In Their Health
Health is an investment too, and in fact before I got into finance I was a food consumption researcher, and it's the whole reason I got into finance was because I took a PhD class in investments because I wanted to understand investments theory, but my theory was that the same thing that motivated people to save money for retirement is the thing that motivated them to engage in healthy behaviors like eating better or exercising, and so that's an investment in your future as well.
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