If retirement is all about money, you might not be ready to stop working

Not only is retirement readiness different for each individual, not many of us are even able to describe what that actually looks like.

Successful retirement planning requires a multi-layered exploration of our wants, needs, financial anxieties and risk tolerance, along with sensitivity to what we really mean in addition to what we actually say. There’s a close analogy to psychotherapy.

This is why it’s an exercise in futility for Wall Street firms to conduct their periodic surveys of retirement readiness. Not surprisingly, these surveys often reach widely divergent conclusions.

Wall Street nevertheless keep trying. A half-dozen such firms have reached out to me already this year, publicizing their latest surveys. One published a report on Feb. 13 announcing that the U.S. retirement crisis is worse than ever, with two-thirds of workers not saving enough for retirement — and nearly one in four without enough savings to even pay for their funeral expenses.

Meanwhile, another survey — released two weeks earlier — found that 70% of U.S. workers are confident that they have saved enough for a comfortable retirement.

The inherent weakness in these surveys is that they are trying to quantify the unquantifiable. Take, for example, the survey finding that two-thirds of workers aren’t saving enough for retirement. It reached this conclusion by measuring the size of respondents’ retirement portfolios, then comparing it to a single across-the-board dollar amount that the surveyors claimed was necessary to retire comfortably.

But there is no one-size-fits-all when it comes to a retirement portfolio. Benjamin Graham, the father of fundamental analysis, made this point in his famous book “The Intelligent Investor”: “The best way to measure your investing success is not by whether you’re beating the market, but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

How many of us can answer the question “where you want to go” with more than bromides? This isn’t to say that having a sizeable portfolio is unimportant to retirement readiness. But the relationship between money and happiness is surprisingly inscrutable. Take recent research by Matthew Killingsworth, a professor at the Wharton School, and Princeton University professors Daniel Kahnemann and Angus Deaton.

The researchers found that more money brings more happiness in large part only if you are a happy person to begin with. If you’re an unhappy person, then money helps you only to a limited extent. Even for happier people, the impact of more money is a lot less than you think: A “four-fold difference in income is… less than a third as large as the effect of a headache” on a person’s feelings of happiness on a given day.

Financial advisers can play a valuable role in helping us sort out these thorny questions, Of course there are unscrupulous advisers who take advantage of vulnerable retirees and near-retirees. The presence of such advisers only reinforces the importance of searching for an adviser carefully. Just don’t let the considerable complexity of retirement planning dissuade you from the search.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.

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