The Unexpected Ways Your Health Influences Happiness in Retirement

The connection between your health and your happiness in retirement may be as important as the retirement income you live on—and for good reasons. Good health allows you to live independently, be active in your community with your family and friends, and spend less of your retirement savings on medical care. Plus, if your health is poor, you may have fewer opportunities for travel and recreation—two areas that can bring happiness to retirees.

According to new research from the Employee Benefit Research Institute (EBRI), both health and wealth impact retirement satisfaction. Healthier retirees in the same wealth group were happier than their peers; likewise, retirees with more assets were happier than those with similar health statuses. In short, you need both health and wealth to be happy in retirement, and the two factors are interrelated. 

Key Takeaways

• Most happy people in retirement cite social connections as their key factor.
• Retirees with half a million dollars or more in assets and excellent to good health are very satisfied with retirement.
• Even if you are relatively healthy, by age 65, you may need $165,000 in after-tax savings for healthcare expenses. 
• The connection between health and happiness in retirement means aging well may have as much impact as financial well-being. 

What Are the Core Values in Retirement?

“I believe that everyone has their own set of values, which should direct how they use their financial and non-financial resources in the world,” shared Stephanie W. McCullough, financial planner, founder of Sofia Financial, and co-host of the podcast, “Take Back Retirement.”

However, studies have shown that factors like health, income, and community are important factors in terms of how retirees enjoy their lives after they leave the workforce. All three could be considered core values.

How Important Is Health in Retirement?

How much of a connection is there between your health and happiness in retirement? Quite a bit. According to 2024 data on retirees from the Employee Benefit Research Institute (EBRI), retirees who reported being in good health were more likely to be satisfied with their retirement than those who did not. 

Note

70% of respondents who reported being in excellent or very good health reported being “very satisfied” with retirement, compared with 28% of those who reported being in fair or poor health.

“I do think that health should be a priority as one plans for and looks toward retirement,” said McCullough. “And it’s not something you can work on later when you have time. All the experts I follow say it’s the small things we do regularly that really move the needle.” So, while you are investing wisely in your retirement accounts, you should invest in your health. 

“Poor health can be both a financial drain and an emotional one,” agreed Stephen Kates, CFP, principal financial analyst for RetireGuide.com. “Without good health, even wealthy retirees will struggle to achieve the same type of activity or utility as someone with only a fraction of the financial resources,” he added.  “Alternatively, someone without any financial resources may be restricted in retirement or unable to retire at all, but with good health, they can still lead a happy life.” 

How Important Is Wealth in Retirement?

No one can dispute the importance of being financially secure in retirement. Even if you are relatively healthy, by age 65, you may need $165,000 in after-tax savings for health care expenses, according to the 2024 Fidelity Retiree Health Care Cost Estimate. 

However, wealth can be defined in many ways. For some, meeting a savings guideline of 70 to 80% of their pre-retirement income is enough to make them feel comfortable in retirement. For others, it’s having enough money to leave behind assets for their heirs. How much “enough” money is in retirement will depend on personal factors. 

“Enough [money]  is hard to quantify since there is always the possibility of ‘more,'” said Kates. “One of the ways that I think financial advisors help people is by creating a plan to define and plot a course toward what is enough. Retirees should aim to cover their essential and aspirational expenses throughout a 30-year retirement.” 

Kates recommended considering essentials like taxes, medical expenses, and long-term care. Then, retirees can think about aspirational expenses like travel and charitable giving.

As you age, the quality of your life may be more important for your happiness than how much money you have accumulated. Saving for retirement to create an income stream, budgeting for each phase of your post-work life, and setting intentions for spending your money are all ways to create a stable (and happier) retirement. 

The Relationship Between Health and Wealth in Retirement Satisfaction

The best combination for happiness in retirement is good health and wealth. For example, EBRI data found that “78 percent of those in excellent to very good health with assets of $500,000 or more reported being very satisfied with their retirement, compared with 55 percent of those in fair to poor health with the same level of assets.”

Of course, investing in your health can be difficult without money. Gyms, concierge medicine, access to fresh and healthy food, and other ways to support good health can get expensive, especially if you are living on a tight budget or lack savings to fall back on. 

For example, according to EBRI, over half (56%) of individuals in households with half a million or more reported to be in excellent to good health. When you compare that group with individuals with less than $25,000 in assets, only 25% reported to be in the same shape. 

By focusing on saving and generating retirement income before retirement, like investing in a 401(k) or 403(b), IRA, and other financial vehicles, and paying attention to your health—getting regular check-ups, walking, maintaining a healthy weight, and eating well—you can set yourself up for a happier second half of life, even if you have fewer assets. It just may be more difficult.

Other Factors That Influence Retirement Satisfaction

Preretirement Planning

Actively investing time and energy into planning your retirement ahead of time may lead to a more positive experience. According to a 2024 MassMutual report, “Retirees who took steps to set themselves up financially and take care of their health at least five years prior to retirement are more likely to report being much happier in retirement.”   

Tip

Pre-retirement steps, like maxing out your 401(k), recalibrating investments when necessary, and creating a budget are all ways to positively influence your happiness in retirement. Being prepared can also help if or when unexpected life events disrupt your retirement roadmap. 

Impacts of Systemic Racism

Racial discrimination may play a role in retirement satisfaction, as minorities have less money saved for their retirement than white Americans.  These disparities in retirement incomes,  according to research from the National Bureau of Economic Research, are partly due to systemic racism and structural barriers, including:

• Employment and occupational discrimination
• The racial wealth gap, including a lack of generational wealth
• Low rates of home ownership due to discriminatory lending practices
• Limited access to health insurance and health care

Tips for Healthy and Wealthy Retirement

There are ways to stay healthy while protecting your wealth in retirement. The best approach is to find ways to stay active, spend less, and be prepared before retirement. 

• Work with a financial planner to devise a thorough retirement plan.
• Look for free activities offered by senior and community centers.
• Swap dining out for healthy home-cooked meals.
• Work longer before you retire, if possible. 
• Consider your core values and try to live by them.

Can Not Having Enough Money Impact Your Health?

Financial health and physical health are connected, and not having enough money can have a seriously detrimental impact on your health. Research shows that as little as $5,000 of additional income per year can lead to greater longevity and better physical and emotional health. Plus, the security that comes with feeling confident in your finances can affect other choices that contribute to a healthier lifestyle. For instance, having additional funds may make it easier to budget for more nutritious food or to set aside time to exercise.

How Much Does the Average American Retiree Have Saved?

According to the most recent (2022) Federal Reserve Survey of Consumer Finances, Americans’ median retirement savings was $86,900. Baby Boomers (today’s retirees) fared better—this group’s median retirement savings was $289,000, based on data from the TransAmerica Center for Retirement Studies. 

How Can I Calculate How Much I Need To Retire Comfortably?

There are a few ways to calculate how much you need to retire comfortably. Some experts recommend 70 to 80% of your pre-retirement income; others say you may need more or less. You can use an online retirement calculator to determine what you need to cover your expenditures. Talking to a financial advisor or planner can help you fine-tune your finances for retirement based on several factors, like how much money you can generate from various income streams. 

What Is the 3% Rule in Retirement?

One of several safe withdrawal rate strategies, the 3% rule, states that retirees withdraw 3% of their savings during their first year and adjust for inflation each year. The idea is that you can stretch your retirement savings for 30 years. Other strategies include using a 4% rule instead. Both are conservative options for retirement income. Your needs may exceed these numbers. A fiduciary financial advisor can help you determine the right guidelines for your savings. 

What Is the Best Age To Retire for Longevity?

Some studies have found that early retirement may cause cognitive decline in some individuals who lose community and purpose after leaving a career or job. However, that doesn’t mean it will be so for everyone. Genetics, access to healthcare, and your retirement savings and income streams should all help to inform your decision about when to retire.

The Bottom Line

The happiest retirees have both health and wealth. To live your best retirement life, prioritize good health and financial planning. 

However, how much money you need to be happy may depend on a few factors. Paying attention to your health, creating a complete retirement plan that aligns with your core values, and investing in your future self via retirement accounts can add to a happier retirement.