The Retirement Rise 4.10.2023

On making more than $75k, Happiness, and a Contrast of Investment Narratives

This Week’s Good Financial News

We often hear that money ‘is the root of all evil.”

Is that true?

A common refrain over the last decade is that individuals do not experience any more happiness as their income rises above $75,000. The takeaway was if you are pursuing well-rounded life, there is no need to pursue

A recent study offers an updated perspective. It turns out that more money is correlated with happiness to a certain degree.

From the Washington Post:

But in 2021, Killingsworth, a happiness researcher and senior fellow at the University of Pennsylvania’s Wharton School, found that happiness does not plateau after $75,000, and that “experienced well-being” can continue to rise with income well beyond $200,000.

Of course, it’s complicated. According to the researchers, there are degrees of happiness, and there can often be a happiness ‘ceiling.’

The study acknowledges that happiness or emotional well-being is a changing daily scale for many people and that “happy people are not all equally happy” but argues that there are “degrees of happiness” and often a “ceiling” for happiness.

For lower-income individuals, income or wage increases can be quite impactful:

The study also found that money can affect happiness differently, depending on income. Among lower earners,“unhappy people gain more from increased income than happier people do,” it said. “In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes.”

In his statement, Killingsowrth made clear that money isn’t everything — “just one of the many determinants of happiness.” He added: “Money is not the secret to happiness, but it can probably help a bit.”

All to say, more money isn’t a bad thing. On the contrary, it can be a wonderful thing.

More can be more. And that’s okay.

An Investment Note for Retirees

Investment journalism looks like this:

• Generally Bearish: Stocks Haven’t Looked This Unattractive Since 2007 - WSJ

• Focused on the near-term instead of the long-term: Corporate Earnings Season Seen as Next Test for Stocks

Timing the market or stock picking looks like this:

• It Doesn’t Work: Stock Pickers Failed to Take Part in First-Quarter Rally

A long-term, thoughtfully-designed, and diversified investment strategy gets to enjoy the below without worrying about all of the above:

• 1st Quarter 2023 S&P 500 Return: 7.5%

• 1st Quarter 2023 MSCI EAFE (International Stocks) Return: 8.47%

I have no idea what the next month or quarter brings, but that knowledge sets me free as an investor. I focus on executing my financial and investment plan, and that’s it. I help my clients to do the same.

Try it. Let me know what you think.

Photo by David Marcu on Unsplash