Depression and Retirement Savings: Confounding Issues with Compounding Interest

43 Pages Posted: 15 Apr 2012 Last revised: 11 Sep 2014

Vicki L. Bogan

Cornell University

Angela R. Fertig

Medica Research Institute

Date Written: July 2014

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 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.

Keywords: retirement savings, household finance, mental health, depression

JEL Classification: G11, I10

Suggested Citation

Bogan, Vicki L. and Fertig, Angela R., Depression and Retirement Savings: Confounding Issues with Compounding Interest (July 2014). Available at SSRN: https://ssrn.com/abstract=2039714 or http://dx.doi.org/10.2139/ssrn.2039714

Vicki L. Bogan (Contact Author)

Cornell University ( email )

454 Warren Hall
Ithaca, NY 14853
United States
607-254-7219 (Phone)

Angela R. Fertig

Medica Research Institute ( email )

401 Carlson Parkway
Minnetonka, MN 55305
United States

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