I’ve written a lot about the numbers and the math behind early retirement and financial independence. That’s with good reason, too, since a high savings rate, some favorable return, and a consistent system of contributions is an essential part of achieving FIRE.
But there’s more to retirement than just money. Like the dog that finally catches the mail truck and doesn’t know what to do with it, you, too, will find reaching retirement is the beginning of a new reality.
And the best way to sum up how you deal with that new reality is to ask yourself, am I happy? And if you’re on the way to retirement, you might wonder, are there things I can do now to set myself up for a happy retirement?
As I write this, I have read somewhere around 55 retirement books, completing several of them a couple of times.
In addition, I have been listening to some retirement podcasts.
My goal is to fully immerse myself in what’s going on in the “retirement space.” I want to see what others are saying and add to my knowledge of the subject. I also want to discover who knows what they are talking about and who doesn’t–and believe me, there are a lot of pretenders out there!
Among all the writers and teachers on retirement, Wes Moss is one of my favorites.
He’s personable, likable, practical (which is a big deal — many authors are somehow able to divorce themselves from reality), and, above all to me, he backs up his statements with facts — something most others do not do. You find that most other writers have opinions, but Wes forms his opinions based on research and his experience as a planner (yes, I know, I forgive him for being a planner).
My prediction is that Moss will become to retirement what Dave Ramsey or Suze Orman is to personal finance. Let’s just hope he doesn’t go over to the dark side like many of those big names do in the process and lose touch with the common man.
Anyway, Moss already has one great retirement book to his credit: You Can Retire Sooner Than You Think.
It’s so good that I included it in my list of The Best Retirement Books to Retire Sooner and Better.
I have covered the book many times on ESI Money including:
- How to Have a Happy Retirement
- Eight Great Learnings from You Can Retire Sooner Than You Think
- The Top Five Money Secrets of the Happiest Retirees
- 18 Traits of the Happiest Retirees
Those last two posts started to narrow in on what makes a person happy versus unhappy in retirement. Well, Moss has expanded those thoughts, and coupled with more research, he wrote a new book titled What the Happiest Retirees Know: 10 Habits for a Healthy, Secure, and Joyful Life.
I wanted to dig more into the book as well as share highlights with you, so I interviewed Wes via email.
Let’s begin with a tricky one. Hahaha. How do you define retirement?
I would define retirement as a place of economic and financial freedom.
It’s a time in your life when your favorite things in the world, or as I like to call them your core pursuits–your family and social network–can be the focus of your time and energy, rather than a job that you might not love.
I loved You Can Retire Sooner than You Think and liked this book just as much. Can you tell my readers how the two are related? Is this one simply an expanded version of what you covered in the first book?
My first book, Retire Sooner, had a larger focus on the financial habits of happy retirees and touched on a variety of lifestyle and family habits as well. What the Happiest Retirees Know focuses on the entire roadmap for a well-rounded retirement, which includes the financial side, but the book has a larger emphasis on the lifestyle habits that can lead to happiness.
I have now studied the habits of happy vs. unhappy retirees for almost a decade. What the Happiest Retirees Know expands on the fundamental financial principles of the happiest retirees, but we dive much deeper into some of the non-financial related habits that surround the happiest retirees.
For instance, we discuss family and social relationships, how a financial relationship with our children impacts our retirement years, and even faith, marriage, and health habits.
In the start of the book you say that these habits can help people retire both happier and sooner. We’ll talk a lot about the happiness side of things in this interview, but for now can you let us know why these habits will help people retire sooner? And any idea of how much sooner (a year? more?)
It was clear to me early on in my financial planning career that happy retirees were typically better off financially than many unhappy retirees. And even for my happy retirees who hadn’t amassed the same level of wealth as the unhappy retirees, they had much more financial peace rather than the financial anxiety that I saw with my unhappy retirees.
It was a lightbulb moment for me. I believe there’s an inherent optimism in happy retirees which allows them to look towards tomorrow, and you see that come through with their finances. They save for retirement, they invest for the next 10, 20, 30+ years, and they pay off their mortgage because they know they’ll enjoy not having those monthly bills. That optimism and faith that tomorrow will be a good day allows them to make (often) wiser financial decisions and gives them financial peace of mind.
When I wrote You Can Retire Sooner Than You Think, my goal was to help people retire closer to 62 instead of 65. I’ve had people call into my radio show or send me emails through my website telling me that they’re retiring as early as 58, 55, and even early 50s after reading my book, though! I think those folks might be more of the exception rather than the rule, but I do believe that by using these strategies, many people can shave off more time than they originally expected when planning for retirement.
The book is about 10 habits of the happiest retirees and the appendix expands these to 30. Any idea how many of either of these someone must have to be happy (other than “the more they have the better chance they have of being happy”)? Do you need 7 of the 10 or 20 of the 30?
All retirees have financial and social situations that are unique to them. There really is no “one size fits all” for the happiest retirees on the block.
Of course, we think the more of the 10, or the more of the 30, that you have, the better chance you will have of finding happiness in retirement.
Are any of the habits mandatory while the others are optional?
I think the 30 habits that we outline in the book are like an Italian family recipe passed down from generation to generation. I envision a “Nonna” standing over the stove sprinkling in a little more of the family traits, keeping the health habits a little stronger, and adding an extra dash of traveling with friends.
As is the case for any good recipe, you need to pay attention to the most important ingredients first. But there is nothing that could hold you back from adding your own twist to the recipe as you go along.
For instance, in the category of family and social habits, there are some must-haves, while there are some other categories that are important but not deal-breakers if you haven’t reached those just yet. Think about this book as more of a guide to happiness and utilize it kind of like the family recipe and tailor it to your liking.
Do increases in happiness taper off once you reach a certain number of habits (like it does for savings)?
In a word, no. This is certainly a case where more is better.
However, I don’t think retirees should feel pressured to be perfect with this list and should instead focus on what matters most to them so long as they get the key pieces right like finances.
Let’s take the 30 habits I mention in the appendix as an example for our base number. It’s hard for me to say that if you have 29 out of the 30 habits, you’ll be less happy than a retiree that practices 30 out of all the 30. I do think the more of these habits that a retiree has, the more likely they are to find that happiness within retirement.
Any idea what percent of retirees are happy retirees and what percent are unhappy retirees?
It’s hard to tell from data, but from my experience as a financial advisor about half of retirees are sitting in that happy camp, while the other half is falling short in some areas and are disappointed in how it’s playing out.
The information we write about can help both camps grow and improve their happiness in retirement.
Do you have a recommended timeline for preparing for retirement (what to do 20 years out, 15 years out, etc)?
My research shows it’s never too late to be a happy retiree. I think Americans get the message they need to start saving in a Roth IRA in their 20s.
While ideal, that’s not realistic for most. I’ve seen a lot of happy retirees that didn’t start saving for retirement until their mid to late 40s. We can climb enormous mountains if we give ourselves 10-20 years.
Of course, sooner is always better, but you can wake up one day at 50 very much behind the ball, but within 10-20 years you can end up in a strong position to be a happy retiree. I think the message and steps outlined in the book can help people get there in an effective and efficient manner.
Happy retirees have a minimum of $500,000 in savings. Using your own rule of thumb, that’s about $2,000 of income per month. Even with SS added in, that doesn’t seem like a lot of money. So is $500,000 really enough (and if so, why)?
The short answer is yes. $500,000 in savings is ABSOLUTELY enough to help people be happy in retirement.
We think that $500,000 in savings is an attainable figure for many retirees can reach and doesn’t feel like an overwhelming number like $2 million or $10 million. It may not sound like a lot of money, but for retirees without a lot of debt and extravagant spending habits, it’s more than enough to retire happy.
Any idea what the average annual spending of happy retirees is?
While I didn’t necessarily focus on spending levels, I did look at income levels in retirement. From those, the research shows happy retirees are typically pulling in just over $80,000 a year when in or nearing retirement.
The research also showed, though, that there was a diminishing margin of return or plateauing effect to both income levels and accumulated retirement assets. I think of this as diminishing marginal happiness per dollar past a certain point. We talk a lot about that in this book.
I’m having trouble understanding the “Rich Ratio.” Not understanding the concept but more understanding the name. Does it really mean the person is “rich?” It seems if your ratio is 1 you simply have income equal to expenses, which doesn’t seem too rich, it seems like “barely making it.” Can you tell us why you think it makes someone wealthy?
There are many definitions of “rich” but I guess it really comes back to these happy retirees we’re talking about. Happy retirees are “masters of the middle,” in that they’re not looking to keep up with the Jones next door. They’re more interested in maintaining a lifestyle that they’ve found brings them joy.
So sure, being able to cover your expenses might not make you rich like the Kardashians, but it does allow for a rich life filled with a wealth of experiences and people that you care about. What’s not rich about that?
I’m interested in details about having multiple streams of retirement income. You note that it’s better to have more than just one or two, but how many more is ideal?
I don’t have a specific number that people need to reach necessarily, but I will say that more tends to be better.
When you think through all the different income streams people tend to have in retirement, it’s clear that as long as you plan ahead, you’ll likely have more than one or two.
Social Security, while constantly under scrutiny, oftentimes is one stream or two for retirees. In addition to Social Security, I’ve seen most married retirees have an investment savings income stream, then maybe a pension or two, and even income coming in from a rental property.
I think as long as you hit above that one- or two-income stream mark, you’re much more likely to fall in the happy camp.
Any thoughts on the spread of income sources in retirement (for instance, if you have five but one of them makes up 80% of your income, how does that impact happiness, if at all)?
There is not an exact percentage that needs to be in each income category, but the more diversification in the types of income streams (real estate income, pension, social security, investment income, etc.) the more formidable your overall income becomes.
That said, I also say that having ten $1,000 checks coming in every month is going to make you sleep easier than having one $10,000 check every month. There’s no specific percentage split you should hit, but if you’ve got one $8,000 check per month and then four $500 checks coming in, I think you’re more likely to reach for a Tylenol PM occasionally.
Do you have a recommended order for creating streams of income (ones that are preferred to others)? How do you advise clients to create some if all they have is Social Security?
Happy retirees typically have at least $500,000 in liquid retirement savings which is invested. As a financial advisor, I’m biased, but investment income is my preferred income stream after accounting for Social Security.
Pensions are another one that tend to be high on the list when thinking through this order of operations. However, these aren’t as common anymore.
From there, it’s more of an open and even playing field with figuring out which stream of income to move to next.
You don’t talk a lot about working in retirement other than to acknowledge that there’s a Retirement Grey Zone where people move from full-time work to part-time work to no work and to list part-time work as a core pursuit category. Can you share any learnings on whether or not happy retirees work and if so, what they do and how many hours a week they work?
There’s great power in the concept of the Retirement Grey Zone. The vast majority of America works for decades in jobs they don’t love. Finding any sort of income-producing job or hobby that you love can be a fountain of happiness. This could be making and selling jewelry or wood carvings online, or maybe it’s working as a sales associate at Pike’s Nursery and sharing your green thumb knowledge with others, or perhaps you’d enjoy being a sub at the local elementary school.
Working in retirement can be a wonderful thing, but I’ve found most happy retirees make sure that it’s in an area that they’re passionate about and not just punching another clock.
Also, any thoughts on being able to disengage from work? Many people are so entangled in their careers that when they leave work, they don’t know who they are. Any findings on whether or not happy retirees are better or worse at making the transition, what they do to make it better (if they do), etc.?
Happy retirees understand that the life side of retirement is just as important as the financial. When planning for retirement, they account for both financial planning and the non-money side of this major life change. They nurture their core pursuits prior to leaving the workforce, and they know how they want to spend their newfound free time in retirement.
Having this sense of direction and plan seems to ease the transition into retirement.
You note that happy retirees have 3.6 core pursuits, which you then round down to needing three. Why did you decide on three being the number needed and not four?
Unlike the plateauing effect we see with financial accumulation, our research shows that you can almost never have too many core pursuits. I think that three is a bare minimum. Four or five are better.
The reason I focus on three is that I try to make them as attainable as possible for those still struggling to find their core pursuits and happiness in retirement.
You note that volunteering is the top core pursuit of happy retirees. Any estimates of how many hours a week a happy retiree volunteers versus an unhappy retiree?
Unfortunately, I didn’t get that specific. Don’t tell my marketing team, though, or they’ll ask me to send out another research survey on this in hopes I’ll write another book someday…
You also note that happy retirees are givers. Any thoughts on how much they give (as a percent of income/assets or in dollar terms)?
Again, with this book, we were looking at more of the big picture items and didn’t collect this information.
That said, from my personal experience I would say that I’ve seen that there are typically a lot of different personal factors that impact this. It all seems to vary from person to person, but maybe I’ll add this to my list to research in the future.
For social interactions, you recommend that people have at least three close connections — people they can confide in. The data says that unhappy retirees have 2.6 people and happy retirees have 3.6, so why didn’t you go with four (three seems to be between happy and unhappy)?
It’s all about the inflection point of happiness.
Having two or fewer close connections actually makes you 2.2 times more likely to be unhappy.
Hitting that magical three number sets people up to be happier, and the more close friends the better.
There’s no happiness plateau with close connections.
Do family members count in the numbers of close connections or are they just “extra” social connections?
Close connections are people that you trust, who love you unconditionally, and completely see you for who you are. This can absolutely include family members.
It’s less important about where people fall in the family or friend category. It’s more important about the depth of the relationship.
This can be a brother, sister, college roommate, neighbor, or golf buddy.
I’m unclear how the close connections work. It’s noted that they should be close enough to confide in and yet a suggestion for finding them is to join a cycling club. How close to they really need to be — can they be casual like someone you’d cycle with or do they need to be much closer? For example, I play pickleball and have somewhere around 50 people I play with, some I see every week (even multiple times a week). Would I confide in them? I’m not sure, but probably not. So how do these relationships factor in?
This actually points to a different part of my study. I found that happy retirees tend to be part of “social epicenters” such as a church, Kiwanis Club, or even a pickleball group which can help them find like-minded people who in time might turn into close connections.
While your pickleball crowd sounds wonderful, if you don’t think you’d confide in any of them then they’re not close connections. However, if from that crowd you meet one or two individuals who you decide to spend time with outside of these pickleball meet-ups until eventually that relationship deepens to a level where you would call them with great news or bad news, then they’ve transformed into close connections.
All this to say, it’s important to have these groups of friends, and you need close connections.
You note that happy retirees travel with friends. Can travel with family count (assuming it’s not family who lives with you)?
Absolutely! Family can be close connections, and I think that’s the main point we’re trying to capture here.
Spend more high-quality time with the people you care about. Travel gives you the space and dedicated time to do that.
You note that the happiest retirees take 2.4 vacations per year. You also note that a staycation does not count. So what counts as a vacation? (A certain distance from home? How much time is the minimum?)
As Jimmy Buffett famously sang, “changes in latitudes, changes in attitudes.”
It doesn’t have to be far, but I do think getting away from your typical day-to-day is important.
For the length of time, we don’t have a minimum or maximum on the length of time, but I do think it’s important that it’s enough time that you feel like you’ve really gotten away from your normal schedule.
It appears you recommend people buy a second home. Is that correct? Or are you just saying it’s a good idea if that’s what they want to do?
In my book, I point out that if you can afford a second home, it is a great option.
It’s certainly not required, but if purchasing a second home is something you’re interested in, it may be worth pursuing.
You list tennis and badminton as great sports to play in retirement. I’m wondering where pickleball lands in relation to them. Any idea? (Note: It may be too early in the life of pickleball growth to know this as it’s a much newer sport).
I’m putting in a call to my editor right now to add pickleball to that list! I love pickleball, and so do happy retirees. Pickleball is a great activity for retirees, as are tennis and badminton.
Basically, anything with a racquet, and you can’t go wrong.
You mention that it’s great to have a dog in retirement as they force you to be more active. Any findings of pet ownership in general among happy retirees?
It’s great to have a dog at any point in your life–when you’re a kid, when you’re a young adult, when you start a family, and even when you retire. It doesn’t take decades of research on what the happiest retirees know to figure out that one!
While I don’t have concrete data to back up that last statement, I do have two wonderful dogs back at home, and I can’t imagine entering retirement without a four-legged friend at my side.
Give us your best argument of when and why people should pay off their mortgages before or soon after retirement.
A mortgage is often the biggest expense we take on during our lifetime. The happiest retirees on the block know that living mortgage-free is one of the biggest financial freedoms one can have. How liberating for a retiree to pay off their mortgage after writing check after check to the bank for 15, 20, 30, and even up to 40 years.
My research shows that as the number of years remaining on the mortgage decreases, happiness levels rise.
You note that dividend stocks are better than bonds, but are you saying that dividend stocks should replace bonds in a portfolio?
I am a huge believer in the power of dividend stocks and equities. I think they can clearly carry much of the economic load over retirement. However, there is more to investing than simply the financial impact.
The other critical piece is your comfort level with how your entire asset base is invested. Bonds do the heavy lifting for overall portfolio stability and can be a critical part of the overall equation when it comes to keeping you on track during the economic upheaval. I think of bonds as more stable when economic markets are not cooperating.
How do you recommend what dividend stocks people should invest in? Should they buy individual stocks or funds?
I generally have my clients invested in both individual stocks and ETFs that invest and concentrate on dividend-paying stocks.
We like to invest in companies that have a long history of not only paying out dividends but also increasing them. Companies that pay and grow dividends have a long history of outpacing the market.
Wade Pfau has recently said that the safe withdrawal rate may be as low as 2.4% in today’s low-interest environment. You have said 4% plus. Give us the reasons why you believe your thinking is better.
This is a question that needs a lot of detail to answer, which is why I’d encourage your readers to pick up a copy of my new book! We cover it in detail there.
In short, though, in 2019 my team actually recreated William Bengin’s famous study of the 4% Rule. It had last been updated in the early 90s. When accounting for the last 30 years, which has seen some major market pullbacks, we actually found that the 4% Rule still held strong and even gave some room for the upside. This study led us to the 4% PLUS Rule.
Can you talk about the need for a plan in retirement — creating something, working on it in advance, and going into retirement with at least a general idea of what you want to accomplish, compared to someone who simply quits work and decides to “wing it.” What are the likely results for these two people and why?
This was actually a data point from my first book. My research showed that happy retirees spend at least five hours per year (and usually more) planning for retirement.
I’ve also seen real-life examples of people who sit down in my office after only a year of retiring and they admit that they’re miserable because they have nothing to do.
It’s the same issue we see time and again in all aspects of life, and there’s a great quote from Benjamin Franklin for it: “Failing to plan is planning to fail.”
You don’t mention much about keeping your mind sharp in retirement. Do you have any thoughts on this and suggestions for keeping mentally strong?
Read my upcoming book to stay sharp!
I think some of the habits that I outline in the book do keep retirees sharp, active, and engaged while also keeping them happy.
I go back to the core pursuits habit that overwhelmingly shows that the happiest people in retirement have at least 3.6 of them.
Any idea how many people fail at retirement (find it boring, become depressed, perhaps return to work, and so on) and what the main reasons for this are?
I actually have a Retire Sooner Podcast episode where I interviewed Roger Whitney, and we discussed how many people struggle with what we deemed the “Shawshank Paradox.” After looking forward to a huge life change, oftentimes people struggle with the reality of retirement.
There are many different reasons people struggle, but I think oftentimes the issues people face are centered around not having enough happening in their life to fill the vacuum that suddenly appears once they’ve stepped away from their career.
What’s next for you? Another book or something else?
How about a nap?
My four boys have also been begging me for another beach trip, so probably that.
Work-wise, I have a newer podcast, Retire Sooner with Wes Moss, that I’m really excited about. I’m enjoying gathering and sharing amazing interviews and information with my followers there.
I have to ask about The Apprentice. What can you tell us about the experience and any potential doors it may have opened up for you?
The Apprentice was a transformative experience for me because it opened my eyes to the power of media.
It gave me the confidence and platform to write my first book, years and years ago.
From there, I was able to land a radio show, write more books, and even spend some time working with different TV shows!
Lots of great stuff here! If I wanted, I could make this a 10,000-word post commenting on all the things he said.
But I’ll summarize my top thoughts:
- I knew there would be several questions he couldn’t answer because you can’t research everything. Now he has a few questions for the next round of research!
- I was happy to hear about family relationships counting as close connections. I am closest with my family members (including traveling with them often) so since I can count them, I’m good with social connections!
- I was trying to get him to admit that having a cat in retirement was a good idea. He didn’t rule it out! For us, our baby cat (who is now over two years old) has been an amazing addition to our family. He has made our retirement so much better! (FYI, if you want to see pictures of him I share them regularly on Instagram).
- Love that he mentioned Jimmy Buffett!
- I’m still not sure about $500,0000 or the “Rich Ratio” being enough. Perhaps it is for many, but they both seem too close for comfort for me personally. I wouldn’t want to trade work stress for money stress simply because I didn’t have enough. What is enough? That’s a hard question, but for me, I’d like to have at least 20% more than I thought I needed.
- I haven’t invested in bonds for a long, long time. Perhaps it was just lucky timing and I didn’t need them, but I am not a big fan of bonds at all. I do like dividend stocks though.
- As you can see, Wes and I agree on a ton of things including the need to plan for retirement, that you need to consider both the financial and life sides of retirement, and the fact that paying off a mortgage before or near retirement is a good idea.
- Oh, and now I know we both like pickleball!
Overall, if you are looking for a good retirement book or even just a good book to read over the next few months, I highly recommend this one.
If anyone does get a copy, please come back here and share your thoughts on it. I would love to hear what you think!
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