Consumer Reports Money Adviser published three big secrets of happy retirement and three costly traps. Here they are by way of Cypen and Cypen newsletter
(www.cypen.com).

Three Big Secrets of Happy Retirement Here is a happy statistic: Sixty-eight percent of retirees surveyed said they were highly satisfied with retired life. Another 27 percent said they are fairly satisfied. Overall, the survey found the following three explanations for why some retirees are happier than others:

Financial comfort. Net worth and retirement satisfaction are intertwined, but not as closely as one might think. Once you have accumulated $250,000 or so, including home equity, your odds of a highly satisfying retirement are better than 50-50. A key difference between today's retirees and tomorrow's, of course, is their likelihood of having a traditional pension. Among respondents, 55 percent reported receiving income from a pension; among the pre-retired, only 41 percent said they had a pension. All else being equal, a job that comes with a traditional pension would be better than one that does not, at least as far as retirement prospects are concerned.

Good health. Retirees tend to be fairly happy with Medicare coverage. Sixty-seven percent of those who have original Medicare plus a Medigap plan said they were highly satisfied, as were 63 percent with Medicare Advantage and 54 percent with original Medicare only. Health coverage from a spouse's plan or a previous employer fared well, too (60- and 66-percent, respectively).

But privately purchased insurance plans were another matter; only 30 percent of retirees were highly satisfied with them. Presumably, many in that last group had retired before 65 and were not eligible for Medicare. Unless you are in line for ex-employee health coverage or have a working spouse and can get onto your spouse's plan, you might not want to retire before age 65, if you have a choice.

Friends and interests. Nineteen percent of retirees wished they had developed enduring friendships, interests or hobbies to carry over into their retirement years. Some 45 percent of retirees with one or more regrets still reported being highly satisfied in retirement, but of those with no regrets, 73 percent

Since 2007, well-heeled retirees have been paying higher than standard rates for Part B, which covers doctors' visits and other outpatient services. This year, they are also paying a surcharge for Part D, which covers drugs.were highly satisfied. In fact, experts say that friendships and interests, or lack thereof, appear to be the single best predictor of overall satisfaction with retirement. So, if you do not already have enough friends and interests, now might be a good time to cultivate a few.

Three Costly Traps

If you were brought up to work hard and save money for your golden years, watch out. Get too comfortable in retirement and you might have to fork over higher premiums for Medicare, pay taxes on your Social Security benefits and perhaps lose some of them. If you want to maximize your benefits and minimize your tax bill, here are three traps to avoid:

Higher rates for Medicare Parts B and D. Since 2007, well-heeled retirees have been paying higher than standard rates for Part B, which covers doctors' visits and other outpatient services. This year, they are also paying a surcharge for Part D, which covers drugs. They pay their regular Part D premium to a private insurance plan and the surcharge to Medicare. How to dodge this trap? You are stuck if your income is always well over the annual limit for higher premiums and higher taxes. But you might be able to avoid the higher premiums if your income is close to the cutoff or if you have a one-time income spike. So, if you are planning to make a move that will boost your income, like selling shares of appreciated stock, it might be better to do it all in one year instead of selling blocks of shares over two or more years. Thus, your income will trigger higher Medicare premiums for only one year.

Taxes on Social Security benefits.

About 34 percent of Social Security beneficiaries lose some of their Social Security checks to the tax collector. You must pay taxes on up to 50 percent of your benefits if your combined income this year falls between $25,000 and $34,000 ($32,000-$44,000 if married and filing jointly). Your combined income is your Adjusted Gross Income and nontaxable interest, plus one-half of your Social Security benefits. If your combined income exceeds the limit, up to 85 percent of your benefits will be taxable. How to dodge this trap? If your income is close to the limits, you should do multiyear tax planning. If you are retired but your spouse continues to work and earns enough to push you over the income limit, you should do the math to figure out if it makes more sense financially for both of you to retire and take your Social Security benefits.

Reduced Social Security benefits.

If you are younger than full retirement age (as high as 67 for people born after 1959), the Social Security Administration will reduce your benefits if you continue to work and earn more than a certain amount. This year, you will lose $1 in benefits for each $2 that you earn above $14,160. If you reach full retirement age during 2011, you will lose $1 in benefits for each $3 that you earn above $37,680, until the month you reach full retirement age. The limits are tied to increases in cost of living. (Most people do not know they will eventually get back any benefits lost, as at full retirement age, their Social Security check will be adjusted to account for benefits withheld earlier. How to dodge this trap?

The real trap here is thinking that you must sidestep this trap. If you have a good job and want to supplement your income by taking Social Security benefits, there is no harm in doing so. You might make up for benefits you lose now but you will collect higher Social Security payments later. Of course, there is the possibility that you might die before you make up for the benefits that you lost while working during the early years of your retirement. Financial experts think taking a chance is worth it.