How Money Worries Keep Half of Us Awake at Night

Half of people ages 35 and older stay awake at night worried about their finances, a new study shows. That’s more than those kept up by concerns over their health, relationships, or career. And while the money concerns are mostly immediate, they threaten to deepen the retirement savings crisis in the long-term.

That's because financial worries can be debilitating, putting pressure on other important aspects of your life. Stressing over money has been shown to cause health issues, sap productivity at work, and lead to discord at home. This is a big reason that companies are investing in financial wellness programs and policymakers are looking for better ways to beef up retirement saving.

At some level, individuals understand the broad reach of financial difficulty. The study, from AARP’s Life Reimagined division, finds that more than half of those surveyed dread having health problems; a third believes their health will be the most important challenge they face in the next five years. One in five stays awake thinking about their relationships or their job.

With money concerns as the backdrop, these lesser worries may build and become self-fulfilling. In their groundbreaking book Scarcity: The New Science of Having Less and How It Defines Our Lives, Princeton psychologist Eldar Shafir and Harvard University economist Sendhil Mullainathan argue that people with money worries are so preoccupied with them that their brain overloads. They become dumber and make poorer decisions that feed a downward financial spiral. The authors demonstrate a significant drop and rise in IQ among certain farmers who are poor before harvest and wealthy afterward.

Financial worries seem to be a common part of each day for many, the AARP study finds. Paying for basic needs easily tops the list of financial concerns among every generation. Perhaps surprisingly, baby boomers—closer to retirement and a fixed income—are less concerned in this area than those who are younger. That may speak to younger generations’ difficulty saving. Being able to pay for an emergency is another big concern among all ages, followed by saving for retirement.

If money issues keep us up at night, the prospect of spending time with family and friends is what gets us out of bed in the morning, AARP found. A third of those 35-plus say these relationships are their chief motivation. This echoes other studies that have found that relationships and experiences are more important than material things as we grow older. More than half say that if money were not an issue they would volunteer, donate to a cause, or travel the world, again echoing earlier research about preferences in retirement.

Recognizing their money issues, and the prospect of living much longer, 73% expect a more extended stage of middle life that includes working longer, AARP finds. Just 16% of those still at work say they will be able to retire younger than their parents did and about half said they will be older—possible much older. Nearly one in three said they would retire between the ages of 70 and 79, nearly as many who expect to retire between 60 and 65.