Retirement Planning Advice from Maslow: How Much Do We Really Need?

Last Updated Feb 24, 2011 4:12 PM EST

What do we really want our retirement years to be like, and how much will that cost us? How much retirement income do we really need? We can get insights into these questions from famed humanist psychologist Abraham Maslow, who created a framework of human needs now popularly known as Maslow's "hierarchy of needs."

Maslow contended that most of us have a fundamental set of physiological and safety needs regarding food, shelter, sleep, property, and resources necessary for living that take first priority. Once we satisfy these basic needs, we can then devote time and attention to additional needs involving love and belonging, such as friendship, family, and sexual intimacy.

We then have the potential to satisfy a higher level of needs that Maslow labeled "esteem," involving confidence, achievement, and respect. Maslow called the last, highest level of needs "self-actualization," and these include morality, creativity, problem-solving, and acceptance. Here's a more detailed description and a graphic depiction of this hierarchy from WikiPedia.

According to Maslow's theory, it's difficult to pay much attention to your higher-order needs when your lower-order needs are threatened. And that can happen pretty easily in our retirement years if we don't have sufficient retirement income or retirement savings to satisfy our basic needs for shelter, food, health and so on. Given this scenario, how can we apply these insights to planning for our retirement years? I have two suggestions:

    1. Spend the least amount of money necessary to do a good job of satisfying your lower-order needs, which usually include housing, transportation, food, and medical care. Here's where some careful judgment is needed, as it's possible to spend much more on housing, transportation, and food than what we really need to be satisfied.
    2. According to Maslow, life gets really good when we're satisfying the top three level of needs: love and belonging, esteem and self-actualization. Take a long, hard look at just what it will take you to satisfy those needs. More specifically, ask yourself how much money you think it will cost. It's quite possible that it won't take as much as you think. It's also possible you can work and earn wages doing something that satisfies one of these higher order needs -- now that's really win-win!
      Advertising can be very persuasive, telling us we can buy our way to happiness and fulfillment. Ads may try to convince you that a bigger house, a flat-screen TV, or the latest car will help you achieve life satisfaction. But those items aren't in Maslow's upper levels of needs, which is a fancier way of saying that money can't buy you happiness. So just tune out the ads and pay attention to your own needs.

      Since boomers will need to make every dollar count in their retirement years, you'll want to think about how to most efficiently secure the lower priority of needs. Then you can focus on what's really important, which for most people comes down to relationships with family and friends, taking care of your health, and doing what truly gives you meaning and purpose in life.

      Image from iStockphoto contributor JJRD
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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 Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.