This study aims to analyze the relationship between prior depression and anxiety, broadly referred to as psychological distress, and its impact on age at retirement, as well as the sources and amounts of wealth in retirement. This study will utilize Panel Study of Income Dynamics (PSID) data waves 2007 to 2021, to analyze these relationships.
A distinctive aspect of this study lies in its use of social drift theory, which posits that a decline in mental health increases the risk of subsequent financial hardship. This is contrary to the more commonly used social causation theory, which states that experiencing financial difficulties increases the risk of developing subsequent psychological distress.
To evaluate these relationships, the study will employ a multiple regression model, with the Kessler-6 index of psychological distress serving as the measure of psychological distress. Additionally, two distinct measures of family-level wealth data will be used: family wealth with home equity, and family wealth excluding home equity. These variables will constitute the central measures of the model. Additionally, variables for race, gender, and ethnicity will be included, to further broaden the understanding of this relationship.
This study aims to provide valuable insights for policymakers. Specifically, offering a deeper understanding of how psychological distress during the pre-retirement years can influence retirement decisions and financial security during retirement.