How Much Does Being Rich Matter in Retirement?
After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.


When it comes to preparing for retirement, many people rightly focus on shoring up their financial security by contributing to 401(k)s, IRAs, and other investment accounts.
With Social Security replacing only 40% of pre-retirement income, having sufficient investment income is critical to being able to maintain your standard of living after leaving work, so it comes as no surprise that saving enough money tops the list of things people think about as they prepare for their later years.
That's why a recent study from the Center for Retirement Research at Boston College may come as such a surprise. The research looked at multiple measures of retirement wellbeing to determine what impacts life satisfaction — and determined that when it comes to financial well-being, being a rich retiree, or having a large net worth, was not nearly as important as you might think.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
More money doesn't necessarily buy more happiness as a retiree
According to the research, income and wealth levels had a far lower impact on financial and life satisfaction than you might expect. Specifically:
- A $10,000 increase in annual income only increased financial well-being by 0.01 to 0.05 on a 10-point scale.
- A $1 million increase in wealth was associated only with a 0.3 to 0.8 increase in financial satisfaction on a 10-point scale.
Based on this low correlation between wealth and satisfaction, researchers concluded that "objective financial measures – such as income and net wealth – are poor predictors of older adults’ self-reported life satisfaction."
This helps to explain many past studies in which retirees report high levels of life satisfaction despite also indicating they regret not saving enough and despite having so little savings that making substantial spending cuts becomes necessary after leaving work.
What does impact retirement happiness?
So, if being richer — and even having millionaire status — doesn't have much of an effect on retiree happiness, what factors did make a difference?
The research found that physical health plays a role, with healthier retirees generally happier than those who experience serious physical issues. Finances also matter, though — but it wasn't income and savings that made a difference. Instead, it was levels of non-mortgage debt — and especially credit card debt — that had the most profound effect on life satisfaction.
Specifically, researchers found that households were one point (out of 10) less financially satisfied with their lives for every $100,000 in non-mortgage debt they owe.
It's not a surprise that debt is a big issue for retirees, as owing money leaves older Americans with less of their income to spend and can also create more financial stress as they worry about where their monthly payments will come from.
This data confirms previous AARP studies showing that debt is a major cause for concern among older Americans, with 61% of adults over 50 who carry debt reporting that the amount they owe is a problem, and 16% viewing it as a "major" problem.
Over a third (34%) of adults 50 and over who carry debt also told the AARP they had felt stressed about this burden in the past year, and one in five reported feeling depression related to their debt. Obviously, high levels of stress and depression will impact retiree happiness.
More retirees cope with debt than ever before
Unfortunately, a growing number of retirees are likely to experience a decline in life satisfaction due to debt issues, as the Federal Reserve reports that 64.8% of households aged 65 to 74 owed money in 2022, compared with just 49.7% in 1989.
The Fed also found that debt more than quadrupled in households within this demographic group between 1992 and 2022, rising from an average of $10,150 per household to $45,000 per household during that time.
High housing costs are a primary reason so many older Americans struggle, according to the AARP, as 36% of adults 50 and over mentioned this issue as a reason they owed money. Vehicle costs, everyday expenses, and an inability to work due to health or family issues were other leading reasons that older Americans said they were forced to borrow.
Bottom line
With the data showing that debt has the biggest correlation with low financial wellbeing, those planning for retirement should focus on taking steps to become debt-free before leaving work.
This could include using lower-interest personal loans to consolidate high-interest credit card debt and make repayment easier, as well as budgeting carefully to avoid borrowing or working longer to become debt-free before leaving the workforce.
While saving will remain important to fund a comfortable retirement lifestyle, treating debt payoff as a priority of similar importance will help to set future retirees up for greater happiness during their later years.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Christy Bieber is an experienced personal finance and legal writer who has been writing since 2008. She has been published by Forbes, CNN, WSJ Buyside, Motley Fool, and many other online sites. She has a JD from UCLA and a degree in English, Media, and Communications from the University of Rochester.
-
Vaccines Medicare Covers for Free
The U.S. is experiencing an outbreak of measles and is on track to have the most whooping cough cases since 1948; these vaccines Medicare covers for free can keep you safe.
By Donna LeValley
-
Why You Need a Trusted Contact for Your Brokerage
Your brokerage or bank needs someone to reach out to if it's concerned you're experiencing fraud or cognitive decline. That's where a trusted contact can help.
By John Waggoner
-
Vaccines Medicare Covers for Free
The U.S. is experiencing an outbreak of measles and is on track to have the most whooping cough cases since 1948; these vaccines Medicare covers for free can keep you safe.
By Donna LeValley
-
Why You Need a Trusted Contact for Your Brokerage
Your brokerage or bank needs someone to reach out to if it's concerned you're experiencing fraud or cognitive decline. That's where a trusted contact can help.
By John Waggoner
-
Four Takeaways From Filing Your Taxes to Boost Your Financial Future
Now that another tax season is in the rearview mirror for most of us, what lessons can you take from what you learned about your finances to plan for the future?
By Kate Winget
-
What Claims Adjusters Are Thinking vs What They're Saying
After a natural disaster, few of us are at our best, but here's what to keep in mind when you're interacting with your insurance company's claims adjuster.
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS
-
Looking to Make a Job Change? How to Stand Out Like a Pro
To make a strong first impression in interviews or when networking, skip your job title and work history and use an opening gambit that highlights your talents.
By Anne deBruin Sample, CEO
-
Customer Services are Strained at the SSA. You Should Plan Around These Federal Holidays
If you have a question or need information from a federal agency, check the federal holiday schedule to make sure you get your business done before they close.
By Donna LeValley
-
Stock Market Today: No 'Powell Put'? No Problem
Investors, traders and speculators look beyond both another Trump post and more signs of slowing economic activity.
By David Dittman
-
How to Store Your Financial Documents the Right Way
Having mountains of financial paperwork take over your home can be frustrating. Here's how to get the mess under control while still having your essential information at your fingertips.
By Laura Gariepy