The Cost of Loneliness in Retirement

For older adults, accounting for the cost of loneliness is just as important as financial planning.

Three older men playing basketball and smiling.
(Image credit: Getty Images)

While we often worry about saving enough for retirement, the cost of loneliness is rising as an equal threat to a happy, healthy retirement. But there are steps you can take now to build your social capital.

Loneliness and social isolation are a serious health epidemic, according to the U.S. Surgeon General. And older adults can be at increased risk due to their greater likelihood of living alone, losing friends or family, or dealing with illness.

The numbers are alarming; more than one-third of older adults experience feelings of loneliness at least once a week, according to the University of Michigan’s National Poll on Healthy Aging. It’s tempting to attribute this rise to recent events like social media or the pandemic, but the truth is that loneliness has been on an upward trajectory for the past two decades.

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This trend underscores the importance of acknowledging and addressing loneliness as a critical component of our well-being, especially as we age. Thus, alongside our financial assets, nurturing and sustaining social connections should receive equal focus in retirement planning.

The deadly serious cost of loneliness

Research indicates that around age 40, we reach the peak in the diversity of our social connections. After that, there’s a significant shift toward spending more time alone, as reported by Our World in Data.

Who Americans spend their time with, by age. Shows a steep rise in "alone" starting at age 40.

(Image credit: Our World in Data)

While being alone doesn’t always equate to loneliness, the overall picture shows our social networks are diminishing. From 1990 to 2021, the percentage of Americans with 10 or more friends dropped dramatically from 33% to just 13%, according to the Survey Center on American Life.

The impact of this social isolation is profound and can be life-threatening. Loneliness is linked to a slew of health issues, including heart disease, stroke, type 2 diabetes, depression, anxiety, addiction, dementia, and even premature death, according to the Centers for Disease Control and Prevention (CDC).

To put it in an even starker perspective, the health risk of social isolation has been equated to smoking 15 cigarettes a day.

Considering these findings, it’s clear that letting our social networks go up in smoke is a health risk we can’t afford.

The financial impact of loneliness

The potential financial consequences of loneliness add another layer of urgency.

Research, like a study from the Keck School of Medicine of USC published in Aging & Mental Health, reveals that Americans over 50 who feel lonely or dissatisfied with their personal relationships are more susceptible to financial scams. Isolation limits their opportunities to discuss financial issues with others, making them prime targets for scammers pretending to offer emotional support while exploiting them financially.

Moreover, as chronic illnesses worsen due to social isolation, medical expenses and stress levels spike, particularly impacting those without a support network during times of illness. A 2017 AARP study found that social isolation is associated with an estimated $6.7 billion in additional federal Medicare spending annually.

Essentially, a network of social support is as vital to the quality of life in later years as any financial asset, highlighting the dual importance of nurturing both financial and social health.

Combatting loneliness

Now imagine a solution to loneliness that’s more effective than any pill, offering protection from its harmful effects and boosting your health and happiness. That solution is friendship.

Simply put, nurturing good relationships keeps us healthier and happier.

The CDC suggests combating loneliness by spending time with loved ones, joining clubs or groups, enjoying nature with others, expressing gratitude, and volunteering.

Author and Harvard lecturer Dr. Jeremy Nobel emphasizes the power of connection in various forms, whether it’s a chat in the grocery line or engaging in creative activities. Art and physical exercise, for instance, reduce stress and boost “feel-good” hormones that sustainably enhance your emotional well-being.

Ultimately, overcoming loneliness lies in proactive steps. Each day, do something that connects you with others or the wider world.

Start early: the compound interest of friendship

The key to combating loneliness and reaping the benefits of social connections might just be to start early, much like the approach to saving and investing.

A recent survey from the American Psychiatric Association reveals that one in three younger people (ages 18 to 34) report feeling lonely nearly every day or multiple times a week, highlighting the prevalence of loneliness and the importance of addressing it from a young age.

The earlier you begin to intentionally build connections, the more robust these bonds will become over time. Like a financial investment, the sooner you start, the greater the compound benefits you’ll enjoy later in life.

Take the legendary 56-year friendship between Charlie Munger and Warren Buffett as an example. No wonder Buffett once advised, “The friends you have will form you as you go through life. Make some good friends, keep them for the rest of your life.”

So, the next time you’re out with friends, remember: picking up the tab isn’t a cost, it’s an investment in your well-being and future happiness.

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Jacob Schroeder

Jacob Schroeder is a financial writer covering topics related to personal finance and retirement. Over the course of a decade in the financial services industry, he has written materials to educate people on saving, investing and life in retirement.

With the love of telling a good story, his work has appeared in publications including Yahoo Finance, Wealth Management magazine, The Detroit News and, as a short-story writer, various literary journals. He is also the creator of the finance newsletter The Root of All (, exploring how money shapes the world around us. Drawing from research and personal experiences, he relates lessons that readers can apply to make more informed financial decisions and live happier lives.