Retirement Happiness Article

[audreyh1]

Good point, although all of these can be run "hands-off" if necessary (property managers, triple net leases, REITs, silent partnership in business ventures, etc). Active participation is usually by choice.

And if that were the case, I expect there wouldn't be additional stress due to "hands off" ownership of real estate and businesses.

 

[ejman]

“People have a difficult time spending money out of wealth,” he said. “It’s far easier for them to spend money that comes in the form of a flow, of income.” Surveys show that retirees who annuitize a portion of their wealth tend to be happier than those who don’t."

I guess this why I like the approach of spending all income from my taxable accounts. I tend to think of that income as paychecks and have no trouble spending that. On the rare occasions when I have to actually sell something it feels like I'm eating into my seed corn and I resent it. I'm fully aware of the intellectual advantages of total return investing but it just doesn't work for me emotionally.

As to the advice on annuitization- like many here I don't like giving up control, I don't trust insurance companies to survive a really, really serious downturn and I don''t like the paltry current payout. Might be something I would consider in my 80's but not now at 67.

 

[Danmar]

“People have a difficult time spending money out of wealth,” he said. “It’s far easier for them to spend money that comes in the form of a flow, of income.” Surveys show that retirees who annuitize a portion of their wealth tend to be happier than those who don’t."

I guess this why I like the approach of spending all income from my taxable accounts. I tend to think of that income as paychecks and have no trouble spending that. On the rare occasions when I have to actually sell something it feels like I'm eating into my seed corn and I resent it. I'm fully aware of the intellectual advantages of total return investing but it just doesn't work for me emotionally.

Likewise. I'm 66, retired 10 years. Portfolio has grown a lot since retirement so now Im systematically selling small amounts of stock each quarter. My divs will still grow by about 6-7% thus outpacing inflation. If I don't do this the kid will certainly Inherit too much.

I get a "kick"out of these articles. I can certainly say that I would be much less happy if my net worth was reduced to $3.5 million. Everybody has a pretty individual happy function. Why would anyone with half a brain rely on someone else to tell them if/when/how they should be happy?

 

[audreyh1]

“People have a difficult time spending money out of wealth,” he said. “It’s far easier for them to spend money that comes in the form of a flow, of income.” Surveys show that retirees who annuitize a portion of their wealth tend to be happier than those who don’t."

I guess this why I like the approach of spending all income from my taxable accounts. I tend to think of that income as paychecks and have no trouble spending that. On the rare occasions when I have to actually sell something it feels like I'm eating into my seed corn and I resent it. I'm fully aware of the intellectual advantages of total return investing but it just doesn't work for me emotionally.

As to the advice on annuitization- like many here I don't like giving up control, I don't trust insurance companies to survive a really, really serious downturn and I don''t like the paltry current payout. Might be something I would consider in my 80's but not now at 67.

I don't have trouble spending from accounts, although it did take some getting used to. But now that annual withdrawal is routine.

 

[YVRRocketSurgery]

I get a "kick"out of these articles. I can certainly say that I would be much less happy if my net worth was reduced to $3.5 million. Everybody has a pretty individual happy function. Why would anyone with half a brain rely on someone else to tell them if/when/how they should be happy?

I don't necessarily read the article as telling if/when/how to be happy.
For me it's about gathering ideas and viewpoints which I can review and see if applicable to my situation.

 

[gerntz]

OK - I don't get this. Why would managing say $5M, $8M, or $10M be any more stressful than $3.5M? I just don't see the difference. I think this is someone's opinion (imagination).

I'll hazard that for most people it becomes more complex vs. doing a Bogle/index thing. And what if those assets are being thrown off from a business you own?


Plus, dropping 1% is $100K at $10M but $35K at $3.5M. Me, losing a $100K would bother me more than losing $35K regardless of what I have.

 

[kcowan]

I think people become used to a certain lifestyle and they can gradually change up or down. Sudden shocks require more dramatic change. We have been at it 14 years now and our lifestyle has adjusted upwards.
- more exercise
- more enjoyment of things we never had time for before
- fine dining more often
- cooking
- charitable activities
- less driving
- more outsourcing

 

[audreyh1]

I'll hazard that for most people it becomes more complex vs. doing a Bogle/index thing. And what if those assets are being thrown off from a business you own?

Plus, dropping 1% is $100K at $10M but $35K at $3.5M. Me, losing a $100K would bother me more than losing $35K regardless of what I have.

Why do you think someone who's portfolio balance has grown over the years would switch out of Bogle/Index into more complicated investments just because their portfolio size is larger? I hazard that most investors stay the course. And why throw businesses into it? Someone can have that size of assets without owning a business after retiring.

You might think $100K drop would bother you. But a 1% drop means you still have $9.9M left! A 1% drop from $3.5M means you now have $3.465M left. How is someone with $9.9M left going to feel worse than someone with $3.465M left?

Investments scale easily. Portfolio fluctuations may increase in absolute terms, but compared to the huge amount remaining you have in spite of these fluctuations, you have a much larger cushion to fall back on.

 

[Chuckanut]

• Retirement happiness does go up with the amount of savings accumulated but only to a point of around $3.5M USD of investable assets. Beyond that, happiness decreases likely due to the stress of managing that wealth.

I'm glad to see that I can be a LOT happier, I mean a very lot happier than I am now. What an opportunity!

 

[Fedup]

Likewise. I'm 66, retired 10 years. Portfolio has grown a lot since retirement so now Im systematically selling small amounts of stock each quarter. My divs will still grow by about 6-7% thus outpacing inflation. If I don't do this the kid will certainly Inherit too much.

I get a "kick"out of these articles. I can certainly say that I would be much less happy if my net worth was reduced to $3.5 million. Everybody has a pretty individual happy function. Why would anyone with half a brain rely on someone else to tell them if/when/how they should be happy?

I reread the first post. It says investable assets, not net worth.

 

[socca]

IMO happiness is a useless concept. I prefer the term health broken down along four axes:
(1) physical
(2) mental / intellectual
(3) mental / emotional
(4) financial

An attempt to compare the health of folks with large portfolios with the health of folks with very large portfolios isn't very interesting, IMO.

 

[Souschef]

Having my income come from places other than my investments allows me to stay heavily invested in equities and not worry about market fluctuations.

I agree-we get income from SS and 2 small pensions that amounts to $70K a year. It is a tremendous cushion against market swings.

 

[Bestwifeever]

I'm thinking larger portfolios are managed for taxes including future estate taxes, among other things. There could be a lot more moving parts to stay on top of than our Vanguard five-fund approach to our just over $1MM stash.

 

[audreyh1]

I'm thinking larger portfolios are managed for taxes including future estate taxes, among other things. There could be a lot more moving parts to stay on top of than our Vanguard five-fund approach to our just over $1MM stash.

But these issues don't come up until >$11M for a couple (US), way higher than the $3.5M "happiness peak" the author found in his research. Couples with $5M, $8M, even $10M can still happily use the Vanguard five-fund approach.

And seriously, with those higher funds, you can hire people to take care of the hassle aspects if you like. You don't have to figure it all in your own.

 

[Danmar]

I reread the first post. It says investable assets, not net worth.

Sorry, same thing if investable assets dropped to $3.5 million.

 

[Huston55]

Follow The Money

At the risk of diverting this thread's focus from $$$, the article also emphasized a harmonious relationship.

Our personal experience, 3 yrs into FIRE, has been that the relationship takes at least as much work as the financial bit; sometimes more. DW & I do have a good relationship and, we even attended a pre-retirement workshop which focused mostly on the non-financial aspects of FIRE; many good tools from that workshop. But, we also have different interests so, we find it takes some effort align our activities & calendars.

Esposa feliz, vida feliz!

 

[Bestwifeever]

But these issues don't come up until >$11M for a couple (US), way higher than the $3.5M "happiness peak" the author found in his research. Couples with $5M, $8M, even $10M can still happily use the Vanguard five-fund approach.

And seriously, with those higher funds, you can hire people to take care of the hassle aspects if you like. You don't have to figure it all in your own.

True, but I think you have to manage how money is inherited to spouses to shield the total $11M exemption from estate taxes (the person with more than $3.5M may see that grow to above the current $5.49M limit), which is a hassle in itself. And if I have to hire someone to take care of the hassle aspects, that adds a lot of stress right there--figuring out who to hire, overseeing what they are doing, trusting that they are not a Bernie Madoff....

Obviously you and I have different takes on this, but I can see why people with more than $3.5M report less happiness than people below that level. And it enables me to say the comforting to us who don't see ourselves as rich, but usually not at all true cliche, "Sure they're rich, but are they happy?"

 

[Dash man]

I don't think anyone can put a dollar figure on happiness. I've seen poor people with nothing that I envy because of the love in their family and the support they give each other. I've seen rich that I don't want to be around because they're so miserable. And you can switch that around.

 

[Danmar]

I don't think anyone can put a dollar figure on happiness. I've seen poor people with nothing that I envy because of the love in their family and the support they give each other. I've seen rich that I don't want to be around because they're so miserable. And you can switch that around.

+1. Happiness is a very personal thing. Wealth, health, relationships, spirituality, personality, attitude, and more all come into play. That's why I find articles about happiness can only be useful in the abstract. Trying to make them proscriptive seems like a mistake. At least to me.

 

[audreyh1]

True, but I think you have to manage how money is inherited to spouses to shield the total $11M exemption from estate taxes (the person with more than $3.5M may see that grow to above the current $5.49M limit), which is a hassle in itself. And if I have to hire someone to take care of the hassle aspects, that adds a lot of stress right there--figuring out who to hire, overseeing what they are doing, trusting that they are not a Bernie Madoff....

Obviously you and I have different takes on this, but I can see why people with more than $3.5M report less happiness than people below that level. And it enables me to say the comforting to us who don't see ourselves as rich, but usually not at all true cliche, "Sure they're rich, but are they happy?"

I'm not arguing that folks with more money might not have more stress.

I was arguing with the theory that was due to managing a larger portfolio. I think there are other good possible explanations, and I gave one: more funds encouraging lifestyle creep which adds complexity. But an individual/couple can choose to avoid that complexity, it's not a life sentence just because you're "rich".

I just don't buy it that a couple with $5M or $7M is necessarily invested any different than a couple with $3.5M. Their assets finally exceed $3.5M and they say - OMG we've got to change everything about how we're investing!!! More likely they smile and keep on investing the same way. They might start to spend a bit more.

 

[unclemick]

Time is our most precious commodity.

Portfolio and 'STUFF' in the late George Carlin sense. I put my portfolio on full auto 2006 ala a Vanguard Target Retirement 2015 and generally went to sleep on my 'few good stocks' for play purposes. The widow I married almost 4 years ago came with two pensions, SS, 4 taxable funds, an IRA, a 401k, a variable annuity and a farm jointly owned with her Brother now deceased.

So we must carve out time as time goes by to UN-STUFF and consolidate. We prefer to stay in the wing flapping romance zone.

Discipline sucks.

heh heh heh - One more thing. Success means I made it over 70 1/2 and I 'love' to whine about my Pals at the IRS when the RMD tax calculation arrives each year. . 2017 will 40 years of time in the Market for my original Bogle's Folly index fund purchase. Ya gotta love componding.

 

[ejman]

Congratulations Unclemick! Let's see 40 years of componding of an initial $3,000 investment in 1977 in Vanguards Index 500 fund would have grown to about $200,880 as of 12/31/16 assuming no money taken out or additional investments put in. The magic of componding indeed! Compounding works out real well too

 

[Souschef]

Congratulations Unclemick! Let's see 40 years of componding of an initial $3,000 investment in 1977 in Vanguards Index 500 fund would have grown to about $200,880 as of 12/31/16 assuming no money taken out or additional investments put in. The magic of compounding indeed! Compounding works out real well too

I doesn't have to even be 40 years. I rolled over my 401k in2009, and it has grown at a compounded rate of 17%

 

[Scuba]

OK - I don't get this. Why would managing say $5M, $8M, or $10M be any more stressful than $3.5M? I just don't see the difference. I think this is someone's opinion (imagination).

In fact, as our retirement assets have grown to exceed what we need for income and possible emergencies, the stress of managing investments has dropped slightly. If we have another nasty bear, the absolute impact should not be as bad because the portfolio grew before the hit.

Money management is something that scales very easily - you can keep using the same techniques as the pile grows. And guess what - you have to become a "wealth manager" in retirement whether or not you have "way more than enough" as long as you have investments you want to make last.

I suspect the major stress lowering comes when all income needs are covered by guaranteed income streams (pension/annuity/social security) AND you have guaranteed affordable health care (retiree healthcare/Medicare with Medigap covered). Then managing any additional investments is not so critical. But this has nothing to do with the size of any additional investments.

Now if someone argued that lifestyle creep tended to make life more complex, and thus a bit more stressful, once folks' net worth exceeded some magic number, I would buy that argument. The solution is easy - be careful about your lifestyle creep - make sure the additional complexity is adding to your happiness, not subtracting from it. Lifestyle creep can definitely happen unconsciously (just like while working), so someone has to be aware to manage their lifestyle to reduce stress/increase happiness.

"OMG, we have to fly first class again?!?! I'm hating this!!!!"

+1
Well said!