Retirement and happiness: It's complicated

Do you expect life in retirement will be the best of times -- or a step backward? 

To find out, the Nationwide Retirement Institute (NRI) recently surveyed both newly retired Americans and those who've been retired for a decade or more. 

Here's what it found. 

More than one-quarter (28 percent) of recent retirees said life is worse in retirement than before it. On the flip side, the NRI survey also shows that a little more than one-third (35 percent) of respondents said life is better in retirement, while 38 percent report it's the same.

But the survey responses of people who've been retired for 10 years or more have a different tilt. Fewer retirees, 17 percent, report that life is worse. And 49 percent of people retired a decade or more report that life is the same.

Other surveys report more positive results. For instance, a recent study by Merrill Lynch/Age Wave reports that the overwhelming majority of retirees (93 percent) say their life is as good as or better than before retirement. And in a recent National Bureau of Economic Research (NBER) working paper produced by George Mason University and Utah State University researchers said "We find strong evidence that retirement improves both health and life satisfaction."

But the numbers aren't high across the board. In a 2014 survey by T. Rowe Price, researchers reports that a little more than half (57 percent) of retirees say they live as well or better than when they were working.

It's likely that much of the difference in reported happiness among the various surveys stems from both the financial resources and health of the surveyed respondents. For example, financial concerns and health challenges were cited as the primary reasons life is worse in retirement for 7 percent of retirees in the Merrill Lynch/Age Wave survey.

The NRI study illustrates the important life trade-offs that older workers and retirees must make. While more than eight in 10 recent retirees cited income as the top reason why retirement life is worse, over three-quarters of recent retirees report "no longer working" as the reason why life is better in retirement.  

This last statistic is consistent with the Merrill Lynch survey, which found that most retirees are happy to be free from the daily grind, the pressure of juggling family and work, alarm clocks, deadlines and never-ending emails. 

For many people, the basic retirement trade-off could come down to a choice between income and freedom. Add in the fact that you're racing against the clock with your health, and it's easy to see why many people want to retire when they still have the health to enjoy life even if that means living on less money.

One way for older workers to reconcile the choice you might have to make between money and freedom might be to focus on the things that really make you happy in your retirement years. This can be a much different goal than "not working." 

Can you work a little and still be happy? And how much is "just enough" income to be happy?

One possible strategy that can help you successfully balance all these trade-offs is to try a downshifting strategy, in which you work fewer hours but still enough to cover your basic living expenses. This will free more time to enjoy life, while allowing your Social Security income and retirement savings to grow until the age when you fully retire.

Some people consider working a little longer a reasonable price to pay for living longer, compared to prior generations. That sounds like a trade-off lots of people would be willing to make.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.