The saying goes that money can’t buy happiness, and while that may be true, there’s undoubtedly a link between our finances and our feelings.
Financial services company SunLife recently commissioned a study into the relationship between happiness and major spending decisions among the over-50s, asking over 2,000 people about big purchases they’ve made, the effect these have had on their happiness, and what they would buy if they could.
Overall satisfaction
Respondents were asked how satisfied they were with their lives as a whole on a scale from 1 to 10, and the results were positive overall, with 70% of over-50s answering 6 or above, whilst 38% said 8, 9 or 10.
People seem to feel happier the older they get, particularly after reaching retirement, with 52% of over-70s ranking their life satisfaction 8 or higher.
The survey found that the happiest over-50s tended to spend more on both long holidays overseas and short stays within the UK. They also spent more on home extensions, renovations, and their gardens. Unsurprisingly, the happiest groups also tended to be free of outstanding debt.
Retirement planning
Retirement – or the prospect of retirement – has a big impact on how happy people feel, with 67% of retirees saying they felt happier in the long term having retired and only one in 10 claiming they are less happy post-retirement.
Overall, retired people reported enjoying an increase in freedom and time spent with their families, although some lamented the drop in disposable income and the lack of interaction that came with being in the workplace.
Just over half of people who had already retired did so before reaching the State Pension age, while only one in 10 delayed retirement to keep working full-time.
Meanwhile, 62% of those surveyed who haven’t retired yet said they would retire early to pursue their hobbies if money was no object, though only 26% actually said they plan to do so. A further 35% said they plan to retire once only they reach the State Pension Age, 20% plan to continue working part time before fully retiring, and 19% plan to continue working full time past the State Pension age. If you don’t know when you plan to retire, our article When can I retire? can help you figure out when that might be, or if you’re considering retiring gradually our guide How can I phase my retirement? may be useful.
If you’re thinking about getting independent financial advice, financial services company Fidelius is offering Rest Less members a free initial consultation with an independent financial advisor to chat about your finances, where you are now, and where you want to go.
There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved. Fidelius is rated 4.7/5 from over 1,000 reviews on VouchedFor, the review site for financial advisors.
When asked about inheritance, most people surveyed said they would like to leave something behind, but were reluctant to cut back on their own enjoyment of retirement to do so, and said they would rather spend or gift the money as an early inheritance while they are still alive.
Holidays
Unsurprisingly, holidays make a big difference to people’s happiness, with the happiest over-50s tending to go on holiday for longer, and spending more when they’re away.
On average, people over 50 spent £2,572 on holidays abroad for around 15 days – but the happiest in the group spent £3,180, and their holidays lasted around 18 days.
There was less of a difference when it came to domestic stays – the average stats for a UK holiday were £705 spent on a nine-day holiday. The happiest in the group spent just £48 more (£753) on slightly shorter holidays of just seven days.
Sunshine was the most sought-after element of a holiday for most respondents, with 72% calling it the most important factor when choosing where to go abroad. Around one in 10 also listed sunshine as one of the top three things that made them happy in life overall. Value for money and authentic food and drinks were the next most important things to holidaymakers.
When asked about the cost of their dream holiday, the average amount respondents suggested they might need was £11,402, with the USA and Australia named as the two most desirable destinations. More than a third (36%) said they doubted that they’d ever be able to go on their dream trip, while 24% hoped to – but weren’t sure if they would get to.
Home improvements
Over 75% of over 50s have made improvements to their home, with nine in 10 claiming doing so improved their happiness. Only 2% of people who had made home improvements said they regretted doing so.
Painting and redecorating were the most popular home improvements made, followed by fitting new carpeting and floors. Only 3% of over 50s had paid for home extensions, which cost £32,000 on average, while 16% had had a new kitchen fitted, costing £7,621 on average.
When it comes to dream improvements, 37% of people over 50 said they would get a new kitchen if money was no object. Most said that they expected not to be able to ever afford their dream renovations, which cost £29,770 on average.
If you have some renovations in mind but aren’t sure how to fund them, our article How to pay for home improvements might provide some inspiration.
Debt
Nearly half of over 50s said they had some form of outstanding debt, usually on credit cards, mortgages and personal loans. Those who had not retired yet had higher outstanding debts than those who had, and the average amount left to pay on mortgages for all over-50s was £64,786.
One in three people over 50 said they had paid off their mid to long-term debts in the last five years, while 19% admitted they haven’t fully paid off any of their debts yet.
The happiest over-50s were 4% more likely to have paid off their mortgage, and 5% more likely to have no outstanding debts compared to the average person over 50.
If you are struggling with debt, our article How to take control of your debts contains some advice you might find helpful.
Cash gifts
Being able to give loved ones a financial helping hand also boosts happiness among the over 50s.
About a quarter of over-50s reported having given a significant cash gift to a loved one, with the most common reasons being to help put a deposit down on a house, provide support following the loss of a job or income reducing, helping pay for a vehicle, gifting an early inheritance, and covering wedding costs.
The majority of over-50s who had given cash gifts within their family said doing so improved their overall happiness, particularly those who had gifted early inheritances. No-one who had given an early inheritance said it made them less happy, and nine out of 10 said it made them happier. If you think you would like to make a cash gift to a family member, our article Which gifts are exempt from Inheritance Tax? contains some useful information.
Big purchases
Excluding the kinds covered in other sections already, more than a third of over 50s said they had made big purchases in the last five years, with the most common purchase by far being a new car. The runners-up in popularity included new bicycles, holiday homes and mobile homes.
Overall, half of over 50s expressed wanting a new car, while a similar number wanted to buy a holiday home, with retired people being more likely to have dream purchases like these than those who have yet to retire. Our guides Everything you need to know about car finance and Five things to consider if you are thinking about buying a holiday let might make for useful reading if either of these appeal to you.
Cost of living crisis
Although many of us have plenty of plans for our spending when we reach retirement, financial pressures mean that many people struggle to make ends meet at all, especially given soaring living costs. Three out of four over 50s cited the increasing cost of living as their main financial concern this year. Around half of those surveyed said they were spending less on groceries, fuel and transport due to steep household bills, with many also cutting back on holiday, clothing and eating out. Our Ways to save money section is full of useful tips for exactly this.
SunLife’s Cost of Retirement study from two years ago found that 26% of retirees and 14% of non-retirees reported having no financial worries. However, the most recent data sees these numbers dropping to just 17% and 8% respectively, showing just how much the cost of living crisis has impacted people’s feelings of financial security.
As a result, many over-50s may be looking at ways to build financial resilience and raise funds so they can enjoy a more comfortable retirement. If you’re concerned about rising living costs, our articles 27 frugal living tips and Seven ways to save on your household bills may help you find ways to reduce your outgoings. If you need to raise funds urgently, to help you through these difficult times, our guide How to raise emergency cash may help. For example, options could include selling investments, or unlocking some of your property wealth via equity release.
According to SunLife’s research, 15% of homeowners said they would consider equity release, and would expect to release £88,143 on average. Around half said they would spend the cash on holidays or their home, and a quarter on debts or early retirement.
You can learn more about equity release in our guide Equity release: what is it and how does it work? and about some of the risks involved in our article Equity release – what are the risks?
If you’re looking for somewhere to start, you can get expert advice from an independent equity release specialist with Unbiased. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.
Finally…
Having the luxury of feeling financially secure and being able to spend on the things you want clearly correlates with increased happiness, according to the SunLife study, though this is unlikely to come as a great surprise.
However, most of the significant contributors to overall happiness came from people spending on their loved ones rather than on themselves, whether that involves giving them an experience like a holiday or an early inheritance. In addition, most people credited their happiness overall to their family, friends and health, or simple things like their pets and good weather, over particular purchases. Find out more about ways you can boost your happiness in our guide 10 science-backed ways to feel happier.
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