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Money doesn’t buy happiness, according to research from the Harvard Study of Adult Development.

While having more wealth will definitely improve life’s circumstances, such as health and how long you live, the degree of happiness a person will actually experience is quite small, says Marc Schulz, the study’s associate director and co-author of The Good Life, Lessons from the World’s Longest Scientific Study of Happiness.

The Harvard study has tracked young Boston men of different socioeconomic backgrounds for the past 85 years and has expanded to include women, children and various races.

Dr. Schulz spoke with Globe Advisor recently to explain what defines happiness for most people.

Why doesn’t more money equal more happiness?

We found people from the poorest of circumstances were quite happy and people in privileged circumstances who had high-paying jobs, some were quite miserable. It turns out there are other things that are much more important to achieving happiness.

Like what?

Relationships give us our most joy and happiness and they’re also the places that we go for help when we face challenges. Our ability to survive and other challenges depends on the connections we have to others.

What’s the takeaway for advisors about happiness and money?

Life is not just about safety and security. Advisors may think if clients have a certain amount of money saved for their retirement and they are debt-free, they will be happier. While those things are important, life is also about the connections that help nourish a person’s psychology, body and health.

People need to think about maintaining friendships and making new connections that will help them continue to thrive. It’s critical not just for their happiness but also for their health. They need to get new friends as they transition from work to retirement as their current work friends are less likely to continue to be part of their life. Loneliness is a very serious risk factor for early death. It’s similar to smoking 15 cigarettes a day, for example.

What are some parallels from your first happiness data in 1938 during the Great Depression versus today in 2023 with inflation, interest rates and housing affordability issues?

Stuff happens to every generation where there are big challenges that can’t be anticipated. During the Great Depression, many families were experiencing quite a lot of hardship and change in their economic fortunes. Young men were college-aged when the Second World War broke out. Around 91 per cent of that college sample ended up serving, and it wasn’t what they imagined they would do. It was the worst experience of their lives. But they also said it was also one of the best experiences. Even the most difficult challenges have a way of asking us to learn new things and to grow. Today, the housing price is a big policy challenge. I’m not sure how it will be addressed. But, you know, there will definitely be other challenges to replace the housing challenge when it’s sorted. That’s the one thing I’m certain of.

This interview has been edited and condensed.

- Deanne Gage, Globe Advisor reporter

Must-reads from Globe Advisor this week

More Canadians face financial hurdles as rents rise

Some advisors may soon find themselves helping clients who face rental challenges and need a complete cash flow analysis. In the past, sourcing other housing arrangements, such as co-ops, senior residences or an even cheaper apartment in a different neighbourhood, nearby city or town, were viable options. Now, with a housing shortage and record rent prices not just in the urban centres, advisors must think of alternatives to keep their clients afloat. Some have embraced the lifestyle of sharing expenses with friends and taking care of one another. Deanne Gage reports.

Money managers divided on timeline of China’s economic recovery

China’s shaky economy appears to be stabilizing, but investors remain cautious about its struggling property sector and weak global demand for its manufactured goods. For some, China’s economic setback is an opportunity to buy into the world’s second-largest economy at cheaper valuations. “There is great skepticism out there ... [but] I don’t think China is broken,” says Arup Datta, senior vice president and head of global quantitative equity at Mackenzie Investments in Boston. Brenda Bouw reports on how advisors are investing.

The September hangover – here’s how to get back on track after a big spending spree

Some clients spent lavishly on travel, new cars, home renovations and, in one case, a big boat through this past spring and summer. Others gave sizeable gifts – “in the hundreds of thousands of dollars” – to grandchildren to help with down payments and mortgages. Part of the spending impulse came from an understandable desire to shake off the pandemic, but some advisors see the fall as an opportunity for a reset. Alison MacAlpine explains.

Why this money manager is buying more shares of Premium Brands and trimming Starbucks

James Telfser isn’t letting market swings and the threat of a recession keep him from snapping up stocks he thinks will do well down the road. “We’re worried about the market in the short term, but we’re finding that there’s no shortage of opportunities to deploy capital for the long term,” says Mr. Telfser, managing partner and portfolio manager at Aventine Investment Counsel in Toronto, whose firm oversees about $220-million in assets. For Mr. Telfser and Aventine, that means investing in a mix of stocks, bonds and alternative assets. Brenda Bouw asks him what he’s been buying and selling.

Also see:

How parents are juggling paying for kids’ education while saving for retirement as costs rise

How parents can budget for their kids to play competitive sports

How mastering the art of scuttlebutt can generate alpha

What robo-advisors got right – and mostly wrong

Debate grows on whether Fed interest rate hikes are done for 2023 in this week’s Advisor Lookahead

What you and your clients need to know

Alberta eyes more than half of CPP’s assets in report on provincial plan

Alberta contends it is entitled to $334-billion from the Canada Pension Plan (CPP) – more than half of the fund in its entirety – according to a report that is intended to bolster the case that the province should establish a pension plan of its own. As part of Premier Danielle Smith’s bid to see resource-rich Alberta assert its provincial power over pensions, the controversial analysis could mark the beginning of a new standoff and rift with the federal government and other provinces. The document envisions a difficult and complex separation of $575-billion in CPP assets. The potential financial impacts of such a momentous withdrawal – if it were actually to proceed – would be felt across the country in the form of a much-diminished CPP pool. And that could lead to higher premiums or lower benefits for other Canadians, Kelly Cryderman and James Bradshaw report.

Two smart RRIF strategies to consider as part of your estate planning

Naming your surviving spouse, or a financially dependent child as a beneficiary can avoid a tax bill on your registered retirement income fund (RRIF) when you die. Yet when it comes to a RRIF, you have a second option. You can name your spouse as the “successor annuitant” rather than a beneficiary. In this case, your RRIF continues to exist after your death (as opposed to being wound up, with the assets transferred to your spouse’s plan), and your spouse becomes the annuitant. This is much simpler administratively. Tim Cestnick has more.

Big Six banks open to refinancing CEBA loans for small businesses

The Big Six banks say they are open to refinancing Canada Emergency Business Account (CEBA) loans for small businesses, though they provided few details and say new terms will have to be decided on a case-by-case basis. CEBA was the most widely used COVID-19 support program for businesses, with the federal government handing out loans of $40,000 or $60,000 to almost 900,000 corporations in 2020 and 2021. Ottawa changed the repayment deadlines on Thursday after months of pressure from business groups, which argued that most small enterprises still have not recovered financially from the pandemic. Chris Hannay provides more details.

– Globe Advisor Staff

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