Life After Full-time Work Blog

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#67 Happiness Comes From Certainty About Not Outliving Your Assets

What’s the relationship between happiness and money? When we understand that, we can understand what retirees say scares them the most.

We saw in Post #3 ( that we’re hard-wired to feel happiest in our later life – that’s the U-curve of happiness. It’s because of brain chemistry. It’s not explicitly connected with giving up full-time work. It’s just a (happy) coincidence that those years are naturally our happiest time. And if we take advantage of the opportunities that that transition brings, we can enhance that happiness.

My theme in this post is to echo the medical profession’s mantra: first, do no harm. In other words, let’s do all we can to leave the post-work happiness level high, and not pull it down. Which raises the obvious question: what is it that is most likely to pull it down? And the answer is: uncertainty that causes anxiety. In particular, anxiety about money, anxiety about outliving our assets.

Surveys in North America pretty consistently highlight this as the biggest worry for retirees and near retirees. For example, The Motley Fool cites (in reverse order, for suspense) the three biggest fears facing would-be retirees[1]: #3 Social Security’s demise; #2 declining health leading to long-term care; and #1 (ta-da!) outliving retirement savings. USA Today headlines[2]: “Big retirement fear: Outliving your savings,” saying that 46% of investors are worried about this (36% of retired investors and 50% of investors who aren’t retired). In the UK, where in April 2015 the law was changed so that retirees were no longer forced to buy a lifetime income annuity with their tax-favored savings, The Telegraph ran an article titled “How to build a pension pot that can outlive you.”[3]

What, then, is the relationship between happiness and money?[4]


It turns out that money and happiness are pretty much the same thing throughout life, when you’re very poor. It’s pretty much a straight line – more money means more happiness – until income reaches subsistence levels. After that, yes, more money does generally mean more happiness, but it’s far from a straight line. Technically, it’s a logarithmic curve. What that means, in plain language, is that it takes a lot more money to buy a little more happiness.

That’s because, once we’re OK with surviving, we start to think about thriving. And we compare ourselves with people we admire, or want to emulate, or envy. Happiness is no longer something that’s absolute, it becomes relative; the measuring stick becomes a comparison with others. That’s why we see a glass half empty rather than a glass half full. And that’s also one of the reasons why poor people can feel happier than wealthier people. So much depends on our expectations and wants, rather than our needs – our lifestyle desires, rather than our survival essentials.


What about certainty? Again, we can look to the brain for this angle.

In general, the brain doesn’t have a location for various feelings. For example, there’s no happiness center. (Too bad, it would be nice if we could trigger the happiness center any time we wanted!) There’s one exception. And that’s an area (actually, two areas, one in each side of our brain) called the amygdala. (That’s the Latin word for “almond,” which is how it’s shaped.) Social scientists call that the “fight-or-flight” center. Whenever we instinctively feel alarmed or anxious, the amygdala is triggered, and in turn it instinctively triggers an emotional reaction that directs us either to fight what we’re facing or to flee from it. Either aggression or panic.

Certainty makes us feel good, precisely because uncertainty triggers the amygdala, and that makes us nervous and unhappy. There’s no time for happiness when the survival instinct is triggered, and that’s what uncertainty does. That’s why we crave certainty. This too is deep in our psyche; this too is what’s hard-wired into our brains.


For example, one of the strongest influences on happiness in mid-life is the status of employment. If you go from employed to unemployed, your happiness level falls a huge amount. Examined by age, it’s still a U-curve. But the U-curve for the unemployed is much below the U-curve for the employed. Why is that? Because all the certainty that the regular paycheck brought has gone. And instinctively, we’re afraid we may have to go into survival mode.

This fear goes a long way back. Today it’s unemployment that triggers it. That reflects the modern world. Go way back, before the modern world, to when agriculture was what we depended on. What was the big fear then? Where’s the rain? In all the systems of gods that human beings imagined in the old days, there was the chief god, and the next most important typically was the rain god, if in fact the chief god wasn’t also the rain god. For the Greeks, Zeus was both the supreme god and the rain god. The same for Jupiter, in Roman mythology. Indra, the Hindu rain god, is the leader of their gods. Even in the modern world, in a financial context, we still call some people rain-makers. When we need something, we’re very anxious until it arrives.

Yes, the certainty of the next check is vital.


In a post-work context, it’s helpful if you already know how much income you’ll need, to support your lifestyle. Then it’s possible to calculate how much you need in assets, to support that spending for a lifetime. See, for example, Post #51 ( on the subject of wealth zones. And that’s also why, in Someday Rich,[5] Noonan and Smith define being rich as having enough money to do whatever you want to do, and define financial security as being in that position all the time. Certainty! Happy? You bet!

Unfortunately, most people aren’t in this fortunate position. Typically they have enough for the essentials of life, but not enough to live their full desired lifestyle. And so they have to make some difficult choices, to balance the desire to make their assets grow with the desire to create certainty with at least some future income. We’ll explore the issues and the choices in a Post yet to come, where we’ll identify their three goals: safety of income, growth of assets and protection against the financial effects of living a long life.

Those are the three characteristics of happy income.



The biggest fear retirees have is outliving their income. And it’s a fear that’s virtually hard-wired into us. The safer your income and the higher the likelihood it’ll outlive you (rather than the other way around), the happier you’ll be.

[1] See

[2] See USA Today, September 24, 2014.

[3] See, March 4, 2016.

[4] See Ezra, Don (2014). Happiness: the Best is Yet to Come (Amazon). Chapter 14.

[5] Noonan, Timothy and Matt Smith (2012). Someday Rich: Planning for Sustainable Tomorrows Today (John Wiley & Sons, Inc., Hoboken, NJ).

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I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.

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