3 Common Mistakes Unhappy Retirees Make and How to Avoid Them

Learn the Most Distinct Differences Between Happy and Unhappy Retirees

retirees having a hug and smiling

Retirement is often portrayed as the trophy for crossing the finish line at the end of a long working career. But in reality, retirement is just another phase of life; one that you must prepare for both emotionally and financially, just as you did for starting a family or changing careers.

How well you prepare will determine how much you enjoy your post-work years. This is important because it is indeed possible to have an unhappy retirement. In a quest to find some answers, I conducted a comprehensive study of more than 1,350 retirees across 46 states. The findings became the basis for the book You Can Retire Sooner Than You Think.

The research identified numerous distinct differences between happy and unhappy retirees. Knowing what sets a happy vs. unhappy retiree apart can help you shape your own retirement future.

Key Takeaways

  • Happy retirees have a plan for managing their money in retirement.
  • Your personal retirement happiness can hinge on how well you've saved for retirement.
  • Debt can be a significant detractor from retirement satisfaction.
  • If you're still in the planning phase, there are steps you can take to ensure a happier, more financially secure retirement.

Identify the Purpose of Your Money

The happiest retirees understand that the point of saving is to enable them to enjoy the things that they love during retirement. Whether this is traveling or donating to causes closest to their heart, happy retirees have a purpose for their money. They long ago created a vision for their post-career years. They know they want to see the world. Or own a mountain cabin. Or start a foundation. Or just garden and read when they aren’t hanging out with the grandkids. 

This vision may change over the years for any number of reasons, but when they hit retirement, happy retirees all have a good sense of how they plan to use the time and money now at their disposal. Unhappy retirees, on the other hand, lack this insight.

If you're saving and investing for retirement but don't have a clear vision of how you'll use that money, consider what an ideal retirement means to you. For example, would you like to travel? Live on a cruise ship? Start a business or side hustle? Having a plan for your money can give you a specific goal to work toward. The real issue at hand here is that happy retirees live with purpose—they have a reason for waking up in the morning—and the happiest retirees have enabled themselves to afford their purpose by planning, saving, and investing properly in the years leading up to retirement.

Aim for a Rich Ratio Greater Than 1

The Rich Ratio is very simple:​ It is the amount of after-tax money that you have in relation to the amount of money that you need. Anyone can calculate their own Rich Ratio. Simply take the amount of monthly income you should have or do have in retirement (Social Security + pension + any additional steady income streams), including what your nest egg should produce, then multiply it by one minus your tax rate, and divide the result by what you expect to spend each month to live the retirement you want: Have/Need = Rich Ratio.

For example, Jennifer wants to travel in retirement, so she needs $8,000 a month. She has a small pension from her time working with a cable company ($1,000/month), plus Social Security at age 62 of $1,800/month. She has saved $1,000,000 in her 401(k).

  • Jennifer’s Have = $1,000 (pension) + $1,800 (Social Security) + $4,100 (5 percent of her 401(k) on a monthly basis) = $6,900
  • Jennifer’s Need = $8,000
  • Jennifer’s Rich Ratio = $6,900/$8,000 = 0.86
  • Jennifer’s Rich Ratio is below 1, so we can’t consider her to be “rich,” and she falls into our unhappy retiree group.

Now take a look at Aaron. He needs just $4,000 a month to retire comfortably. He has already paid off his house, so he’s living mortgage-free. Aaron also has a small pension of $1,300/month. He receives $1,800 from Social Security every month and he has $400,000 in his 401(k).

  • Aaron’s Have = $1,300 + $1,800 + $1,650 (5% of his 401(k) on a monthly basis) = $4,750
  • Aaron’s Need = $4,000
  • Aaron’s Rich Ratio = $4,750/$4,000 = 1.18

Despite the fact that Aaron has less money in his retirement account and a smaller net worth than Jennifer, he is actually set up to be a much happier retiree. 

Fine-tuning your own Rich Ratio starts with analyzing your estimated retirement income and your estimated retirement budget. If you have no clue what you'll actually spend in retirement, now is a good time to go over your current expenses to see what may increase or decrease as you get older. You can then compare those numbers to your estimated retirement income from both tax-advantaged and taxable accounts, Social Security, an annuity, or other sources of retirement benefits.


Choose the right draw-down rate for retirement assets. The 4% rule, for example, is a good rule of thumb to follow but consider how that works for your individual situation.

Make Mortgage Payoff a Priority

 Happy retirees have either paid off their mortgage or they are within five years of having it paid off when they retire. Conversely, a large percentage of unhappy retirees have 10 or more years until their house will be paid off.

So, if you are planning to move in retirement, buy a house that you can pay off completely so you aren’t saddled with extra years of mortgage payments. Remember, buying and moving to a new house often requires moving costs, new furniture, drapes, rugs, cable and TV hook-ups, etc. The costs can quickly add up.

And before you decide that a remodeled kitchen or finished basement will make retirement more enjoyable, remember that every home improvement project has an uncanny way of leading to another project. Before you know it, you are in the middle of a significant remodel and a significant chunk of your retirement nest egg is gone. Avoid this by making major home improvements (and repairs) before you retire.


Be cautious when borrowing against home equity to pay for home improvements. If you default on a home equity loan, you could risk losing your home to foreclosure.

The same is true for other types of debt as well. If you still have student loans, car loans, or credit card debt, create a plan for paying down as much of the balance as possible. This way, more of your retirement income can go toward helping you create the happiest lifestyle possible in your later years.

The Bottom Line

Planning a happy retirement is something you can achieve if you know where to focus your time, money, and energy. Building an investment portfolio that's designed to meet your income needs. Do this by accurately estimating your retirement expenses and eliminating as much of your debt as possible. These actions can help you build a solid financial foundation for the long term.