Quality of Life in Retirement
Kathy Longo, CFP®, CAP®, CDFA Thursday, 19 April 2018
Living life the way we envision as peaceful, abundant, secure and fulfilling is what many call the American Dream. Quality of life is a meaningful part of our needs to feel happy and safe in our lives. Unfortunately, from social isolation to diminished health to poor eating habits, people’s quality of life is at risk as they age. There are many factors that can contribute to a reduced quality of life and there are planning measures that can be taken to mitigate that loss.
Our team works with clients to help them identify opportunities to age happily. Key components frequently include reducing the risk of losing touch with friends and family, maintaining access to healthy foods, having access to quality and necessary medical care, and to maintain a sense of fulfillment as they reach an advanced age. While many people in their 40s and 50s aren’t necessarily thinking this far into the future, they may be experiencing the challenges that their aging parents are facing and see that advanced planning for aging can have a positive impact on the elderly as well as their families.
A study by Michael Finke, Nhat Ho, and Sandra Huston titled Spending, Relationship Quality, and Life Satisfaction in Retirement provided evidence that “leisure spending, health status, and spousal and friend relationships have the greatest impact on creating life satisfaction during retirement, while other types of spending and children relationships do not.”[i]
Having a plan that determines your best choices for housing, social engagement and leisure experiences (travel, cultural events, dining) as you age could have lasting benefits on your total well-being.
Aging in (the Right) Place
There are costs and benefits to where you choose to live as you age and are largely dependent on comfort, independence, and affordability. While many people are choosing to “Age in Place” for the aforementioned reasons, it is important to analyze the costs and benefits of doing so. As people get into advanced age there can arise difficulty with activities of daily living (ADLs) – like bathing, proper eating and nutrition, dressing, etc. – as well as instrumental activities of daily living (IADLs) – which are non-essential to the basics of daily living but perhaps even more important for well-being. Things like living independently, managing money, preparing meals and engaging with other people regularly are examples of IADLs.[ii]
When daily living becomes a significant struggle in any of these areas it can be beneficial to already have a strategy for where you will go. Depending on the circumstances, you might determine that a nursing home is the best place or, if you are only in need of some care, assisted living facilities or continuing care communities can be a good option. The choice of whether to sell your home or rent it out needs to be made. And, perhaps most importantly, how finances will be structured for your new living arrangements and what impact that will have on your savings and any plans you have to bequeath your estate to family or charities.
Knowing well in advance the various aging scenarios and building plans for these types of decisions can have a big impact on your financial plan and how money is saved, spent and invested. Aging creates a number of unpredictable outcomes so a flexible plan is very valuable.
We have clients who made the choice to live with their children and the experience quickly turned from being able to spend more time with children and grandchildren to becoming the de facto nanny. Others have given the highest of praise to their living situations and find great joy in being with their families on a daily basis.
According to the same study mentioned previously, statistically, there is no correlation between spending more time with children and improved life satisfaction in retirement. That is not to say that people do not enjoy being with their children and grandchildren, but it does suggest that doing so daily does not typically contribute to your overall joy.[iii]
For some people living with adult children and their families is an appealing alternative to assisted living or nursing homes and may be decided upon well before advanced aging and the potential health implications that come with it. Though in theory living with your children can seem like a win-win, give it some long hard thought, or a trial run, before you truly commit.
Relationships and Your Health
It can become more challenging to spend time with friends and family as you age. This can be associated with diminished health or lack of motivation to get out and be social. It is, however, very important for your life satisfaction according to Finke, Ho, and Huston, that you continue to engage socially and their research suggests that proximity can have an impact on the frequency of that social engagement.
There is a great deal of focus on how money impacts your well-being as you age, but the types of relationships that you have and maintain as you age can directly impact your satisfaction which, in turn, impacts your health and overall well-being.[iv]
Humans are social creatures. Since the beginning of civilization, we have lived in groups. Friends meet our social need for support and companionship beyond that which our families provide. According to The Nurses’ Health Study done at Harvard Medical School, the more friends that women had as they aged the less likely they were to develop physical health problems. This study found the results so significant that the researchers concluded that not having close friends is as detrimental to our health as smoking or obesity.
Making friends later in life can be intimidating, but incorporating it as one of your retirement goals can be a good start. Getting involved in activities that you enjoy and include others can also help to stir the social pot. Whichever way you stay socially engaged, continue to do so as you age, because your health depends on it.
As with friendships, maintaining healthy relationship habits with your spouse can lead to higher life satisfaction.[v] The research from Finke et al confirmed that high-quality marital relationships certainly contributed to satisfaction later in life, and it also explained that low-quality marriages resulted in less life satisfaction.
For more information on how marriages can be affected by retirement and how you can keep a healthy and happy relationship with your spouse please read our blog How Will Your Marriage be Affected by Retirement.
While spending money should not be considered a leisure activity or something that brings immense satisfaction on its face, there is evidence to suggest that certain types of spending help to enhance fulfillment and happiness as people age. Leisure spending, specifically on experiences rather than tangible items, had a positive impact on retirees.[vi]
So the next time you want to spend a little money, consider a concert, a Broadway show, or a bucket list vacation before you decide on the new TV, High-Tech Gadget or Car.
When considering life changes as you age is it important to explore the costs and benefits of those decisions beyond the money to truly understand the impact they will have on your personal satisfaction. Relocating to be with kids may sound ideal, but it may mean moving far away from friends and social activities that are fulfilling. Staying in your home as you age may make sense right now, but having a contingency plan is important for your future.
Aging is a part of life, and as is the case in all other life stages, happiness and fulfillment are important, if not critical, to our total well-being. Looking ahead and giving thought to how, where and in what manner you might age can have a lasting impact on you and those you love.
[v] . Ibid
About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.