personal finance

Do You Want a Happy Retirement? These 4 Strategies Can Be the Keys

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Does more money equal more happiness?

When it comes to your retirement, it does — up to a point, according to certified financial planner Wes Moss, chief investment strategist at Atlanta-based Capital Investment Advisors and author of the book, "What the Happiest Retirees Know."

"There's this real inflection point," he said. "In the early stages of accumulating, more money has a huge impact on happiness, and then it starts to plateau."

That magic number is $500,000 in retirement savings; after that, its influence starts to level off, Moss said his research shows.

Your savings aren't the only key to happiness in your golden years, either. Here are four financial strategies you can employ both now and in retirement to achieve happiness, according to experts.

1. Focus on paying down your mortgage

Some financial experts may suggest that paying off a mortgage isn't a high priority, thanks to historically low interest rates.

Yet people who pay off their mortgage within five years of retirement are four times more likely to end up happier than those who don't, Moss said his research shows.

"The psychological side of not having a mortgage, perhaps is even more powerful [than the money side], and kind of outweighs the financial argument to not pay it off," he said.

Making extra payments or sending in more than the monthly amount due can help shave years off the life of the loan.

2. Start saving now

Not only does having enough in savings help make you happy in retirement, the act of saving money can also make you feel happier, according to researcher Elizabeth Dunn, chief science officer for financial technology firm Happy Money and co-author of "Happy Money: The Science of Happier Spending."

Break your large saving goals, such as those for retirement, into bite-size pieces that feel doable, she said. Small steps are an easy way to form habits that stick.

"Just taking the time to create a savings account may have an immediate impact on your overall happiness," added Dunn, a professor in the Department of Psychology at the University of British Columbia in Canada.

As your habits stick, increase your contributions to your retirement plan so that you can have the money you'll ultimately need later in life.

3. Have multiple income streams

Three checks are better than one, psychologically speaking, even if they all add up to the same amount, Moss said.

"There's a real power in this diversification of different income streams," he said. It also provides comfort to someone who may worry about relying just on one big check.

In addition to investment income, which would come from your retirement account and potentially additional investments accounts, owning a rental property is a great way to earn extra money in retirement, Moss said.

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Social Security is also a source of income for many retirees. If you are an entrepreneur and didn't make contributions, consider getting a small business retirement plan, like a simplified employee pension (SEP) account.

Last, income from part-time work or a hobby you love, like photography or making jewelry, can also help.

"Maybe I'm no longer a 24/7 attorney; I'm no longer consulting and flying over the world," Moss said. "I'm doing something that I really love and it's part time and that counts."

4. What you spend on matters

You may think you want to buy your dream home in a new locale or splurge on a recreational vehicle to tour the country.

Yet buying things like durable goods, cars, clothes and gifts doesn't significantly increase life satisfaction in retirement, according to CFP Michael Finke, a professor of wealth management at The American College of Financial Services.

Time at the beach may be great when you are on vacation, but it could become boring once you move and live there a while, he explained.

Instead, what makes retirees happiest is spending money socializing with other people, according to his research.

"What makes us happy during our working lives are not necessarily the things that will make us happy when we retire," Finke said.

"Things like driving around in an RV or buying a home in the mountains can make us less happy if it results in social isolation."

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