According to a study from the University of Wisconsin-Milwaukee, each additional $10,000 added to your net worth in retirement increases the chance that an individual will rate his or herself among the most satisfied by 1%. This study has been cited by a number of journalists: John Clements of the Wall Street Journal, Walter Updegrave of Money Magazine, and Joel Dresang of the local Journal-Sentinel to name a few. Each has a similar take on what the study’s results mean.
* Retirees like money but dislike risk and uncertainty. Pensions and their guaranteed income help retirees feel more secure than the risk inherent in a 401(k). Today’s workers have less access to pensions. (Case in point: Alcoa’s latest announcement [via blueprint].) When these workers eventually retire, if security is an issue they may choose to convert their retirement funds to an annuity to guarantee a steady income. An annuity comes with certain costs which should be weighed.
Also, a great 401(k) might make up for a missing pension, according to Timothy Middleton. IBM is one company that put together a nice set of options and benefits for 401(k) participants.
* Active retirees are more satisfied. Retirees who work and volunteer (up to and no more than 200 hours per year) are 13 percent more likely to consider themselves satisfied. At 500 hours per year, the effect reverses.
* Control your exit. Those leaving the work force are more satisfied if their departure was their decision. If an individual is forced out or convinces to leave a job before he or she is ready — psychologically prepared, perhaps — then the retiree will feel less satisfied with retirement.
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