AbstractUsing the 2008, 2012, and 2016 waves of the Health and Retirement Study (HRS), this study employs Structural Equation Modeling (SEM) to investigate if financial self‐efficacy mediates the relationship between affective states (e.g., state‐like emotions) and financial satisfaction and if this differs for retirees and non‐retirees. The results show that retirees' negative affective state (negative affect) in wave 1 (2008) is related inversely to their financial self‐efficacy in wave 2 (2012), and financial self‐efficacy is related positively to financial satisfaction in wave 3 (2016). The results show that negative affect is associated with lower financial satisfaction through financial self‐efficacy as a mediating characteristic for retirees. However, for non‐retirees, no statistically significant mediation relationship is found. Findings from this study contribute to the gap in understanding the lingering effects of negative affect on financial behavior and financial satisfaction levels of older adults. This study provides insights into how financial planning practitioners can help clients navigate affective states and financial self‐efficacy as they work together to reach their financial goals.