For many people, the years before retirement are dominated by one question: is there enough money? Superannuation balances, pension rules and calculators can make it seem as though a good retirement is mostly a matter of arithmetic. Money does matter, and the research is clear that financial hardship takes a real toll on wellbeing. But when researchers ask retirees how satisfied they are with life, and then look at what explains the answer, wealth is only part of the picture, and often not the largest part.
What follows draws on studies from the United States and Australia that examine money alongside the other things that shape life after work. They do not establish a single income level beyond which money stops mattering, or one ranking that applies to every retiree. They do give us good reasons to plan for health, close relationships and a sense of purpose alongside financial security.
Money remains part of wellbeing
It would be wrong to say money has nothing to do with happiness. The Australian Unity Wellbeing Index, run with Deakin University, tracks Australians’ life satisfaction. In its 2023 results, lead researcher Dr Kate Lycett reported that all groups living on a household income of $100,000 or less had personal wellbeing scores below the normal range, at a time of rising rents, power bills and food costs. According to Australian Unity’s summary of the findings, wellbeing kept rising in higher income brackets too.
A large study published in 2023 in the Proceedings of the National Academy of Sciences examined the relationship between income and emotional wellbeing in the United States. Matthew Killingsworth, Daniel Kahneman and Barbara Mellers analysed app-based reports from 33,391 employed adults aged 18 to 65. For most participants, higher household income was associated with greater happiness, with no clear plateau. For the least happy group, the association flattened above about US$100,000 a year. These were working-age adults, not a sample of retirees, so the findings cannot be directly applied to retirement incomes.
That last finding is worth sitting with, but it does not show that additional money would fail to help a particular unhappy person. The study measured associations, not the effects of giving people more money. Its broader message is that the relationship between income and wellbeing is more varied than a simple cut-off suggests.
What retirees themselves say matters most
Research focused specifically on retirement helps fill out the picture. In a 2006 working paper, Susann Rohwedder of RAND analysed more than a decade of data from the US Health and Retirement Study, which follows older Americans over time. She examined how people rated their retirement years and which circumstances were associated with more or less satisfying outcomes.
Her conclusion, in the Michigan Retirement Research Center working paper, was that health had the strongest association with the general measures of retirement wellbeing she examined. Compared with respondents reporting excellent or very good health, those reporting fair or poor health had about eight times the odds of being not at all satisfied with retirement. An eightfold difference in odds is not the same as being eight times as likely, and this observational analysis cannot establish cause and effect.
Income and wealth came next. People in the top income and wealth groups were noticeably less likely to report poor outcomes, especially worry about money. But loneliness was close behind. Feeling lonely more than doubled the odds of an unfavourable retirement outcome, an effect Rohwedder described as similar in size to being in the lowest income group. Becoming lonely during retirement was also linked to worse outcomes.
Relationships alongside spending
Michael Finke, Nhat Ho and Sandra Huston, also using Health and Retirement Study data, examined how spending and relationship quality were associated with retirees’ life satisfaction. Their 2017 research paper, prepared for a financial-planning research conference, identified leisure spending, health and the quality of spousal and friendship relationships as important factors, after accounting for financial and other personal circumstances.
The useful point is not a dollar price for a happy marriage or a formula for compensating for an unhappy one. This research suggests that how retirees use their money and the relationships in which they spend their time both deserve attention. Spending more on enjoyable activities cannot be assumed to repair a strained relationship.
This fits with one of the best-known findings on later life. The Harvard Study of Adult Development began with men in 1938 and later expanded to include their families. In a 2023 Harvard Gazette interview, its director, Robert Waldinger, described how relationship satisfaction in middle age predicted later health more strongly than the researchers had expected. He emphasised the value of having someone to rely on in times of need. That is a reason to invest in relationships alongside financial planning, rather than proof that income ceases to matter once a particular level is reached.
A reason to get up in the morning
A sense of purpose is another part of the picture. The Australian Unity researchers describe what they call a “golden triangle of happiness”: standard of living, a sense of achieving something in life, and personal relationships. That does not rank purpose above money, but it reminds us that financial wellbeing is one part of a satisfying life.
For many people, work quietly supplied the other two. It gave structure to the day, a sense of being useful and a ready-made circle of colleagues. Retirement can take all three away at once, which may be one reason loneliness can creep in, and why Rohwedder found that becoming lonely during retirement was linked to worse outcomes. People who replace those things, through volunteering, caring for family, learning something new, joining a club or simply keeping regular contact with friends, are giving attention to the parts of wellbeing that a bank balance cannot supply.
What this means for planning
None of this means financial planning is unimportant. Rohwedder’s analysis linked younger retirement ages with greater odds of worrying about income, while the Australian Unity findings show how closely financial strain and lower wellbeing can go together. These results do not establish that delaying retirement would itself prevent financial worries. Having enough to live without constant worry is a foundation, and anyone making decisions about superannuation or a pension is best to speak with a licensed financial adviser. This article offers general perspective only.
What the research does suggest is that retirement planning that stops at the money is incomplete. A practical plan might also ask how health will be looked after, who the important people will be and how contact with them will be kept up, and what will give the days some purpose. These questions are less tidy than a projected income figure, but on this evidence they may matter as much.
What the research cannot say
Most of these studies are observational. They show which things tend to go together, not which cause which. People in good health may find it easier to stay socially active, and people with strong relationships may be more likely to look after their health. Several of the studies are also American, and the dollar figures in them are US dollars, so they do not translate neatly to Australian incomes or the pension system here.
The useful message is that these parts of retirement belong together. Money provides options and security, while health, close relationships and meaningful activity also contribute to how life after work feels. There is no single income threshold or universal ranking here. A plan that gives attention to all of them is more complete than one concerned only with the size of the nest egg.
Photo: Centre for Ageing Better / Pexels
