How to Avoid an Unhappy Retirement

Now that I’ve shared How to Have a Happy Retirement from the great retirement book You Can Retire Sooner Than You Think, it’s time to look at the other side of the equation — what makes people unhappy in retirement.

The book shares a whole host of facts from a comprehensive survey they completed, some of which were mentioned last time (as a contrast to what happy retirees experienced).

Today I want to share a section of the book giving the author’s thoughts on how to avoid an unhappy retirement. I’ll add my own perspective and comment along the way.

Eight Ways to Avoid an Unhappy Retirement

1. Ditch the BMW and stick to the Asian brands.

Thoughts from the book:

If you are retired and drive a BMW, chances are you are not happy. My survey results found that BMWs are the top luxury car in unhappy retirees’ garages across America.

My guess [is BMW owners] are still competing. They buy the “Ultimate Driving Machine” because they are looking for a distinction — a high-end status symbol to make them feel better about themselves. But in purchasing such a car, they have opted, either knowingly or unknowingly, to add an additional financial burden to their lives.

[Happy retirees] tend to prefer Asian luxury brands by a three-to-one ratio. Happy retirees are looking for two things in the cars they drive: comfort and cushion. Anything else is just a well-polished money sump.

Haha! Maybe BMWs should be called the “Ultimate Money Suck.” LOL!

Personally, I’m not a car guy, so I don’t go ga-ga over one car versus another. I know some of you are car people and if that fits into your retirement plan, that’s fine with me. It’s just not something I’m into.

It seems the author’s main issue is that these retirees are unhappy because they bought a car they couldn’t afford. That’s a problem, for sure. It’s also an issue that we’ll see pop up a few more times in points below.

So the real way to avoid being unhappy in retirement is less about buying a BMW and more about spending within your means. But that’s not as sexy sounding, is it?

So IMO, if you can afford it, get whatever car you want. You’ll probably be happier that way.

We have never owned a luxury car and I can’t think of a situation in which I would. It’s just not something that appeals to us.

Since we’ve been married we’ve owned two Subarus, four Toyotas, two Hondas, and a Nissan (BTW, these numbers include two cars my wife totaled).

They have all lasted a long time (could have been longer — we gave many away to needy relatives or our church once they hit 100k miles) and been very reliable which is what we look for in cars.

As far as the author’s advice goes, we have certainly stuck to the Asian brands and it’s worked out well for us.

2. You don’t need a second career as a stock trader.

Thoughts from the book:

I can’t tell you how many unhappy retirees I’ve met who decide to “play the market.” They have more time on their hands than ever before, so they think they’ll become investment experts and active stock traders overnight. Big mistake.

If you’re constantly tweaking your algorithms, frantically receiving Google alerts about the highest dividend-paying stocks, or making major investment choices because you read an obscure article in the Wall Street Journal, chances are you’re going to end up disappointed.

File this under “too much time on your hands.”

It kinda goes back to the post about happy retirees. One of the keys is having what the author called “core pursuits” (activities you’re passionate about/involved in). If you have enough of them (at least 3.5), you are likely to have a happy retirement.

If you have no outside interests (or just a couple), not only are you unhappy but you’re also looking for something to do with your time. So why not start day-trading. That sounds like it’s both fun and profitable, right?

Ugh. I don’t know what gets into some people.

Needless to say, we have not been tempted to day trade in retirement or even to buy an individual stock. We’re sticking with stock index funds for the long term.

3. Give your money a purpose.

Thoughts from the book:

For many unhappy retirees, the only purpose of having money in retirement is to have money in retirement. Happy retirees, on the other hand, know their money is merely the means for living a happy life, not the end goal.

The kind of legacy you leave is entirely up to you—but here are some possible ideas to get you executed:

  • Get active in a local charity that rings true to your heart.
  • Open your own charitable fighting account, also known as a donor-advised fund.
  • Explore crowdfunding organizations.

Ok, now he’s getting into people’s business!

He’s talking about giving — both time AND money.

If you do these, you tend to be happier. If you don’t do them, you aren’t.

We talked about volunteering in the previous post — how it give you something to do (core pursuit), allows you to help others (providing purpose), and involves others (it’s a social activity.) Lots of great stuff associated with volunteering in retirement.

But now he adds giving money to the equation. There have been numerous studies on the benefits of giving money. Why would those benefits be any different in retirement than pre-retirement?

I’ve talked about giving quite a bit so I’ll let this idea stand on its own and sink in for those who are receptive.

4. Don’t move, and don’t renovate.

Here’s an interesting one:

Mistake #1: Never make a big move at the beginning of retirement. Sure, they had a nice new place, but they also had a nice new mortgage.

Mistake #2: Now is not the time for costly renovations. Each one engenders one more. [Many have] learned the hard way that home improvements is a slippery slope: it quickly starts to feel like a retiree’s full-time job.

Mistake #3: [These house changes] eat into a significant chunk of the very new egg that was supposed to last in perpetuity.

This is interesting to me for a couple reasons.

First, we have been considering both moving as well as home renovations. Does this mean we’re either unhappy or about to be?

Second, it sounds like the people who are making these moves (and are thus unhappy) don’t really have the funds for what they want to do. So they spend money they don’t have, putting a strain on their retirement and making them unhappy. Is this what he’s saying? It’s the same issue as the BMW point IMO.

If so, I think the “Don’t move, and don’t renovate” advice should be “Don’t move, and don’t renovate unless you can afford it.”

For instance, if we did either of these, we would have plenty of money and our retirement would not be impacted in any way (other than we may like the new place/renovations more or less than what we had before, but that’s the way it is with any purchasing decision.)

The author’s solution for these is to do them (move and/or renovate) before you retire — while you still have a job and money coming in.

Again, I don’t see this as a retirement issue as long as you have adequate funds.

5. Make big-ticket purchases before you retire.

Here’s another tip that’s related to the previous one:

Unhappy retirees are prone to making big purchases, and worse, making them at precisely the wrong times.

Happy retirees have a much healthier relationship to spending. It’s not that they don’t spend money. It’s that they know when to do it: when they’re still drawing a paycheck.

I don’t get this. What’s the issue if you have the money in retirement?

The main problem is people spending money they don’t have. I agree with that. Just wondering why it’s not phrased that way…

6. Plan and budget for your retirement.

The book’s thoughts:

44 percent of the unhappy group reported that they were “not satisfied” with the amount of retirement planning they had done, compared to only 3 percent of the happy group.

Almost all happy retirees have done their homework: they’re enjoying their retirement because they planned to enjoy it. They did adequate legwork and preparation to ensure their reality would match their expectations.

Unhappy retirees, on the other hand, just don’t take the time. Here’s a scary statistic: less than half of Americans plan for retirement at all. That’s right: Only 46 percent of workers have even tried to calculate what they need to save for retirement.

Happy retirees are typically better budgeters than unhappy ones. They spend more time with their financial planners. They are more comfortable with the level of planning they’ve done. My survey shows that 79 percent of the happy group is comfortable with the amount of time they’ve spent planning for their future. Conversely, 87 percent of the unhappy group feels they haven’t done enough to plan.

Lots of thoughts on this one:

  • I’m not surprised that so many don’t plan for one of the biggest financial moves of their lives. Americans never disappoint me when presented the opportunity to underwhelm with financial statistics.
  • We planned for our retirement (of course), the main part of which was developing a retirement budget for the first two years. Turns out we made more and spent less than I estimated, but the budgets did give us confidence that we had more than enough to take the leap.
  • One thing I didn’t think much about was what I’d do with my time in retirement. I “knew” I had enough interests to keep me busy and that I am a disciplined person, so I figured it would work out — and it has. That said, I think most people need to consider the non-financial issues associated with retirement when they are in the planning stage.
  • “They spend more time with their financial planners.” Haha! I’m wondering if this was impacted by the fact that the survey was of the author’s clients (not sure that’s the case, just wondering.) We, of course, spent zero time with our planner working on retirement. Why would we need to?
  • We were certainly comfortable with the amount of planning we did. I had been seriously considering retirement for two years before we actually made the leap, so a lot of thought had gone into it.

Some questions: Why didn’t the unhappy group plan more? Is it that they felt they planned enough and once they retired realized they hadn’t? Or did they just blow off planning and now their retirement stinks?

7. Make sure your Rich Ratio is over 1.

This one puzzles me a bit:

The Rich Ratio is simply the amount of money you have in relation to the amount of money you need.

Take monthly income you will have coming in, including what your nest egg should produce, and divide it by what you expect to spend each month to live the retirement you want:

Have / Need = Rich Ratio

Any ratio over 1 is fantastic. Any ratio below that [and] you have some work to do.

I think the name is wrong. Since when did we begin to define “rich” as “having just enough income to cover our spending”? The answer: never.

Changing the name to the “Retirement Readiness Ratio” or something similar would be more accurate. Basically at “1” all it means is that you have enough to cover your retirement needs (i.e. you are ready financially to retire.) That’s it.

If you want to add levels, you could have “retirement readiness” be 1 to 1.25, “retirement surplus” be 1.25 to 1.5, and “rich retirement” being 1.51 or higher. The names are corny, I know, but you get the idea. To me you are rich when you have more than enough to cover spending, not just barely enough to cover it.

I wouldn’t call a ratio of 1.01 “fantastic”.

This was not one of my favorite parts of the book.

8. Check your pessimism at the door.

More thoughts from the book:

Pessimism can be costly, and fear is almost always financially devastating. Don’t let pessimism lock you out of a stock market and economy, that, despite the road bumps, will flourish over time.

I think pessimism is a killer while preparing for retirement as much as it is in retirement.

Here they use it as crippling the retiree with their investments, and certainly the same thing can happen before you retire.

Case in point: my dad took all his money out of stocks in 2013 or so because he felt the market was due for a correction (we’d just had a massive one in 2008, so this was fresh in his mind). Needless to say, his portfolio would be twice as big today if he had left the money in.

Bonus Number 9

Here’s another finding that wasn’t on the book’s list but was contained in another section. I felt it was worth including here.

9. Don’t limit your core pursuits to solitary activities.

Here’s a quote from the book:

The unhappiest retirees almost always reported the same core pursuit in the number one place: reading. There’s nothing wrong with reading, of course, but it’s a very solitary activity.

These unhappy retirees like spending time with their grandchildren, which the fundamental retirees would applaud, but they also enjoy fishing, hunting, and writing. What do all of these pursuits have in common? You guessed it: they are often solitary endeavors.

We talked about the need for both core pursuits as well as social activity in my happiness in retirement post.

We noted that unhappy retirees have far fewer core pursuits than happy retirees.

We also noted that even if they had enough core pursuits, unless some of them included social aspects, the retirees were unhappy. That’s what the point above is saying.

Personally, I love reading. I read while walking (listening to books or podcasts), read at my computer (mostly financial articles, but some sports and news too — not too much news or I get depressed), and read at my desk/in the living room chair (mostly books on money.) Yes, this is a solitary activity, but I do have enough social ones to make up for it.

Same thing goes for writing.

I don’t fish so I can’t comment on that. As for hunting, my dad and his brothers were active hunters in Iowa (quail and pheasant mostly) and I went a few times when I got older. I always considered hunting a social activity since there were lots of people involved and a strong camaraderie among us. Maybe we hunted differently than others?

That’s the list of things to avoid if you want a happy retirement. What do you think of these? See any that are a problem (or could be a problem) for you?


Originally posted at

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