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Retirement planning isn't just about the money

Senior couple on park bench
Hill Street Studios | Blend Images | Getty Images

The gleam of your Golden Years is anything but certain.

A number of predictors indicate just how happy you'll be in retirement, Michael S. Finke, a certified financial planner, told attendees Tuesday at the American Institute of Certified Public Accountants' Advanced Personal Financial Planning Conference in Las Vegas. Some factors are under your control; others, less so:

Assets

One big predictor is, of course, money. Wealthier consumers tend to be more satisfied in retirement, although they're only spending about $10,000 more a year than middle-income folks, said Finke, director of retirement planning and living at Texas Tech University's department of personal financial planning.

It's not the amount spent that's making them happier, but rather, how it's used. "Think about money as access in retirement," he said. Wealthier retirees spend less time watching TV compared with middle-wealth retirees, and more time in physically active and social pursuits—which are ultimately more satisfying.

But there's a fine line. Having too much money can reduce happiness. Retirees who have saved more than about $3.5 million report lower satisfaction levels, said Finke. At that level of wealth, part of your retirement "job" is likely to include asset management, and handling requests from family and charities for assistance. "We have to worry about managing a complex nest egg, and that might make people less happy," he said.

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Spending habits

Savers may have a tougher time making the transition to retirement spending. "It's trying to turn ants into grasshoppers," he said, referencing Aesop's fable about virtues. Annuitizing retirement income can help there because it gives more of a license to spend, easing the stress over how much is too much, he said.

Income

A 2012 study from researchers at the University of Wisconsin-Milwaukee and Boston College's Center for Retirement Research found that pension and Social Security income was very satisfying; money from defined contribution plans less so. Satisfaction for earned income of any kind is negative, said Finke.

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Age

Retired or not, getting older can make you happier, period. Studies have found a happiness "u curve," Don Ezra, author of "Happiness: The best is yet to come," told AICPA attendees in another session on longevity risks. "Happiness comes from different circuits in the brain," he said. Want-generating dopamine declines and like-inducing opioids increase with age. At age 70, you're happier than you are at age 20, he said.

Finke said timing matters, however. "The peak happiness years of retirement tend to happen between 66 and 70," he said. Retiring late can mean that you don't have the health—or the desire—to travel and be more active. Once retirees hit age 70, they tend to sleep more and watch more TV. "Especially when you get those later years, it can be a trial to spend a lot of money," he said.

Marital status

A good marriage can be one of the strongest predictors of happiness, said Finke. "Positive relationships with your spouse become even more important after retirement," he said. Married people and those in a "close relationship" report high levels of satisfaction. But there's nuance here, too. Couples where one spouse retires before the other are less satisfied, so consider coordinating your workplace exits.

Single? Don't despair. "The happiest group of retirees are women who get divorced between the ages of 60 and 65," said Finke.

Health

"If you don't have the health to be able to enjoy the commodities you're producing, you're not going to be happy in retirement," said Finke. Of course, health-care costs can also eat into assets saved for retirement, adding stress on that front.

Social connections

Retirees who report having more social interactions are happier, according to a 2011 Gallup poll. Our social networks naturally decline when we leave the workforce, said Finke, and the hobbies and activities we choose can be important in generating life satisfaction.

It's important to consider that those may be different activities than what you enjoy now, he said. Golf, for example, can be a way for a worker to escape the family and relax, but a retiree could enjoy it less if their golfing buddy isn't someone they especially like. Plan ahead for that possibility by using a few weeks' vacation to "practice being retired," said Finke. That can help you figure out what activities really make you happy.

Living situation

Owning your own home can be satisfying—to an extent, said Finke. His research has found that once you're in your 80s, you're happier as a renter, without all the responsibilities of maintaining a home.

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Proximity to kids

"Don't overestimate the amount of happiness you're going to get by moving close to your children in retirement," said Finke. Retirees who live less than 10 minutes from their kids are ultimately less satisfied. Find other ways to be close. Just having kids can be a predictor of a happier retirement.