Quantifying the effect of early retirement on the wealth of individuals with depression or other mental illness

Deborah Schofield, Rupendra Shrestha, Richard Percival, Simon Kelly, Megan Passey, Emily Callander

    Research output: Contribution to journalArticle

    25 Citations (Scopus)
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    Abstract

    Background In addition to the health burden caused by mental illnesses, these conditions contribute to economic disadvantage because of their impact on labour force participation. Aims To quantify the cost of lost savings and wealth to Australians aged 45–64 who retire from the labour force early because of depression or other mental illness. Method Cross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model built on data from the Australian Bureau of Statistics’ Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model. Results People who are not part of the labour force because of depression or other mental illness have 78% (95% CI 92.2–37.1) and 93% (95% CI 98.4–70.5) less wealth accumulated respectively, compared with people of the same age, gender and education who are in the labour force with no chronic health condition. People who are out of the labour force as a result of depression or other mental illness are also more likely to have the wealth that they do have in cash assets, rather than higher-growth assets such as superannuation, home equity and other financial investments. Conclusions This lower accumulated wealth is likely to result in lower living standards for these individuals in the future. This will compound the impact of their condition on their health and quality of life, and put a large financial burden on the state as a result of the need to provide financial assistance for these individuals. The large direct medical costs of mental illness are generally attributed to the condition’s high prevalence rates.1, 2 Mental illness prevalence rates of one in four people are not uncommon in many countries.2, 3 For individuals with depression and other mental illness, in addition to the impact on health and quality of life these conditions contribute to economic disadvantage because of the impact on labour force participation. The labour force participation rate for people with a mental illness is acknowledged to generally be poor.4 A recent study estimated that 51% of Australians aged 45–64 with a mental illness and 53% of those with depression are not part of the workforce, significantly more than the 17% of 45–64 year olds with no chronic health conditions who are not part of the labour force.5 The impact of this low rate of labour force participation is reflected in the incomes of those with a mental illness; they have 37% lower average weekly incomes than people without a chronic illness (details available from the author on request). This reduction in labour force participation and income can have a lifetime impact. Early retirement may leave a large number of mentally ill people with reduced savings or accumulated wealth to finance their retirement years. The impact of the loss of savings is particularly significant for those aged 45–64, as this is the age bracket where most lifetime savings and wealth accumulation occurs.6 This wealth is generally required to finance retirement, and as life expectancy increases, this wealth will have to support longer periods in retirement.7– 9 Although there have been studies that link mental illness with reduced incomes,1, 2, 10 there is little published research assessing the impact of early retirement owing to mental illness on wealth or savings. Indeed, there has been little research on the link between early retirement due to any illness and lost savings and wealth, with just a handful of studies examining the relationship between general health status and wealth.11, 12 This study uses the recently developed Health&WealthMOD – an up-to-date microsimulation model of health, employment, income, and wealth – to quantify the cost of lost savings and wealth on people aged 45–64 who retire from the labour force early because of mental illness.
    Original languageEnglish
    Pages (from-to)123-128
    Number of pages6
    JournalBritish Journal of Psychiatry
    Volume198
    Issue number2
    DOIs
    Publication statusPublished - 2011

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    Retirement
    Health
    Cost Savings
    Economics
    Quality of Life
    Cost of Illness
    Mentally Ill Persons
    Life Expectancy
    Research
    Caregivers
    Health Status
    Chronic Disease
    Education

    Cite this

    Schofield, Deborah ; Shrestha, Rupendra ; Percival, Richard ; Kelly, Simon ; Passey, Megan ; Callander, Emily. / Quantifying the effect of early retirement on the wealth of individuals with depression or other mental illness. In: British Journal of Psychiatry. 2011 ; Vol. 198, No. 2. pp. 123-128.
    @article{d886d6e17a01493084b729b04f0e207e,
    title = "Quantifying the effect of early retirement on the wealth of individuals with depression or other mental illness",
    abstract = "Background In addition to the health burden caused by mental illnesses, these conditions contribute to economic disadvantage because of their impact on labour force participation. Aims To quantify the cost of lost savings and wealth to Australians aged 45–64 who retire from the labour force early because of depression or other mental illness. Method Cross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model built on data from the Australian Bureau of Statistics’ Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model. Results People who are not part of the labour force because of depression or other mental illness have 78{\%} (95{\%} CI 92.2–37.1) and 93{\%} (95{\%} CI 98.4–70.5) less wealth accumulated respectively, compared with people of the same age, gender and education who are in the labour force with no chronic health condition. People who are out of the labour force as a result of depression or other mental illness are also more likely to have the wealth that they do have in cash assets, rather than higher-growth assets such as superannuation, home equity and other financial investments. Conclusions This lower accumulated wealth is likely to result in lower living standards for these individuals in the future. This will compound the impact of their condition on their health and quality of life, and put a large financial burden on the state as a result of the need to provide financial assistance for these individuals. The large direct medical costs of mental illness are generally attributed to the condition’s high prevalence rates.1, 2 Mental illness prevalence rates of one in four people are not uncommon in many countries.2, 3 For individuals with depression and other mental illness, in addition to the impact on health and quality of life these conditions contribute to economic disadvantage because of the impact on labour force participation. The labour force participation rate for people with a mental illness is acknowledged to generally be poor.4 A recent study estimated that 51{\%} of Australians aged 45–64 with a mental illness and 53{\%} of those with depression are not part of the workforce, significantly more than the 17{\%} of 45–64 year olds with no chronic health conditions who are not part of the labour force.5 The impact of this low rate of labour force participation is reflected in the incomes of those with a mental illness; they have 37{\%} lower average weekly incomes than people without a chronic illness (details available from the author on request). This reduction in labour force participation and income can have a lifetime impact. Early retirement may leave a large number of mentally ill people with reduced savings or accumulated wealth to finance their retirement years. The impact of the loss of savings is particularly significant for those aged 45–64, as this is the age bracket where most lifetime savings and wealth accumulation occurs.6 This wealth is generally required to finance retirement, and as life expectancy increases, this wealth will have to support longer periods in retirement.7– 9 Although there have been studies that link mental illness with reduced incomes,1, 2, 10 there is little published research assessing the impact of early retirement owing to mental illness on wealth or savings. Indeed, there has been little research on the link between early retirement due to any illness and lost savings and wealth, with just a handful of studies examining the relationship between general health status and wealth.11, 12 This study uses the recently developed Health&WealthMOD – an up-to-date microsimulation model of health, employment, income, and wealth – to quantify the cost of lost savings and wealth on people aged 45–64 who retire from the labour force early because of mental illness.",
    author = "Deborah Schofield and Rupendra Shrestha and Richard Percival and Simon Kelly and Megan Passey and Emily Callander",
    year = "2011",
    doi = "10.1192/BJP.BP.110.081679",
    language = "English",
    volume = "198",
    pages = "123--128",
    journal = "The Journal of mental science",
    issn = "0007-1250",
    publisher = "Royal College of Psychiatrists",
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    }

    Quantifying the effect of early retirement on the wealth of individuals with depression or other mental illness. / Schofield, Deborah; Shrestha, Rupendra; Percival, Richard; Kelly, Simon; Passey, Megan; Callander, Emily.

    In: British Journal of Psychiatry, Vol. 198, No. 2, 2011, p. 123-128.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - Quantifying the effect of early retirement on the wealth of individuals with depression or other mental illness

    AU - Schofield, Deborah

    AU - Shrestha, Rupendra

    AU - Percival, Richard

    AU - Kelly, Simon

    AU - Passey, Megan

    AU - Callander, Emily

    PY - 2011

    Y1 - 2011

    N2 - Background In addition to the health burden caused by mental illnesses, these conditions contribute to economic disadvantage because of their impact on labour force participation. Aims To quantify the cost of lost savings and wealth to Australians aged 45–64 who retire from the labour force early because of depression or other mental illness. Method Cross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model built on data from the Australian Bureau of Statistics’ Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model. Results People who are not part of the labour force because of depression or other mental illness have 78% (95% CI 92.2–37.1) and 93% (95% CI 98.4–70.5) less wealth accumulated respectively, compared with people of the same age, gender and education who are in the labour force with no chronic health condition. People who are out of the labour force as a result of depression or other mental illness are also more likely to have the wealth that they do have in cash assets, rather than higher-growth assets such as superannuation, home equity and other financial investments. Conclusions This lower accumulated wealth is likely to result in lower living standards for these individuals in the future. This will compound the impact of their condition on their health and quality of life, and put a large financial burden on the state as a result of the need to provide financial assistance for these individuals. The large direct medical costs of mental illness are generally attributed to the condition’s high prevalence rates.1, 2 Mental illness prevalence rates of one in four people are not uncommon in many countries.2, 3 For individuals with depression and other mental illness, in addition to the impact on health and quality of life these conditions contribute to economic disadvantage because of the impact on labour force participation. The labour force participation rate for people with a mental illness is acknowledged to generally be poor.4 A recent study estimated that 51% of Australians aged 45–64 with a mental illness and 53% of those with depression are not part of the workforce, significantly more than the 17% of 45–64 year olds with no chronic health conditions who are not part of the labour force.5 The impact of this low rate of labour force participation is reflected in the incomes of those with a mental illness; they have 37% lower average weekly incomes than people without a chronic illness (details available from the author on request). This reduction in labour force participation and income can have a lifetime impact. Early retirement may leave a large number of mentally ill people with reduced savings or accumulated wealth to finance their retirement years. The impact of the loss of savings is particularly significant for those aged 45–64, as this is the age bracket where most lifetime savings and wealth accumulation occurs.6 This wealth is generally required to finance retirement, and as life expectancy increases, this wealth will have to support longer periods in retirement.7– 9 Although there have been studies that link mental illness with reduced incomes,1, 2, 10 there is little published research assessing the impact of early retirement owing to mental illness on wealth or savings. Indeed, there has been little research on the link between early retirement due to any illness and lost savings and wealth, with just a handful of studies examining the relationship between general health status and wealth.11, 12 This study uses the recently developed Health&WealthMOD – an up-to-date microsimulation model of health, employment, income, and wealth – to quantify the cost of lost savings and wealth on people aged 45–64 who retire from the labour force early because of mental illness.

    AB - Background In addition to the health burden caused by mental illnesses, these conditions contribute to economic disadvantage because of their impact on labour force participation. Aims To quantify the cost of lost savings and wealth to Australians aged 45–64 who retire from the labour force early because of depression or other mental illness. Method Cross-sectional analysis of the base population of Health&WealthMOD, a microsimulation model built on data from the Australian Bureau of Statistics’ Survey of Disability, Ageing and Carers and STINMOD, an income and savings microsimulation model. Results People who are not part of the labour force because of depression or other mental illness have 78% (95% CI 92.2–37.1) and 93% (95% CI 98.4–70.5) less wealth accumulated respectively, compared with people of the same age, gender and education who are in the labour force with no chronic health condition. People who are out of the labour force as a result of depression or other mental illness are also more likely to have the wealth that they do have in cash assets, rather than higher-growth assets such as superannuation, home equity and other financial investments. Conclusions This lower accumulated wealth is likely to result in lower living standards for these individuals in the future. This will compound the impact of their condition on their health and quality of life, and put a large financial burden on the state as a result of the need to provide financial assistance for these individuals. The large direct medical costs of mental illness are generally attributed to the condition’s high prevalence rates.1, 2 Mental illness prevalence rates of one in four people are not uncommon in many countries.2, 3 For individuals with depression and other mental illness, in addition to the impact on health and quality of life these conditions contribute to economic disadvantage because of the impact on labour force participation. The labour force participation rate for people with a mental illness is acknowledged to generally be poor.4 A recent study estimated that 51% of Australians aged 45–64 with a mental illness and 53% of those with depression are not part of the workforce, significantly more than the 17% of 45–64 year olds with no chronic health conditions who are not part of the labour force.5 The impact of this low rate of labour force participation is reflected in the incomes of those with a mental illness; they have 37% lower average weekly incomes than people without a chronic illness (details available from the author on request). This reduction in labour force participation and income can have a lifetime impact. Early retirement may leave a large number of mentally ill people with reduced savings or accumulated wealth to finance their retirement years. The impact of the loss of savings is particularly significant for those aged 45–64, as this is the age bracket where most lifetime savings and wealth accumulation occurs.6 This wealth is generally required to finance retirement, and as life expectancy increases, this wealth will have to support longer periods in retirement.7– 9 Although there have been studies that link mental illness with reduced incomes,1, 2, 10 there is little published research assessing the impact of early retirement owing to mental illness on wealth or savings. Indeed, there has been little research on the link between early retirement due to any illness and lost savings and wealth, with just a handful of studies examining the relationship between general health status and wealth.11, 12 This study uses the recently developed Health&WealthMOD – an up-to-date microsimulation model of health, employment, income, and wealth – to quantify the cost of lost savings and wealth on people aged 45–64 who retire from the labour force early because of mental illness.

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    DO - 10.1192/BJP.BP.110.081679

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    EP - 128

    JO - The Journal of mental science

    JF - The Journal of mental science

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