Depression and Retirement Savings: Confounding Issues with Compounding Interest
Vicki L. Bogan
Angela R. Fertig
Medica Research Institute
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 mental health problems magnifies the need to understand how household characteristics affect retirement. Mental health problems have a large and significant negative effect on retirement savings. Psychological distress decreases the probability of holding retirement accounts between 4 percent and 15 percent. Mental health problems can decrease retirement savings as a share of financial assets by over 40 percent. The magnitude of these effects suggests changes to employer management and government regulation of these accounts may be necessary.
Number of Pages in PDF File: 43
Keywords: retirement savings, household finance, mental health, depression
JEL Classification: G11, I10
Date posted: April 15, 2012 ; Last revised: September 11, 2014
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