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Mental health and retirement savings: Confounding issues with compounding interest

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  • Vicki L. Bogan
  • Angela R. Fertig

Abstract

The questionable ability of the U.S. pension system to provide for the growing elderly population combined with the rising number of people affected by depression and other mental health issues magnifies the need to understand how these household characteristics affect retirement. Mental health problems have a large and significant negative effect on retirement savings. Specifically, psychological distress is associated with decreasing the probability of holding retirement accounts by as much as 24 percentage points and decreasing retirement savings as a share of financial assets by as much as 67 percentage points. The magnitude of these effects underscores the importance of employer management policy and government regulation of these accounts to help ensure households have adequate retirement savings.

Suggested Citation

  • Vicki L. Bogan & Angela R. Fertig, 2018. "Mental health and retirement savings: Confounding issues with compounding interest," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 404-425, February.
    • Handle: RePEc:wly:hlthec:v:27:y:2018:i:2:p:404-425
    DOI: 10.1002/hec.3579
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    3. Jermaine Toney & Vicki L. Bogan, 2024. "How Extended Family Mental Health Issues Influence Household Portfolio Allocations," Review of Economics of the Household, Springer, vol. 22(2), pages 633-708, June.
    4. Marcela PARADA‐CONTZEN, 2023. "Gender, family status and health characteristics: Understanding retirement inequalities in the Chilean pension model," International Labour Review, International Labour Organization, vol. 162(2), pages 271-303, June.
    5. Simon Appleton & Jinying Huang & Xuyan Lou & Minghai Zhou, 2024. "Money and mental health: The impact of intergenerational transfers on elderly people in China," Health Economics, John Wiley & Sons, Ltd., vol. 33(11), pages 2645-2670, November.
    6. Choung, Youngjoo & Chatterjee, Swarn & Pak, Tae-Young, 2022. "Depression and financial planning horizon," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).

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