Researcher advises retirees to make 2 key moves for happiness in retirement: 'Preparation is key'

A recent survey from the Employee Benefits Research Institute found that retirees are experiencing lower levels of well-being than they did four years ago, with only 48% of retired Americans between the ages of 62 and 75 reporting being very satisfied with life in retirement, down from 62% in 2020 and 53% in 2022.

Digging into the data, it's not hard to see why.

Retirees' credit card debt has increased significantly due to inflation, with 68% reporting outstanding debt in 2021, compared to 43% in 2020.

Many retirees are discovering that they did not plan as effectively as they could have. Approximately half admit to saving less than what was necessary. One in three reports saving the appropriate amount, and only 17% confess to over-saving.

Despite the program's goal of replacing just 40% of preretirement pay, four out of ten retirees rely on Social Security benefits to make up more than 80% of their retirement income.

To ensure satisfaction in retirement, Bridget Bearden, a research and development strategist at EBRI and the study's author, suggests making a few key moves now that are highly correlated with satisfaction in the future.

"It all comes back to preparation," she says.

1. Enroll in your workplace retirement account and stay there

EBRI's data reveals a strong correlation between participation in workplace retirement plans and both a high standard of living and satisfaction in retirement.

Investing consistently and tax-advantagedly over the long term is possible through enrollment in a plan such as a 401(k). This allows you to benefit from compounding interest and potentially earn "free money" through a matching contribution from your employer.

Job tenure is another highly correlated factor that affects the accumulation of assets. Those who remain at a company for a longer period and switch positions less frequently tend to have more assets. On the other hand, individuals who frequently switch jobs may be tempted to cash out their old workplace retirement plan or enroll in a new one with a lower default contribution rate.

If you've been working at a job for several years, you may have increased your 401(k) contributions from the standard 6% to 10%. A common error among job-hoppers is to reduce their contributions when starting a new job, according to Jack VanDerhei, director of retirement studies at Morningstar Retirement, who recently spoke to CNBC Make It.

"When you switch jobs, you may be defaulted back to a 6% contribution. To maximize your benefits, remember what you were contributing in your previous job and maintain that level. This is particularly beneficial for younger individuals."

Ensure that you continue to contribute to retirement accounts while considering the possibility of changing jobs.

Bearden states that if you have multiple employers with high job turnover and rely on your accumulated funds to make ends meet, the outcomes are not desirable.

2. Make a plan

EBRI's data consistently shows that retirees face unexpected challenges. They retire earlier than planned, spend more than anticipated, and their lifestyle doesn't match their expectations.

According to Bearden, retirees who have someone assisting them in planning for different scenarios tend to have a high level of satisfaction in retirement. The presence of a financial advisor, which is linked to household income, is a reliable indicator of retirement contentment and the capacity to spend.

Those who can afford a financial planner are more likely to have higher levels of satisfaction due to their financial stability.

According to Bearden, having a plan, whether professionally done or not, can increase overall satisfaction during retirement because it allows individuals to feel more comfortable knowing they have accounted for the unexpected twists and turns that may occur.

It's not enough to have enough money for a comfortable retirement; it's also important to use your funds wisely to avoid overspending and depleting your savings.

"Fewer individuals are utilizing budgets compared to previous years, according to Bearden, which may be linked to an increase in retiree credit card debt. As Bearden explains, having a large sum of money without a plan can lead to overspending."

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