You've just turned seventy-five. The dang kids don't call. Your left knee's shot and hurts like heck. It's been a decade since you boxed up your gold watch, framed photographs, and potted plant, leaving behind the aggravations and satisfactions of a successful career. In all, you're increasingly lonely, you've got no meaningful regular work, your body is slowly deteriorating, and you've naught but paltry pension checks for income. So what keeps you from sliding inexorably into elderly ennui?

"Financial satisfaction" is what.

That's a thumbnail of the statistical sketch of later-life satisfaction drawn by University of Southern California economist Richard Easterlin in a 2006 paper published in the Journal of Economic Psychology. If you're one of the 77 million Baby Boomers now hurtling toward Social Security, or if you love one, listen up.

Money does make us happy in at least this one way: as a firewall against an otherwise soul-sapping senescence.

Easterlin, a pioneer of the study of happiness in the field of economics, set out to chart the trajectory of happiness over an ordinary person's life-span. He discovered that, on average, happiness rises slowly from our early twenties, peaks at about forty-five, and then declines as slowly as it rose. But the smooth arc of happiness over the life-cycle obscures dramatic action in average satisfaction within the main domains of life—family, work, health, and finances—that together compose the overall trend.

Easterlin, drawing on the massive General Social Survey, reports that health satisfaction heads steadily south from eighteen on, while family satisfaction peaks at about fifty then tails off determinedly. Job satisfaction hits a crescendo at about sixty and slopes off with retirement. Only financial satisfaction, like Matlock reruns, gets better with old age. Financial satisfaction, Easterlin finds, dips until the mid-thirties, levels off, then heads skyward, soaring ever higher each remaining year of life. If not for sharply rising financial satisfaction, the mild downward slide from midlife would be a sharp drop into a well of gray-haired despair. Money does make us happy in at least this one way: as a firewall against an otherwise soul-sapping senescence.

But Easterlin—a vocal critic of the money-happiness link—does not interpret his findings quite this way. Why not?

In his paper, Easterlin targets the hypothesis, popular among some psychologists, that each of us has a happiness "setpoint" that we always return to as we "adapt" or "habituate" to a new circumstance, whether it be winning a lottery or losing a leg. If true, the strong setpoint view implies that there is little we can do permanently to make ourselves either more or less happy. And it implies that public policy can't do much to affect our happiness, either—a result Easterlin is keen to avoid. So he points to the persistent decline of satisfaction with health and in other life-domains to argue against the setpoint theory: the data show we never get used to our bad knees and our ungrateful grown kids. It's a persuasive argument.

But the investment will pay off, both financially and psychologically… later.

But instead of treating the continuous rise of financial satisfaction in late life with analytical symmetry, Easterlin takes an altogether different tack. While he could have argued that satisfaction with our material resources, like dissatisfaction with our health, does not fully dissipate and therefore provides yet another reason to reject the strong setpoint theory, Easterlin tells a very different tale, one about the way we readjust our financial aspirations over time. Early in life, Easterlin maintains, we are disappointed by a mismatch between financial hope and reality. But then, "later in life aspirations may level off and decline, and the pressure of debt payments on income diminish. As financial worries recede, satisfaction with one's financial situation rises."

Surely this is part of the story. But why not argue that we enjoy having and spending lots of money and we never get over just how sweet it really is—just as we don't like having bad knees and never get over how bad it bites. It can't be that we don't have lots of money when we're old, because oldsters are swimming in it, relatively speaking. According to the Federal Reserve's Survey of Consumer Finances, net wealth peaks at about sixty years old, just before retirement, with a net worth of about a quarter million for the median household. Compare that to the approximately $75,000 net worth for the median household headed by a forty year old. Eighty-year olds have it twice as good, even after two decades of drawing down retirement funds, with a median net worth of around $150,000. (And you can't take it with you!)

What are those debt payments Easterlin mentions for? For houses, cars, small business loans, the kids' tuition, and so on. Once all that stuff's paid off and once you retire, then what have you got? Kids who've moved to Phoenix and Atlanta, for one thing. Sorry! But you've also got a passel of assets to sell or enjoy, money finally freed up to spend on yourself, and a surfeit of leisure with which to spend it.

Easterlin is right that "the upturn in later life clearly cannot be due to rising income," since income does drop sharply at retirement. But this point appears to have distracted him, illustrating the hazards of focusing on income as a stand-in for an individual's overall economic condition.

Financial satisfaction – ownership, wealth, fiscal freedom -- is the lone buoy that keeps seniors' life satisfaction from sinking.

There is often a wide gap between new income and final consumption, which is well-reflected in the life-cycle career of financial satisfaction. For example, this thirty-four year-old (at the statistical nadir of financial satisfaction, I must add) is still making monthly payments on student loans. While these loans have bought me a high level of "human capital," I've yet to see compensating returns on my investment, and I'm sending a good part of my current income to my creditor, and therefore not spending it on mind-blowing trips to Thailand. But the investment will pay off, both financially and psychologically… later.

Moreover, kinds of consumption vary widely with stage of life, and not all kinds are equally satisfying. For example, people who chose to have children opt for a huge expense—a heavily kid-centric pattern of consumption for about two decades. As Dan Gilbert argues in his bestseller Stumbling on Happiness, kids—though enormously expensive--don't make us especially happy: we just think they will. (According to the USDA, each child costs an average of about $180,000 for middle-income families—and that's only until age eighteen.) We are unlikely to take a great deal of personal pleasure in income spent on diapers, day care, braces, and tuition. Nor do parents internalize the whole benefit of shared family goods, such as bigger houses, cars, and appliances. Even if you're raking in the dough, there may be little "me money" left at the end of the day.

But by retirement—at the apex of total wealth—just about all that money is "me money" (or, one hopes, "us money" for intact couples). Add the plausible hypothesis that old people have discovered through long experience patterns of consumption that give them real pleasure— tooling around in Winnebagos from one early bird dinner to the next—and it's easy to see why silver foxes get the most from the green.

What the numbers on the late-life surge in financial satisfaction show us is that deferred gratification is gratifying indeed. And it's a good thing, too. Financial satisfaction—ownership, wealth, fiscal freedom—is the lone buoy that keeps seniors' life satisfaction from sinking. So kick up that 401K contribution, kids, and let compound interest go to work. It may sting now, but, surveys say, your doddering, future self may have nothing else.

Will Wilkinson is a policy analyst at the Cato Institute, managing editor of Cato Unbound, and author of a recent Cato Institute study, " In Pursuit of Happiness Research: Is It Reliable? What Does It Imply for Policy."

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