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Taylor Schulte: A $4 million nest egg, two advisors saying you can retire and still every year another excuse to keep working. That was a situation a listener recently wrote in about. On paper, he’s in great shape, but emotionally he can’t quite make the leap. Markets feel uncertain inflation is still a concern and another year of work always seems like it will just buy a little more safety. So his question was simple, honest, and probably familiar. What data point will finally give me 100% confidence to retire? To help answer that, Dr. Daniel Crosby drops by. Daniel is a psychologist and behavioral finance expert and as you’ll hear, his answer is not a number. We also tackle questions like, why does the excitement from a big purchase fade so quickly? And how can you spend in a way that creates more lasting happiness? If you had $10,000 to spend on a family trip, a home project or a cause you care about, which one is most likely to leave a lasting impact?

And win is stay the course and ignore the noise, the wrong advice. If you’ve done a great job saving but still wrestle with how to spend when to finally retire or what will make the next chapter feel meaningful, you’ll enjoy this conversation. Welcome to another episode of The Stay Wealthy Retirement Show. I’m your host, Taylor Schulte, and every week I tackle the most important financial topics to help you stay wealthy in retirement. And now onto the episode.

Why $4M Still Doesn’t Feel Like Enough to Retire (Listener Q&A)

She wrote in a question that said, Daniel, in your last conversation with Taylor, you used the Ferrari example to explain how quickly the excitement from a purchase can wear off. I’m curious to learn a little more about the research on this. Do we know how long the happiness boost tends to last for different kinds of spending? Is there a better way to spend in retirement so enjoyment doesn’t wear off so fast? One thought that crossed my mind was maybe taking several smaller trips throughout the year instead of one big one, but I’m curious to hear your thoughts.

Daniel Crosby: Yeah, so this is a fantastic question. Please say hello to Atlanta for me. I miss it. I miss it very much. So the term here is adaptation. And like many things in behavioral economics, behavioral finance, it’s a real positive thing that sometimes gets misapplied and becomes a negative when it comes to money. What do I mean by this? Well, adaptation is something that is incredibly positive for the human family. We are capable of a lot more than we realized. Taylor and I were talking about this right before we got on the show. I just moved across the country. I’m living in my in- laws basement for the next month while we wait for our house to clear up and I’m doing great. And I think if you had asked me that a couple months ago like, “Hey, you’re living in your in- laws basement out of a single suitcase, how are you going to feel?” I would’ve told you that I was going to feel really, really bad, but we’re way more adaptable than we give ourselves credit for and this allows us to roll with punches.

It allows us to overcome tragedy, be resilient in the face of loss. There’s all kinds of positive things that come out of this. The negative thing that comes out of it is we’re also highly adaptable to really good things or really luxurious things. You buy that Ferrari and there is a boost to answer your initial question of usually weeks to months. Depending on individual differences, weeks to months, there is this happiness boost, but then after a couple months it fades away. So what is then the antidote to this? Well, I think she made one really good suggestion. The way to think about this is how can we position our savings, spending and investing in ways that overcome this tendency to habituate or adapt? One thing to think about is anticipation. If you think about something like a vacation, one of the things that we do in our family if we’re going to take a vacation big or small, part of the reason that a vacation or an experience pays such high happiness dividends is there’s a preparation period where you’re planning it, you’re talking about, well, what are we going to do when we go to LA?

Where are we going to stay? What are we going to eat? Who will we see? So there’s the anticipatory happiness. There’s the happiness in the moment, which is its own sort of blessing. And then there’s the re-experiencing of that every time you tell it around the dinner table, “Oh, do you remember what Taylor said when we were at that dinner in LA?” So there’s really sort of a pre, a post and a during level of happiness that then anticipation really just heightens that. So yeah, the other reason that experiences and travel in particular tends to pay high dividends is it’s resistant to this adaptation. If I take my kids to Korea, which is something we’re thinking about doing over Thanksgiving, if I take my family to Korea over Thanksgiving, I’m going to see things I’ve never seen. I’m going to hear a language I’m unfamiliar with, I’m going to eat food that I’m unfamiliar with.

All of this resists adaptation. It’s newness, newness, newness, newness, newness versus that Ferrari, which is new day one. It’s a little bit less new day two. And on day 200, it’s just like my grocery getter. I mean, it’s just sort of the way I’ll get around. So anything you can do to build anticipation or to invoke that newness is going to really help. And that’s why I think things like experiences and travel are so powerful.

Taylor Schulte:  Your comment about newness reminded me. Well, two things came to mind as you’re answering that. One, regarding newness and your potential trip to Korea, my grandmother used to always tell me, she would say, “Don’t go to the same place twice.” And I never understood it because you go to this awesome place in Hawaii. That was amazing. Let’s do that again. Daniel, I know you love San Diego. You take your family here every summer. Let’s go do that again. But I can understand the benefit of going somewhere different and new and experiencing that for the first time. So maybe reminded me of her and what she used to always tell me. I do think about it. I would make conscious decisions when we travel and try to do something new and different and get uncomfortable and go somewhere a little unfamiliar. The second thing it reminded me of, and I’m curious your thoughts on this is my middle son struggles a little bit.

His highs are high and his lows are low. He gets these really big dopamine hits. It could be going on a trip. It could be he gets an hour of video games and he’s really excited and plays video games. And then once video games are done, he goes into this really difficult period. And what I started thinking about as you’re answering that question is, is there a benefit? And this is what I do with him now as a way to kind of handle this is I always have something else kind of planned for him after that hour of video games. After video games, we’re all going to go in the pool together and go have a good time. Or after video games, we’re all going to go out to a fun pizza dinner or something. We’ll have something on the back end of that. And it made me think, is there something here around travel where you start planning that next trip or you always have that next trip on the books and plan and something to look forward to?

Daniel Crosby: At the risk of getting heavy here, I think this principle applies. One of my favorite psychologists, a gentleman named Raul May has this great quote and he says, “Depression is the inability to construct a future.” And I think about that all the time, like the power of anticipation, the power of something to look forward to. And again, at the risk of being heavy here, I used to work at a suicide crisis line when I was in college and the very, very first thing we would always do, this was the very first piece of instruction we got was give them something, give them a future, just like even what are you going to eat tomorrow? What are you going to do this weekend? Just even something that’s small, give them hope, give them something to look forward to. I think that’s a very human thing. We need to know what’s next.

We need something to look forward to and to anticipate. And so whether it’s something very heavy and sort of existential or whether it’s just sort of the joy of planning your next trip, I think that’s a really profoundly central human need.

Taylor Schulte: Well, I think this segues into our next question really well from Tom in Austin, Texas. And Tom sent me an email that said, “Dr. Crosby, you’ve talked before about how spending on experiences, relationships, and buying back time can make us happier than just buying more stuff. Now that I’ve settled into retirement, I found that I have some flexibility in my budget and I want to be intentional about how I use it. So let’s say I have $10,000 that I could put toward a family trip, a home renovation, or a gift to charity. Is there research that actually compares different things I could spend my money on in terms of how much happiness they tend to produce? I know it’s probably not a clean ranking, but does the data give us anything concrete to go on for someone in their early 60s?

Daniel Crosby: Yeah. So this is where I love this question. And so Tom, I’m going to introduce a framework. I love frameworks. This is kind of how I think about the world. I like these simple sort of rubrics I can refer back to. And when it comes to this question of spending money in meaningful ways that lead to flourishing and lasting happiness, for me, there’s really three Bs and I think they’re all sort of equally powerful. Your mileage may vary, pick your favorite. But if you want to spend money in ways that endure, it’s believing, belonging and becoming. So let me kind of break those down. Believing is this. We find in the research that people who are the happiest, people who live the lives that they rate as being purposeful and joyful, they operate by some sort of moral code. So this is you making the world a better place, like whatever that looks like for you, that could be volunteerism or charity or kind of giving back.

For me, we’re having a conversation here. I used to live in the Philippines. I have a big love for Filipinos and Filipino culture. They just had a big natural disaster there. Whenever that happens and it happens a whole lot in the Philippines, I try and do something, whether it’s reach out to someone I know there or give money or fundraise or do something, that’s believing. That’s part of my moral code. That’s how I feel like I can impact the world in a positive way and consistently we see what’s called pro- social spending, spending in ways that make the world better in ways that are important to you that buys a lot of happiness. The belonging piece is all about relationships. Anything that you can do to deepen a relationship that’s money well spent. If that’s taking your grandkid to a movie and to ice cream, that’s money well spent.

If that’s bringing the family to a beach vacation, that’s money well spent. If that’s buying a plane ticket so someone can come see you, all of that is going to really buy a lot of happiness in that belonging bucket. And then the third one I think is the one that we think of the least perhaps when we think about spending money in ways that lead to flourishing. This is becoming. Becoming is the people who are the happiest and live the lives that are the most meaningful. They have a sense of who they could become and they put themselves on a path to become better. This is about self-improvement about growth. So that becoming could be getting a massage so you can relax a little bit and have some well-earned R&R. That becoming could be going back and taking adult education courses. That could be taking piano lessons or going to therapy or a million things that make you more of the type of person that you want to be.

So make the world a better place, that’s believing. Be good to the people you love, that’s belonging, and become better yourself. That’s becoming. I think those are the three ways that you could reliably, Tom, spend that $10,000 in a way that’ll improve your life meaningfully and that you’ll look back on fondly.

Taylor Schulte: I love that. What a cool framework. I’m curious when it comes to making the world a better place, i.e. Gifting to charity. Maybe we touched on this last time you were on the show, but I’m curious if there’s a difference in happiness levels when you’re giving money to something, let’s use the Philippines as an example here since you brought it up, giving money to an organization to support this disaster in the Philippines versus maybe this is a little unrealistic, but going to the Philippines and using your skillset or your time or your hands, however, to help them improve the situation. Maybe that’s unrealistic, but maybe it’s, I don’t know, spending 10, instead of giving them $10,000, using that $10,000 to, I don’t know, produce some videos on YouTube to get more exposure to this disaster in the Philippines to get more people on board to support them even more.

Is there a difference in happiness levels when you’re actually getting involved in something, getting your hands dirty a little bit, putting in that personal effort versus just writing a check?

Daniel Crosby: There’s two considerations here and I believe that they’re equally important and I love this question because I think there’s sort of the, we’ll call it the utilitarian perspective. So from a utilitarian perspective, I went to the Philippines last year. It cost me about $10,000 in airfare for myself and my son. The average Filipino laborer makes $8 a day. The $10,000 I sent sending myself and my son to the Philippines could buy a whole lot of food for a whole lot of folks. I mean, just from a utilitarian perspective, look, there’s a lot of good that could be done with that money that far exceeds the good that I can do with my two little hands when I show up in Manila. So I think there’s a utilitarian reality that we have to think about. But then I think there’s also sort of this personal, social, spiritual, existential reality that is meaningful.

You want to feel good. And we know from the research that the people who are the happiest with their philanthropic giving are doing one of two things. One, they’re either giving financially until it hurts a litle bit. You’ve got to think you’re writing out the check and you go, “Eh.” This seems like a lot, or they’re working with their hands. I do think there’s value in me going to the Philippines and doing labor even though from a purely utilitarian perspective, there’s more that could be done with that. The answer for me is I try and balance those things because my wife and I, when we’ve talked about giving from a purely utilitarian perspective, all anyone should ever do with their money is buy clean drinking wells and mosquito nets. If you’re just trying to maximize lives saved, it’s like dig wells, buy mosquito nets, that’s the best you can do.

But contributing to the arts in my local community, volunteerism, me flying somewhere to help out, all of those things enrich my life and make it enjoyable for me to give that increases the likelihood that I’ll continue to give in the future. I think those are both important considerations. I think you have to kind of balance the letter of the law and the spirit of the law in a way that is acceptable to you because I think they’re both important.

Taylor Schulte: Really good stuff. I appreciate you elaborating on that. Let’s go ahead and pivot away from happiness and spending and retirement. And our next question comes from David in Boise, Idaho, a litle bit closer to where you’re at today. And David says, “Hey, Taylor, I’m 63 and for the last few years, I’ve been telling my wife that I’ll retire next year.” We’ve heard this all before, Daniel, but every year I find another excuse to keep working, markets, inflation, or just wanting a bigger cushion. We have about $4 million saved. Two different advisors have said we’re okay and the Monte Carlo projections support that I could have easily retired already. At this point, I’m starting to realize that I’m no longer being smart. I’m just scared to pull the trigger. I’m struggling to figure out what data point will actually give me 100% confidence to make the leap.

I’d love to hear your thoughts as I work through this unanticipated challenge.

Daniel Crosby: Yeah. So I was just in Boise last week. What a great town. I guess I’m just going to make a comment about every city, but yeah, what a great town. My first time gorgeous city and had some great tacos. So David, I love your question. I don’t think a data point candidly sort of jumping to the conclusion first. I don’t think there’s a data point on earth that’s going to change your mind. I think you have lots of data points. If David were sitting across from me, I think I would want to know a couple of things. One question I would ask David is I would say, “Hey, if someone handed you a crystal ball proving definitively that you could be financially secure well into your old age, would you retire tomorrow?” I suspect the answer is no, because that’s effectively the information that he’s getting with the Monte Carlo simulations.

And if in fact the answer is no, then money isn’t the obstacle and there’s something larger at play, which then leads me to my second question. It seems like David is assuming of himself that he’s acting irrationally, that he should be retiring and that he’s not and that he’s being whatever stubborn or dug in or something, that he’s being irrational. And I assume something different. I assume that there’s a deeper reason why he’s doing this and I assume that there’s something he’s getting out of work that may not be showing up on a balance sheet and that’s consistent with a lot of the research. I mean, I wrote about in the soul of wealth some research that showed that recently retired folks are some of the saddest folks on the planet and it’s because work brings so much into our lives that is non-financial. It brings us many of the bees that we talked about earlier, right?

It brings us that belonging and that becoming. We have a team at work and we work with people we care about. We’re getting promoted, we’re learning new skills, we’re growing. So those would be kind of my two questions for David and I guess would be questions I’d ask him to reflect on or have that conversation with someone he cares about. If you had that certainty, would you retire tomorrow? My guess is no. And then if that’s the case, then what might you be getting out of work that is actually serving you well? And if you do want to retire, maybe in my example, it’s the relationships or the growth. Maybe if you really do want to retire, you need to make a plan for connectedness and growth outside of work. I think for men in particular, the research shows we fail to do this. Men tend to be sort of over indexed on their work relationships versus women who tend to have broader and stronger relational ties outside of work in addition to at work.

And so those are real needs I imagine that work’s bringing that to your life and if you want to retire, you just got to find a way to get those things somewhere else.

Taylor Schulte: Yeah. It just makes me think that so many people assume that retirement is still this kind of black and white decision like, “Do I keep working or do I stop working?” And what we’re finding out in the work that we do for clients, and I know this is starting to show up in some of the research, is that more and more people are not retiring in the traditional way. It kind of reminds me of your comment about charitable giving where you try to kind of strike that balance between writing checks and also getting involved and getting your hands dirty a little bit and kind of finding a balance between those two. And I kind of think of this retirement decision the same way. It doesn’t have to be this, “I’m working today and tomorrow I’m going to stop.” It could be that you start to slow down and make that transition a litle bit easier or you have some part-time consulting work in retirement to stay connected with that prior company or to stay connected with your prior clients or people that you enjoy spending time around.

So it doesn’t have to be this black or white decision. And then kind of on that note of black and white decisions here with retirement planning, I mean, you could have a great Monte Carlo analysis, great financial advisor that does this great analysis, but just because the math says, “Hey, you’re good today,” doesn’t necessarily mean that you’ll be good tomorrow. We just don’t know the future. We don’t have a crystal ball. We don’t know what sort of event could be around the corner. And I think we just have to accept that we have to be flexible in retirement. And you can comment on this because I know you’ve done a lot of work on different levels of saving, but it doesn’t really matter. I don’t think whether you have a million dollars saved, $4 million saved like David or 10 or 15 or $20 million, you still worry about those things.

Just one big event around the corner could wipe out all of this hard work. So I think we just have to accept that no matter how great a Monte Carlo analysis looks, that it’s not this yes, no decision that we have to accept it. It’s just we have to be flexible. We know that things could change and that we might have to adapt to whatever environment that we find ourselves in in retirement. I’m not sure if you have any additional thoughts there.

Daniel Crosby: I love your sort of taking on our overly binary approach to retirement, either like I’m grinding and I’m fully in work mode or I’m fully in golf mode and work free. 

Taylor Schulte: Sounds good too.

Daniel Crosby: Yeah, yeah. I do think some of the happiest, I believe David was in his 60s and I think some of the happiest people I know that are around that age are people with sort of part-time portfolio careers who are taking their accumulated wisdom, applying that 15 to 30 hours a week, but then also finding a lot of time for family and hobbies and personal wellbeing. I think that’s a wonderful place to be and it allows you to put off the years when you start drawing down that $4 million retirement nest egg, which you know the math better than anyone on how powerful that is. Each year you can defer beginning to take distributions from that four million helps a whole lot. So I think that sort of getting away from that binary on off yes, no view of retirement’s really a powerful idea.

Taylor Schulte: Well, speaking of being flexible, our next question comes from Eileen in Washington and she sent me an email not that long ago that said, “Taylor, I’m 60 and widowed and I have about two and a half million dollars saved. I listen to a lot of retirement podcasts, including yours and the advice always seems to come back to some version of stay the course, don’t panic, ignore the noise.” I understand the point, but sometimes it starts to feel like the financial version of thoughts and prayers. Are there times when doing nothing and just staying the course is actually the wrong move? And how do you tell the difference between making a thoughtful adjustment and just looking for a reason to mess with the plan? What a great question.

Daniel Crosby: Okay. So the thoughts and prayers phrasing is so brilliantly pointed, Eileen, that I really, really love that phrasing because it does feel a little glib. It does feel a little trite for folks like myself and for folks like Taylor to say, “Hey, hang in there, take the long view.” When we know that it’s psychologically difficult, it’s easy for us to say. So here’s what I would say about that as honestly as I can. For me, again, here’s sort of the signpost. The difference between wisdom and panic is in my mind whether your decision would still make sense without today’s headlines. There are reasons to make a change to a plan like major life events, unexpected occurrences, health changing, spending changes, tax law changes, new goals, new priorities in life. All of those might warrant a conversation with your advisor that would lead you to take a different tact with respect to how you’re saving and spending and investing your wealth.

I think the bad reasons are what you saw this week in the headlines, your political preferences for or against whoever the current occupant of Pennsylvania Avenue is. These sorts of things I think are largely detrimental, recent volatility, recent headlines, boredom, FOMO. And it can be hard sometimes because we can position these things in ways that obfuscate the truth from ourselves. It can be hard to tease those things apart, but yeah, that would be my signpost. My signpost would be, would I make the same decision I’m talking about making now if I hadn’t looked at the market in six months, if I hadn’t opened my account in six months, would I still be making a change? A little corollary that I will tack on there is that sometimes I think it is good to bend and not break. And if market timing is a sin, then I suggest that folks sin a little.

I borrowed that from Cliff Astinus who’s much smarter than me, but over the last couple of years, I’ve been on this health journey and I’ve lost a lot of weight and I’ve gotten in better shape and one of the ways that I have been able to be consistent with my diet and exercise is by having a Snickers bar or a Reese’s cup every night at eight o’clock like clockwork. And no nutritionist on earth would tell you that that is optimal.

The macros in my Snickers bar are not optimal for that 250 calorie spend, but that sinning a little is the thing that allows me to be on point with the other 90% of my caloric intake for the day. So sometimes I encourage people to like, “Hey, if you’re worried, sure, take 5% of your wealth and move it to safety or take six months or a year or even two years and move it to safety so you sleep better at night.” Or look, if you’re excited about some of the stuff that’s popping off in a hot market, sure, take 3% of your wealth and invest it, play the market and see how it goes. I do think that sinning a little, having sort of a cheat meal, so to speak, can be an antidote to making a big swing in and out with the rest of your wealth.

So yeah, the two things I would say is, is the decision being driven by headlines or something more fundamental would be sort of my first sanity check. And then my second sanity check would be, is there a two to 5% solution that’s going to scratch this itch that I have and help me feel better but not fundamentally deviate from my plan?

Taylor Schulte: What do you say to somebody who says, “Look, I get it. Don’t panic, stay the course, long-term investing, don’t do something, just stand there.” All these famous things that are said. And when you look back in history, it all clicks. It makes sense. It validates that thinking, but then you have people that say, “This time is different, right? The environment that we’re in today is different. The president, the way he makes decisions is different.” How do you respond to something like that when someone understands that the philosophy of staying the course, but a Are looking at things here in the moment and thinking, “Yeah, but this is entirely different than the last 100 years of history that we’ve been studying.”

Daniel Crosby: Yeah. I think even the recent past has given us many examples of times when you could have legitimately said, “This time is different and patience was still the right answer.” I mean, COVID is a very, very easy answer. I mean, look, personally during COVID, I remember thinking this thing’s going to zero because we are shutting down the world’s economic engine, not one state, not one country. The world is staying at home and look what would have happened to you if you had been impatient and tried to time that. I mean, you had every excuse to think that this time was different. You were right. I mean, you were even right that this time was different and yet still the market defied that difference. And so our ability to say this time is or isn’t different still has to correspond with market realities and market realities have time and again defied people’s impulses.

The other thing that I think we have to self-calibrate and understand about ourselves is we always think it’s different. We’re prone to think it’s different way more than it is. I mean, if we look at back again, whether it’s a series of volatile elections, assassination attempts, wars, viruses, this is like the last five or six years so many big, scary, legitimately bad things. And look at what has happened to optimists and long-term thinkers. So I think we need to understand how sort of finely calibrated we are for worry and understand how different that is than the reality of the market.

Taylor Schulte: Yeah. I’m glad he brought up the COVID era. One of my favorite data points, and I won’t get it perfect here, but Nick Majully had shared either in his book or a blog, I know he shared it when he joined me on the show, that even if you time the market perfectly and you bought at the low point in March of 2020 when things were just in the gutter, you would’ve still been buying at higher prices than I think it was two or three years prior. So even if you get these things perfect and time them perfect, you’re still buying at the wrong time essentially.

Daniel Crosby: Right. Yeah.

Taylor Schulte: Well, I appreciate you sharing your thoughts on that. Maybe one follow-up question is just maybe just given your background in psychology, is the framing stay the course, don’t panic, ignore the noise? Is that constructive? Is there a better way to communicate how to battle through these difficult time periods? Should we as advisors be using some different phrasing than, “Hey client, I hear you, understand you, ” but just ignore it.

Daniel Crosby: So you’re going to have to pardon a digression here because this is one of my favorite stories. Okay,

Taylor Schulte: Cool.

Daniel Crosby: In the ’50s, Betty Crocker came out with instant cake mix. And so because of the Second World War, women had just entered the workforce in unprecedented numbers. You’re beginning to see the rise of the dual-income family and people were looking for convenience. And so out comes this just add water cake mix that tastes fantastic. Well, Betty Crocker thinks they have a hit but they don’t and they start to see that people are reticent to buy this cake mix and they dig in and do a little psychographic research. And the reason is because women in particular, moms in particular, think that it’s too easy. It feels like cheating and they’re like, “It doesn’t even feel like I made the cake. It doesn’t feel special just because it’s too simple.” And so Betty Crocker reengineers reformulates their cake mix to be more like what it is now.

You got to add some vanilla and a couple of eggs and some water and some oil and then you can make the cake mix. They actually dumb it down to make it a worse product. And then it was complicated enough that people were like, “Okay, now I made the cake.” If I put the oil and the eggs and the water and the flavoring in, okay, now I can kind of claim it and it’s complicated enough that it works. I feel like for a lot of people that’s at play in markets. And I feel like some of the reason why we have a lot of research into people who work with financial advisors do demonstrably better than people who don’t in lots of predictable ways. They have higher returns, they’re better at staying the course, they have higher levels of happiness, better marriages. It’s just on and on and on.

And look, the reality is for most folks, you could 60 / 40 Vanguard it and be okay if you could stay the course almost no one can. And I think one of the benefits of working with a financial advisor is that they basically complicate it just enough for it to feel hard enough for you to do what you ought to do. There’s enough, there’s the planning, there’s a little more sophistication, there’s a few more bells and whistles to the program that help that’s your eggs and oil and vanilla. And I think that’s powerful. So kind of back to my two to 5% solution, I think practically speaking, there’s nothing wrong in a limited way in complicating your financial life candidly, perhaps a little unnecessarily if it helps you stay the course.

Taylor Schulte: We’ll answer one final question here. We have to answer Nathan’s question. Nathan’s in Cincinnati, Ohio. And I say we have to because he writes, “Dr. Crosby, I was one of the lucky winners of your book, The Soul of Wealth, when Taylor gave away copies on the podcast. In the book, you shared that 50% of our happiness is genetic. About 10% comes from life circumstances and the remaining 40% comes from our choices and behaviors. Many of us spend years trying to get everything right when it comes to retirement planning, but it sounds like those things may only move the needle so much. So what actually moves the 40%? Are there specific habits or behaviors that have been studied and shown to improve happiness or wellbeing in retirement in a lasting way? I’m curious what the research actually says works, especially for people in their 60s or already in retirement.

Daniel Crosby: Yeah. So this is a great question. Nathan, much better question than Skyline Chili as it turns out. A little National League Central Rivalry never hurt anybody, Nathan. I’m a Cardinals fan. So when we talk about preparing for retirement, a lot of people treat it like a portfolio event. It’s much bigger than that. It’s a meaning event. And I don’t know what Nathan meant by preparing and getting it right, but for many people, preparation looks like financial preparation. And we see that the people who are happiest in retirement have prepared along five dimensions. And I actually talk about them in chapter one of the soul of wealth. So the first is … Oh, and as I go through these, I want you to think about the degree to which money can or cannot influence sort of these five domains.

1.) The first is fun and leisure. People who are happy in retirement have adequate time for golfing, going to the beach, eating an ice cream cone, doing fun stuff. We tend to prepare for that. When we think about retirement, that facet of it tends to loom very large in our mind.

2.) The second one is the social component. Again, as I said earlier, a lot of people, men in particular, arrive at retirement woefully unprepared for friendship and connection.

3.) The third one is actually deep work. This is the one that people miss more than anything. Humans are wired to work. Humans are wired for struggle and most of us get all the struggle we need at our day jobs, like all the struggle we need and more at our day jobs, but you need something in retirement that is deep focused work that’s going to cause you to lose track of time and be really immersive. This could be, again, getting better in an instrument. This could be volunteer work, this could be a part-time job, but you need something.

4.) The fourth thing that people who are happy in retirement have is a focus on something bigger than themselves. Could be community volunteerism, could be spirituality or religion, could be volunteerism or philanthropy, but getting outside of self is a key. I mean, every major philosophical and faith tradition would have this at the top of their list. This is huge. I mean, there’s a reason that thousands of years of wisdom tell us to sort of get outside of ourselves and work on something bigger.

5.) And then the fifth one is that personal growth that we talked about before. It is not enough for you to solely work on your golf swing. You want to continue to be vibrant. You want to be learning and growing. So if you think about these, money helps most with the fun and leisure and a lot of the other stuff we have to kind of go get ourselves.

Even the personal growth piece, yeah, it’ll pay for your therapy or it’ll pay for your adult education class, but you still got to go. You still got to go, you still got to read the books. So those are the five areas. Have a little fun, do a little work, surround yourself with people who love you, focus on something bigger than yourself and continue to grow and thrive. Those are the five areas.

Taylor Schulte: It’s like a lot of people, including myself when I first came across this in the book, get stuck on this 50% of happiness is genetic. I mean, it’s kind of mind-blowing when you see it for the first time and read that research. But it’s also fascinating to me that 40% of our happiness is essentially in our control. 10% comes from what you say life circumstances, things are just kind of happening to us that we maybe can’t control. I don’t know if you define it that way or not, but so it reads to me, but 40% is actually in our control. We have control over a lot more than we think. So I think it’s easy to get stuck on that 50% or even that 10%, but it does seem like we have a lot of control over our happiness in retirement, even our success in retirement.

Daniel Crosby: Yeah. It’s funny. I think people are shocked twice because that first stat is kind of jarring when you hear that 50% of your set point for happiness is genetic. As our friend Tyrone says, choose better parents, right?

Taylor Schulte: Right. Yes.

Daniel Crosby: If you’re having a hard time choose better parents.

Taylor Schulte: Yeah, it’s that simple.

Daniel Crosby: Yeah. So I mean, that’s kind of the bad news. The good news is of the 50% of happiness that is non-genetic and more volitional, we can control 80% or better of that. And I would even say that the 10% of life circumstances, this isn’t always true. Bad things certainly happen to good people, but your life circumstances in general are not totally divorced from the choices you make either. So of that remaining 50%, I think a great deal of it’s in our control and that’s where we choose to focus and not just be sad about not having chosen better parents.

Taylor Schulte: Stay the course and focus on the things you can control. I think that sums it up. Daniel, I really appreciate you joining me on the show today and answering these listener questions. It was a lot of fun taking a little bit different of approach having you on the show today. So just thank you very much for joining me. Thank you for your continued work and research and everything you do to support the profession. It’s always good to have you here.

Daniel Crosby: Well, they were wonderfully thoughtful questions. You clearly have engaged and bright listeners and thank you for having me back. This podcast is for informational and entertainment purposes only and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.

Disclaimer

This podcast is for informational and entertainment purposes only, and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.