Demographic and Psychosocial Predictors of Financial Strain in Older Adults

Dawn Alley, University of Maryland
Joan R. Kahn, University of Maryland

Financial strain is an important indicator of well-being that is strongly related to mental and physical health. Financial strain varies independently of objective measures of socioeconomic status, and the sources of this variation are not well understood. Additionally, few studies have examined whether the factors that predict financial strain vary across race and gender groups, despite higher reporting of financial strain among women and minorities. Using nationally representative data from the 2006 Health and Retirement Study (N=6,287), we demonstrate that psychosocial characteristics are important predictors of financial strain, accounting for more variation than is explained by objective economic measures. Economic resources, psychosocial resources, and health explain much of the variation in financial strain across demographic subgroups.