19/01/2016 10:31 AM AEDT | Updated 15/07/2016 12:51 PM AEST

5 Tips For A Happy Retirement

All you ever hear about is the financial side of retirement. Save more, invest more, have more, but for what?

For you the answer might be financial independence, or to have a certain amount of money, or just to stop working so you can do something you like.

There are legions of experts out there to help you with the money side of things - your asset allocation, tax structure, how much you need to save, how much you can safely withdraw etc etc etc.

Understand, however, that there are a lot of people out there who seem to have more money than most, but are still not happy.

So, obviously, there's got to be more to it than that!

How can you avoid an unhappy retirement, and what can we learn from happy retirees?

In my experience, happy retirees have five things:

1. Health

Health trumps wealth. This is an obvious one, isn't it? The happiest retirees seem to be the healthiest. Whoever said "If you have your health, you have everything," was probably retired.

The message is that health will have a major impact on your satisfaction with life in retirement. A focus on health will allow you to enjoy life to the fullest extent in your later years. While you can't predict how healthy you will be in the future, you can help influence the outcome by making lifestyle choices that promote good health.

Happy retirees keep fit and healthy

2. Identity

Often, the first question we ask when we meet someone is, "So, what do you do?"

What will you say when you aren't tied to a job anymore?

In addition to providing income, many of our life anchors are directly linked to our job - accomplishment, self-worth, contribution, success. There are problems to be solved and new things to learn constantly. When you retire, they are gone from day one - you are left to fill the void yourself.

Happy retirees keep growing

3. Friends

Want to live longer? Get some friends.

If you are not heading to an office or getting out and about each day, you miss out on important social interaction that you need to keep good physical and emotional health and cognitive function.

Social interaction stops your brain going rusty.

Research also shows that people with strong social relationships increase their odds of survival over certain time periods by 50 percent. That's on par with quitting smoking, and nearly twice as beneficial as physical activity in terms of decreasing your odds of dying.

Happy retirees are not isolated. They stay socially active and maintain relationships.

4. Purpose

A lot of people moving into their retirement years are under the (false) impression that the money that they have saved alone is going to make them happy once the big day comes.

The happiest retirees understand that the point of saving is to enable them to enjoy the things that they love doing. That could be traveling, family, friends or donating to causes that are important to you.

Happy retirees have purpose.

5. A rich ratio of better than one

What Is The Rich Ratio?

The Rich Ratio is an easy way to understand money. Simply put, it is the amount of income you have in relation to the amount of income you need.

The maths is, "Have" divided by "Need" should be greater than 1.

For example, if you have the ability to generate $10,000 a month and you need only $5,000, you have a rich ratio of 2 (10,000 divided by 5,000). You're rich!

By that same logic, if you have the ability to generate $1 million a month, but you need $2 million, you have a rich ratio of 0.5. You're not rich. So it's a very personal thing. And it will change with age as well. Any ratio over 1 is fantastic.

Happy retirees honour the rich ratio.

Retirement ought to be a happy time. It should be a time when you are able to fully devote your energy and finances to doing the things you love. So make sure you have a plan before you retire and by following these few simple rules, you too can maximise the chance it's a happy one.


Tony Sandercock is a Certified Financial Planner ® and Buyer's Advocate. View his website here.