Anxiety, depression damaging to retirement savings, study finds

ITHACA, N. Y. — Retirement doesn’t look as alluring for those afflicted with psychological issues, a new study finds.

Researchers at Cornell University recently conducted a poll, finding that those who suffered from mental health disorders, such as anxiety and depression, were less prepared financially for retirement than their peers.

Woman feeling stressed, frustrated
A new study finds that people suffering from anxiety, depression, and other mental health issues are less likely to have a strong retirement account.

Specifically, those suffering from depression or anxiety were 25 percent less likely to hold any sort of retirement account at all.

Those who do have savings are still suffering, however. Among households that do have accounts, the amounts held in those plans were relatively feeble, ranging from $15,000 less, on average, for single households, to $42,000 less for married couples than those with no mental health issues. That’s up to 67 percent less stowed away than healthy individuals or couples.

“Mental health problems could potentially exacerbate problems that households are already having managing their retirement portfolios. If that is the case, then we will have widening inequality as households with mental health problems earlier in life have fewer financial resources in retirement,” says lead author Vicki Bogan in a university press release.

Bogan and her team also found that married couples under psychological distress were 47 percent more likely to withdraw funds from their retirement accounts. While distressed individuals tended to behave the same, regardless of their relationship status, the researchers did note that there were some minor practical differences.

For example, married individuals were more likely to take early disbursements from their retirement accounts, while single individuals were more inclined to simply not put money in those accounts in the first place.

As for why mental health plays a role in retirement account strength, the researchers believe that psychologically distressed people may be more adverse to taking risks financially. Similarly, they may be concerned about having an account they can’t dip into at will.

“If your anxiety makes you think you’re not going to live long, or makes you discount the future, you might not want to save,” explains Bogan. “You might think, ‘Why should I save for that? I might not be around.'”

Bogan also points to employees not having a clear understanding of how they should take advantage of work pensions as more companies shy away from traditional savings accounts and lean towards contribution-based plans.

Considering both the scope of these findings and mental health issues today, the researchers argue that government and the private sector may have to intervene.

“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,” says co-author Angela Fertig in a press release by the Medical Research Institute. “Better understanding the link between mental health and retirement savings decisions could inform policy interventions that may encourage households to save sufficient funds for retirement through defined-contribution plans and shape national changes to the defined-contribution plan withdrawal penalties.”

With Social Security perhaps being no certain thing in the future, retirement savings will become that much more vital.

The full study was published in the journal Health Economics.


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