June 14, 2016
More Retirees Get Less Satisfaction
In the late 1990s, six out of ten retirees found retirement “very satisfying.” Today, not even half do, according to a recent analysis of a long-term survey of older Americans.
The news isn’t all bad, since the “moderately satisfied” share rose – and moderately satisfied is probably a more realistic goal for most people anyway.
But the question of why so few people are very satisfied with their retirement state of mind is difficult to pin down. The survey analysis by the Employee Benefit Research Institute (EBRI) and past academic research provide some clues.
Health. It’s well-established that health and satisfaction are inextricably linked: healthier retirees are happier retirees, according to a 2005 study by the Center for Retirement Research, which supports this blog. One reason health is important is that retirees who are healthy can remain active – bridge, golf, travel, volunteering, whatever – which brings satisfaction.
But health cannot explain the decline in satisfaction, because rising longevity over the past three decades indicates that retirees are, to some extent, healthier than they once were.
Age. Research shows that older retirees – over age 70 – are happier than the youngest retirees, a finding that EBRI’s survey analysis confirms. One explanation could be that younger retirees often have left the labor force prematurely due to poor health, stress, or unemployment.
Shifting demographics might play a role in declining satisfaction over time. As the baby boom bulge enters the retirement pipeline, there are more younger retirees. And boomers are pulling down the average retirement age – the oldest boomers, born in 1946, were just 66 in 2012, the final year in EBRI’s satisfaction report.
Money. A third factor is a retiree’s economic well-being. Academic research does show that wealthier retirees are happier. EBRI said that 72 percent of retirees in the top quartile, ranked by asset levels, report that they are very satisfied, compared with only 33 percent in the lowest quartile.
The form that money takes could be important. Fewer retirees today have traditional pensions that pay a fixed monthly benefit. Social Security benefits are also replacing a declining share of American households’ pre-retirement earnings, due to the program’s rising full retirement age and the decline in spousal benefits received by married, working women. The 401(k) has replaced defined benefit pensions, shifting the financial risks – and the onerous to save – over to the typical worker.
There are no hard and fast rules for why some are satisfied with their retirement and others are dissatisfied. But this blog should give retirees and future retirees something to think about.
What are your thoughts about what makes retirees feel satisfied with their lives? Please share them in the comments section below.