Retirement Happiness Isn’t Just About Money: What You Really Need to Retire Early and Well

When most people dream of retirement, they imagine freedom—freedom to travel, relax, spend time with family, and live without the pressure of a paycheck. But the truth is, a successful and satisfying retirement takes more than just a healthy 401(k balance. It takes planning across money, relationships, and health—the three pillars Dr. Michael Finkel identified as the biggest predictors of happiness in retirement.

1. What Actually Makes You Happy in Retirement?

According to Dr. Finkel, happiness in retirement isn’t about owning more stuff. In fact, buying durable goods like RVs or luxury cars has minimal impact on life satisfaction. What truly drives joy is spending money on experiences—like dining with friends, going on vacation, or staying socially active.

He also warns that social isolation is one of the strongest predictors of unhappiness. That means it’s not just about building your financial portfolio—it’s about investing in your relationships and making time for the people you care about. Health, of course, is the other big pillar. It’s not fully within our control, but maintaining fitness, staying active, and treating your health like a long-term investment can significantly boost quality of life.

2. Rethinking the 4% Rule

You’ve probably heard of the 4% rule—the idea that you can safely withdraw 4% of your portfolio annually in retirement without running out of money. But Finkel explains that this rule is rigid and doesn’t account for market fluctuations or personal spending changes.

Newer approaches like the floor-and-cap strategy or guardrail withdrawals give retirees the flexibility to adjust spending based on real conditions. Retirees typically split their expenses into fixed (housing, insurance) and variable (travel, entertainment) costs. If you’re planning early retirement, this flexibility in the one-third variable portion of your budget is where you can safely adjust.

3. Cognitive Decline and the Importance of Simplicity

Even with the best-laid plans, cognitive decline is a reality we all face. It tends to start gradually around retirement age and averages about 1% per year. That means if you’re managing a complex portfolio well at 65, you might not be able to do so by 80.

The solution? Automate your finances. Simplify your income streams. And plan ahead for the time when you may not want—or be able—to manage every financial detail.

4. Can You Retire Early? Let’s Spitball It.

Let’s look at three different real-life retirement scenarios:

John and Debbie (Both 54, Pennsylvania)

With $2.8M in retirement accounts and $400K in brokerage, they’re close to pulling the trigger on early retirement at 56. But with $10,000 in combined monthly spending, the margin is tight. They’d need a 3.6% withdrawal rate, which is doable but leaves little room for error. Their best bet? Delay retirement slightly or pick up part-time work to bridge the gap until Social Security kicks in at 70. And rather than taking the lump sum, John’s monthly pension is the clear winner due to its high internal return.

Steve and His Wife (Colorado)

Steve (48) and his wife (54) are sitting on a $3.9M net worth with a paid-off home. Their plan is to live on $10K a month, and they can make it work if Steve picks up $40K a year in part-time income. A 2.5% withdrawal rate is extremely sustainable. They also have a great tax strategy opportunity—making Roth conversions and capital gains harvesting while still in a lower bracket.

Eager Eagle and Partner (Washington State)

With a combined $2M+ in savings and modest fixed income, they’re ready for retirement at 65. Their $140K in annual expenses can be sustained with a 4% withdrawal rate, which their portfolio can easily support. But retiring three years earlier at 62 would require some bridge income to avoid over-reliance on savings. A phased approach could ease the transition.

Final Thoughts

Whether you’re spitballing an early retirement or planning for a more traditional path, the key to success lies in flexibility, not perfection. Build a plan that adapts to life’s inevitable changes. Prioritize relationships, experiences, and health over things. And when in doubt, take the time to reassess.

A fulfilling retirement isn’t just a financial puzzle. It’s a life strategy—and the best plans are the ones that keep you happy, healthy, and connected long after you’ve left the office behind.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.