If you’re approaching retirement, it’s possible you’ve saved 10% of your monthly income for your entire working life. Maybe you’ve taken advantage of employer-sponsored retirement plans...and all of your estate planning is handled? If that’s you, excellent! You’re more financially prepared than most. However, there is another type of wealth you’ll need to build in retirement—your social wealth.
Many retirees soon learn that what they actually need to be happy is not a summer house on the lake - it’s a community of friends to enjoy it with. Maintaining, building, and expanding friendships are essential to a happy, successful retirement.
Why is building social wealth so important in retirement?
Why Relationships are Your Most Important Currency in Retirement
Financial wealth is important for many reasons - it can provide added comfort, more options, and the ability to leave a legacy. But social wealth keeps you happy and healthy. And most retirees agree, that’s everything.
Good friends are worth more than a few hearty belly laughs - they can serve as that reflective voice, coach, cheerleader, sounding board, or even critic, when you need it. Your support system is also important as you age and (potentially) face new challenges like the loss of a spouse or mobility issues.
And our close relationships have real effects on our physical and mental health. Evidence shows that support from friends and loved ones help us:
- Reduce stress and loneliness
- Recover more quickly from diseases
- Stay active and motivated
- Continue to sharpen and challenge our minds
Multiple studies have concluded that embracing community helps us live longer and age more gracefully.
Phases of Friendship Throughout Our Lives
As we move through life, our priorities shift and evolve. Naturally, so do our relationships.
Researchers have found that most people increase the number of friends they have until about age twenty-five, then that number slowly declines into late middle age.
Early in life is a time of building many diverse relationships as we “test out” our identities. For many, that’s followed by the educational, child-rearing, and/or working years. Each bringing with them new and different sets of friends.
Some of those relationships may overlap, some may fade and some will remain strong. Life events - be it distance, divorce, family demands, or changing priorities - may strain or strengthen relationships.
At some point, all of us need to rebuild our social wealth. Many people experience this after they retire. Retirement gives you more time to focus on fun and socializing, yet friendship circles tend to shrink during this period in life.
Relationship Circles and Social Wealth
As you start thinking about how to change, expand, and build relationships in the retirement phase, consider the concept of relationship circles. Sociologists often use relationship circles to help map out the connections in our lives.
Most adults can easily maintain our closest relationships with five people at a time. Yet, in our daily lives, we also interact with up to 150 other people. You can divide these people into circles based on varying degrees of intimacy and connection. When combined, these relationships circles form supportive rings around you. You’ll want to recognize and appreciate the different roles different people play in your life.
- Circle of Intimacy - The people closest to you, whom you trust and share deepest feelings with. These are the people you would be very sad to lose.
- Circle of Friendship - Friends or relatives you may call to go to dinner or see a movie but are not considered your most dear friends or those you want to see regularly.
- Circle of Participation - Acquaintances such as neighbors, gym buddies, people from your place of worship, etc.
- Circle of Exchange - Transactional relationships with service providers (doctors, therapists, hairdressers, support providers, financial advisors, attorneys, accountants, etc.)
When you think about the people in your life in terms of these circles, it’s easy to see how people may move in and out of the various circles throughout your life. Think about who would be in each of your relationship circles. Are there people in your Circle of Participation who are good candidates for the Friendship or Intimacy Circle? How can you build upon your relationship with them? It's even possible that people within your Circle of Exchange could evolve into a different type of relationship.
Whether you’re in a relationship rut or you’re after more and different social interactions, you can use relationship circles to figure out who really matters to you. And where you want to invest your time. You may even be surprised to realize you don’t need to meet new people - you just need to renew old relationships.
Wealth Legacy Institute knows retiring successfully is about more than just money. We work with you to create a plan that considers your financial goals, and the life you want to build in retirement as well.
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