Mental Health and Retirement Savings: Confounding Issues with Compounding Interest

Abstract:     
The questionable ability of the U.S. pension system to adequately provide for the growing elderly population combined with the rising number of people affected by mental health problems magnifies the need to understand how mental health problems affect retirement savings. This paper shows that mental health has a large and significant negative effect on retirement savings. For example, mental health problems decrease the probability of households holding pension accounts between 3 percent and 13 percent. The magnitude of these effects suggests changes to employer management and government regulation of these accounts may be required.

Number of Pages in PDF File: 43

Keywords: retirement savings, mental health, depression, memory

JEL Classification: G11, I10

working papers series