This study seeks to analyze the relationship between prior depression and anxiety, broadly termed psychological distress, and the sources and amounts of wealth at retirement. This study uses Panel Study of Income Dynamics (PSID) data waves 2007-2021, to analyze these relationships. This relationship is analyzed in two phases; 2007-2019, and 2019 and beyond, to better understand differences in the relationship in pre-COVID-19 and COVID-19 eras.

A unique feature of this study is that it examines the relationship between mental health and wealth through the lens of social drift theory, which posits that a decline in mental health increases the risk of subsequent financial hardship, which is contrary to the more commonly used social causation theory, which states that experiencing financial difficulties increases the risk of developing subsequent psychological distress.

Using a multiple regression model, this study measures psychological distress using the Kessler-6 index of psychological distress, and two measures of family level PSID wealth data: wealth inclusive of home equity, and wealth excluding home equity, as the primary variables in the model.

Our findings can help policy makers, researchers, and mental health practitioners better understand the effects of psychological distress in pre-retirement years on financial security in retirement.

Accepted Oral Presentation