Income Shocks, Financial Hardship, and Changes in Depression Symptomatology Among Older Americans During the First Year of the COVID-19 Pandemic

Abstract

Using data from the 2018 and 2020 waves of the Health and Retirement Study, this research examined the effect of financial hardship experienced during the COVID-19 pandemic on the mental health of older Americans. Estimates from the ordinary least squares and logistic regressions showed that individuals who experienced income shocks, particularly those with decreased retirement savings/assets income, reported more depressive symptoms and a higher likelihood of depression. Similarly, financial hardship measured as the number of financial arrears was found to be positively correlated with depression symptoms and the onset of depression. Depression symptomatology and onsets were mainly influenced by pandemic-related shocks to retirement/assets income among retired individuals and by earnings shocks among nonretired respondents. The effects were more pronounced among retired individuals and those without a preexisting history of psychiatric problems.