A new study from TIAA adds to the body of knowledge on financial stress and its influence on mental health.
The research – which underscores employers’ role in supporting both the mental and financial well-being of their employees – draws from a survey by the TIAA Institute, TIAA’s research arm, and High Lantern Group.
The study comes just as over 40 percent of Americans face the risk of depleting their retirement savings, according to data from the Employee Benefit Research Institute. On the mental health front, the World Health Organization says 12 percent of the global population lives with a mental health condition, yet fewer than half receive necessary services.
In its report, the TIAA Institute identified financial insecurities, such as debt and the inability to cover basic needs, as key stressors that can exacerbate mental health challenges. High amounts of debt are often associated with anxiety, depression, and anger, the institute's researchers noted.
The link between mental health and wealth goes both ways. The report’s authors said that among people experiencing mental health challenges, 93 percent felt they spent more than usual, 92 percent found it harder to make financial decisions, and 56 percent took out a loan they otherwise would not have.
They also found poor mental health can negatively impact financial decision-making, with sufferers engaging in impulsive spending or risky investments, or accumulating debt without considering the long-term consequences.
The report’s findings hint at a vicious cycle of wealth and mental health challenges, with financial difficulties lead to mental health issues, resulting in poor financial decisions, which create even more financial problems and feelings of helplessness.
"We live in a world in which greater numbers of people are increasingly struggling to create financial health. And one of the biggest drivers of mental health is a person's sense of financial stability," said Tara Giuliano, chief marketing officer at US asset manager Nuveen, which is a wholly owned subsidiary of TIAA.
The report also highlighted the cost to employers, as financial stress not only detracts from productivity but also doubles the likelihood of employee absences. Forty-two percent of US adults link their mental health issues to financial concerns, contributing to a 34 percent rise in workplace absenteeism and tardiness.
"The pandemic has heightened awareness about the prevalence of mental health challenges, with rates of poor mental health rising,” said Claire Borelli, TIAA's chief people officer. “Organizations should openly discuss mental health to help break down the stigma, and importantly take a leadership role in addressing this defining issue of our time."
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