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Retirement Planning May Improve Your Health

Whether or not a person contributes to a 401(k) plan may influence his or her health. Commenting on their study of employees with access to company-sponsored wellness testing, Timothy Gubler and Lamar Pierce of Washington University said they found that “retirement savings and health-improvement behaviors were highly correlated. Individuals who had previously chosen to save for the future by making 401(k) contributions improved their health significantly more than non-contributors did, even though there were few health differences between the two groups prior to program implementation.”

The study was limited in scope, but its authors believe the results demonstrate the impact of time-discounting preferences. Time discounting refers to whether a person prefers to realize a benefit now (e.g., the payment of cash) or prefers to postpone in exchange for a better benefit in the future (e.g., a larger payment of cash). The authors opine that if discounting preferences can be changed in one domain, such as the setting aside of a portion of current pay for retirement, discounting preferences are also easier to change in other domains, such as health.

Study participants were 213 employees of an industrial laundry company with facilities in multiple states. The company’s wellness program included annual screenings that included blood tests and a health-habit survey. Employees received the results, with nurses calling employees whose tests revealed highly abnormal results. The study looked at data compiled between 2010 and 2012. Financial discounting preferences were based on the amount contributed to the 401(k) plan. New employees started with a default contribution rate of 6% of salary (which maximized the company’s match), but were allowed to alter the contribution amount. There were few differences in the health of 401(k) plan contributors and non-contributors at the initial screening.

About three out of four 401(k) plan contributors saw improvement in one or more abnormal blood-test findings (blood sugar, cholesterol, etc.) compared with non-contributors. Additionally, at least one high-risk factor (heavy alcohol use, not exercising, smoking, etc.) decreased for one out of every two contributors.

The researchers ruled out factors suggesting that a link between savings and health did not exist. Gubler and Lamar found little correlation between conscientiousness in other areas (e.g., punctuality and seat belt use), the willingness to take advice from an authority figures, urgent financial needs or life expectancy and 401(k) contributions.

Source: “Healthy, Wealthy and Wise: Retirement Planning Predicts Employee Health Improvements,” Timothy Gubler and Lamar Pierce, Psychological Science, June 27, 2014.


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