'Deep financial impact' of retirement through mental ill-health

Income Protection

People who retire early because of mental illness can find themselves with up to 93% less accumulated wealth than people who continue to work, according to an Australian study. This can leave them facing hardship and lower living standards in their old age.

Researchers from the University of Sydney and University of Canberra teamed up to quantify the cost of lost savings and wealth to Australians who retire early because of depression or other mental illness. Their findings are published in the February issue of the British Journal of Psychiatry.

The study was based on a survey of 8,864 people aged between 45 and 64, of which 43 were not working because of depression, and 56 were not working because of other mental illnesses.

The average total wealth accumulated by people who were employed full time and did not have any mental illness or other chronic health condition was £218,954, while those who worked part time had accumulated a mean wealth of £198,039.

In contrast, those who were not in the labour force due to depression had accumulated an average of £133,200, while those not in the labour force because of other mental illness had accumulated just £81,824 on average.

Lead researcher Professor Deborah Schofield said: "This lower accumulated wealth is likely to result in lower living standards for these people, and the state may be required to provide financial support - a hefty financial burden. We believe that some of this financial burden could be avoided by investing more money in interventions to prevent the occurrence of mental illness in the first place."

Mental illness is a key cause of income protection claims but early intervention has been shown to achieve high return to work rates.

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