Financial advisor Wes Moss, writing for The Balance, studied happy and unhappy retirees and came up with some interesting answers to that question. He found, for example, that retirees who own a BMW, long regarded as a luxury car associated with wealth, are actually pretty unhappy. Similarly, retirees who trade in stocks on their own, which you might associate with having enough money to put some at risk, are generally unhappy.
This led Moss to create something he calls the "Rich Ratio," which is basically "the amount of money you have in relation to the amount of money you need." In his interesting article, Moss offers two examples to demonstrate "how someone with less money saved can actually have a higher Rich Ratio and is probably living happier." His point is that money for money's sake doesn't buy you happiness; money has to have a purpose. Happy retirees, writes Moss, understand that money is not the end goal, it is simply a means for living a happy life.
This is a sensible way to put one's monetary needs into perspective. Wise retirees who have lived a relatively comfortable life during full employment years, not worrying about money, may have a more challenging time maintaining their lifestyle in retirement. Typically, income is reduced during retirement years, so even with substantial savings, it is advisable to reduce expenses as much as possible and preserve a certain amount of capital. This may mean that one's lifestyle expectations need to be adjusted in retirement. Retirees with realistic expectations may find that they don't need as much money as they think to be happy -- and that the key to happiness is not money.
Food for thought.