When I think of the people who are having a good (or great) retirement, they seem to have four things in common. To be fair, although I think I know a lot of retirees, it’s still a relatively small sample and so perhaps not statistically significant.

Nevertheless, the four things I’ve observed from happy retirees are that they:

1. Have the right house;
2. Have enough income;
3. Know what they want to do with their time;
4. Keep family and friends close.

The right house

This is probably less about having a house which is the right size or with the right facilities. Instead, it’s about having a house that’s familiar and well located for what you want to do and who you want to see.

A lot of older people like to be in a house that’s familiar but, especially, they need to live in a place that gives easy access to friends and family. One of the big dangers for retired people is that they become isolated and don’t have enough social contact – and that’s often about where they live.

I know down-sizing is fairly popular currently, but you do need to be very careful about down-sizing when you are trying to free up capital to live on. Generally, down-sizing only frees up significant capital if you shift location, to a cheaper city or suburb, for example.

Calculate what you could draw in retirement.

Simply buying a smaller house may not give you significantly more capital after you’ve paid real estate agents, lawyers, valuers, building inspectors, and removal companies. If you only move to a smaller house there is often only minimal financial advantage – it’s usually shifting cities where major amounts are gained.

Shifting from a place means shifting from your network. Unless there is a good reason to move cities (to be nearer to family, for instance) many people would do better to stay put and use a home equity release product for additional income. This is often a better way to generate more income than down-sizing to a smaller house, and it comes with fewer disruptions.

Income

This is less about hitting a specific income threshold, and more about having a sense of comfort that the income you have is enough to support your expected lifestyle. Having enough is to be self-sufficient and this is the key rather than the size of any investment portfolio or the income that can be derived. Your income may not be great, but you should be happy if it is sufficient for a good life and for your life.

Most retirees I know like the feeling that they are drawing down from their savings an amount that gives confidence that the money will last as long as they do - they live well within their means and there is a comfort to that. My advice to people is to make sure that they relax and cut their cloth to suit, rather than overspend (or underspend!) and worry.

If you’d like to gauge how much income you could potentially generate in retirement for a given lump sum, Lifetime have a simple and free lifetime income projection tool, here.