The Happiest Retirees Don’t Obsess Over, They Discuss, Their Money

Almost 70% of Americans say they’d rather talk about their weight than their money. In fact, it’s right there on the Thanksgiving table taboo list with politics, sex and opinions about in-laws. But everyone has some, wants some and is chasing more, so it certainly calls for discussion. Of course, there’s a fine line between paying attention to, and obsessing about, your financial situation. Finding that balance is a must though for a happy retirement. Not sure what is vigilance and what is excessive? Read on to find out what data from our recent money and happiness survey of 1,500 U.S. retirees has to say.

Retirees who report never discussing finances with a spouse or partner were 2x more likely to be unhappy. Alternatively, the happiest group of retirees spend between one and two hours per month discussing their financial picture. These discussion topics range from retirement savings, mortgages, car loans and other debt, to healthcare and retirement location planning. Beyond two hours and up to about four hours, relative happiness levels stay reasonably consistent.

Problems emerge, however, when couples’ discussions are in excess of four and a half hours per month. At this level and beyond, happiness levels drop. When a couple dedicates this kind of time to finances, the conversations are emblematic of bigger issues –  perhaps dysfunctional spending habits that demand major conversation or, more likely, just an unhealthy obsession with money.

Money elicits all sorts of responses from retirees. Some feel shame or frustration that they aren’t at a supposed “normal” place financially and avoid discussions altogether. This ignorance is certainly not bliss, and avoiding discussion tends to compound bad situations.

Of course, as the survey shows, these ‘avoiders’ are quite unhappy. (I should remind you, it’s never too late to start saving and find happiness in retirement!). Others spend an inordinate amount of time trying to control their finances. It’s certainly understandable; CNN, social media, financial apps, they offer an unrelenting barrage of market noise. Sensational headlines and ad streams about the “best new” investment strategy can provoke a retiree to act. After all, who doesn’t want to safeguard their financial future? But in these cases, paying too much attention is counterproductive.

Happiness and learning to deal with loss.

I vividly recall a client meeting some years ago. The poor lady was just compulsively staring, mouth agape, at the ticker scrolling across a financial news TV station. Finally, she just put her hands over both eyes and continued the conversation. This wasn’t a Black Monday crash, mind you. This was a normal down day in the markets. All humans and animals have a deeply rooted, primal aversion to loss. It’s part of our DNA. Have you ever tried to take a treat from a dog? Even sweet little Lassie will unleash a guttural growl when a hand gets near her snack. In the animal kingdom, every prospective meal could be the last.

Nobel Prize-winning psychologist Daniel Kahneman documented a similarly powerful truth in human behavioral economics and the science of loss-aversion. He found that losing $100 creates 300% more negative emotion than winning $100 creates in positive emotion. Further experiments had him talking to high-powered corporate executives. He’d suggest a coin flip and if it was ‘tails’ they’d lose $10,000. He’d then ask how much money he’d have to give them for a “heads” toss, to make them take the deal. No one would agree until the upside eclipsed at least $20,000.

This aversion plays out in the day-to-day lives of everyday people too.

We’re so convinced that loss compromises survival, that we become either paralyzed to act or act impulsively. With finances, retirees must understand the nature of markets and have a healthy view on loss, recovery, frequency, length, and depth of market movement. I often remind clients that what is important isn’t marketing timing, but time in the market. By over-emphasizing money, people grow unhappy trying to control what they can’t. Worse still is that loss aversion drives people to move in and out markets unnecessarily – furthering the vicious cycle of underperformance, worry, and overreaction.

As you work toward retirement, consider ole’ Scrooge McDuck. His love of money was all consuming. He was the wealthiest duck on the planet (even wealthier than his business rival, John D. Rockerduck), yet it was never enough. His life’s mission was to protect his fortune and every word or action was part of a calculated act to avoid loss. While he certainly spent more than four or five hours a month, the obsessiveness made him miserable.

Emotion is at the crux of investing. It’s challenging to manage it in a healthy way, but it can be done. And the data says it can be achieved in a thorough but brief period each month of financial discussion. Total avoidance certainly doesn’t help. And neither does overemphasis.

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