Wes Moss: Good news for those who got slow start on retirement savings

Do you have enough saved for retirement?

Probably not, if you are basing your analysis on numbers touted by Wall Street and the financial media.

But it’s your retirement, not theirs. You only need enough money to be happy; however that looks to you. And a happy retirement is about more than money. A lot more.

It’s true that fewer Americans are hitting the nest egg numbers suggested by the big investment firms. JP Morgan’s Retirement Savings Checkpoints table, for example, recommends that a 50-year-old who earns $100,000 annually have $450,000 invested. A 40-year-old making the same should have over a quarter-million saved.

Those numbers are laughable to the 62 percent of working households headed by folks ages 55-64 that have liquid savings less than their average annual incomes, according to a study by the National Institute on Retirement Security. A 2017 report showed that for households ages 50-55, the median retirement account balance was just $8,000; for those ages 56-61, just $17,000.

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There is no way around it. Money is essential to securing a good retirement. But you really don’t need millions of dollars to be happy in your post-career years. How do I know? Because I surveyed nearly 2,000 retirees across America to better understand their happiness level and what accounts for it. One of my objectives was to help my clients understand the critical elements of a happy retirement.

And, guess what? Having a multimillion-dollar nest egg is not always one of those elements.

What does make all the difference in retirement is passion. My research shows that the happiest retirees have 3.6 core pursuits. These are activities or hobbies that bring you joy and enrich your life. Such core pursuits are often lifelong interests that finally get the attention they deserve in the post-career years. My research shows that, for many people, the existence of these passions was actually responsible for the difference in happiness and unhappiness in retirement.

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So, even if you are running a little behind on that nest egg, don’t kill yourself trying to save every penny at the expense of identifying or cultivating pursuits you love. If you don’t make time to discover the hobbies that are life-giving to you, you could miss out on the fulfilling retirement you’ve worked toward for all these years — regardless of how much you have saved.

And how much do you need to have saved to have a happy retirement? I suggest a base target of $500,000, then adjust for your specific lifestyle. That might make some late starters suck in their breath, but it’s entirely doable, even for late starters. That figure was common among the happy retirees I interviewed, many of whom, granted, lived in areas with lower costs of living and/or chose to live simple lives in retirement.

By hitting that $500,000 benchmark, many retirees were able to pair investment income with Social Security, pension benefits, rental property income or even part-time work to create a solid income stream in the $5,000-per-month range.

Paying off your mortgage before your farewell party is another way to stretch a modest retirement nest egg. You don’t have to slash your mortgage with a big lump sum payment. Start to reduce your loan balance by applying a bit more to it each month.

If, for example, you have just started paying on a 30-year mortgage of $250,000 at 5 percent interest, your scheduled monthly payment is $1,342. By adding $300 per month to that payment, you can slice nearly 10 years off the mortgage and save $79,684 in interest.

My survey research shows that people are five times more likely to be happy if they have less than five years left on their mortgage. There is much truth in the saying “You don’t own your house, your house owns you.”

Here’s some more good news for those nearing retirement who may have gotten a slow start on savings: While it certainly takes some discipline and perseverance, for the group of retirees that started saving after 55, this group in my research still enjoys a higher percentage of happiness than unhappiness.

Maybe that happiness comes from having focused their efforts and achieved something remarkable — building a retirement in just 10 or 15 years.

A big retirement cushion doesn’t guarantee a happier retirement. And starting late or saving less doesn’t mean a future of misery. Start today! Set your sights on your benchmark. Get a plan in place to pay off your mortgage. Then, remember to swing a tennis racket, play some golf or hit the town for dinner and dancing, because happiness in retirement is about so much more than just money.

Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than seven years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to wesmoss.com.


This information is provided to you as a resource for informational purposes only and should not be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. There will be periods of performance fluctuations, including periods of negative returns. Past performance is not indicative of future results when considering any investment vehicle. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.


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