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Everyone wants to be happy in retirement.
So what will it take to get there?
It’s not just about saving money, although it’s important, according to certified financial planner Wes Moss, chief investment strategist at Atlanta-based Capital Investment Advisors and author of the next book. What the Happiest Retirees Know “.
“Does more money buy more happiness?” ” he said. “Yes it is, but only up to a point.”
This point is $ 500.00 in retirement savings; After that, happiness plateaued, Moss said, according to his research.
According to experts, here are some financial strategies you can use to find happiness now and in retirement.
start saving now
Saving money can make you happier, according to researcher Elizabeth Dunn, chief scientist of financial technology company Happy Money and co-author of “Happy Money: The Science of Happier Spending.”
She said break down your big savings goals, like for retirement, into little chunks that seem doable. Small steps are an easy way to build habits that last.
“Just taking the time to create a savings account can have an immediate impact on your overall happiness,” said Dunn, professor in the Department of Psychology at the University of British Columbia.
As your habits continue, increase contributions to your retirement plan so you have the money you need later in life.
Focus on paying off your mortgage
Some financial experts may suggest that paying off the mortgage is not a high priority due to the low interest rates.
Yet people who pay off their mortgage within five years of retirement are four times happier than those who don’t, according to Moss’s own research.
“The psychological side of not being hostage, maybe even more powerful [than the money side], and that overrides the financial justification for non-payment, ”he said.
Making additional payments or sending more than the monthly amount owed can help shorten the term of the loan.
what do you spend on business
You might think you want to buy your dream home in a new location or splurge on an RV to tour the country.
According to Michael Finke, CFP, professor of wealth management at the American College of Financial Services, the happiest retiree is spending time socializing with other people.
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According to their research, spending on assets such as durable goods, cars, clothing, and gifts does not significantly increase satisfaction with retirement. Beach weather can be great when you’re on vacation, but it can get boring after a while, he said.
“What makes us happy in our working life doesn’t necessarily make us happy when we retire,” said Finke.
“Often what makes us happy is around other people,” he said. “Things like driving a motorhome or buying a house in the mountains can make us less happy if it results in social isolation. “
There are several sources of income
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Three checks are better than one, psychologically speaking, even though they all add up to the same amount, Moss said.
“There is real power in this diversification of different sources of income,” he said. It also provides comfort to someone who may only be worried about having to depend on a big check.
In addition to the investment income, which will come from your retirement account and potentially additional investment accounts, owning rental property is a great way to make extra money in retirement, Moss said.
Social security is also a source of income for many retirees. If you’re an entrepreneur and haven’t contributed, consider purchasing a small business retirement plan, such as a Simplified Employee Retirement Account (SEP).
Finally, income from a part-time job or from a hobby you enjoy, such as photography or jewelry making, can also help.
“Maybe I’m not a 24/7 lawyer anymore. I no longer consult or fly around the world, ”Moss said. “I’m doing something that I really love and it’s part-time and that’s what matters.”
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