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Death by Investing: How a 10 Percent Loss Raises Mortality Levels Stock market declines are linked to early death, illness, and fatal accidents. Are you at risk?

By Pamela Yellen Edited by Frances Dodds

Opinions expressed by Entrepreneur contributors are their own.

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Losing money in the stock market can cost you your life, and I'm not just talking about the old cliché of people jumping out of skyscraper windows when markets crash.

Related: Stock Market Rebounds After October Plunge

In fact, people with as little as 10 percent of their wealth in the stock market who experience a 10 percent loss stand an increased risk of dying early or suffering health problems such as high blood pressure and depression.

That's according to a study published in the American Economic Journal, which looked at booms and busts in the U.S. stock market between 1998 and 2011. In the study, Hannes Schwandt, assistant economics professor at the University of Zurich Department of Economics, determined that what he called "wealth shocks" strongly affect health outcomes.

"A 10 percent wealth loss leads to an impairment of 2 to 3 percent of a standard deviation in physical health, mental health, and survival rates," the study abstract stated.

Among every 100 retirees with money in the market who suffered a 10 percent wealth shock, one additional person will die within the next two years, and 2.5 more will develop health problems, the study found.

The study did not examine the impact of market declines larger than 10 percent, but it is logical to conclude that the more money that's lost, the greater the risk that loss places on investors' health.

Of course this was not the first study to examine the correlation between wealth and health, but it did raise the question: How does losing a chunk of your money lead to health problems and early mortality?

Related: President Trump Threatens More Tariffs and Spooks the Stock Market

My own explanation, as financial investigator and author, references the roller coaster of negative emotions -- anxiety, anger, frustration -- that people feel when their finances are put in jeopardy. This is because our financial security impacts our livelihood, defined as "a means of securing the necessities of life."

The flood of strong emotions people feel when they get the financial rug pulled out from under them can be especially acute for people nearing retirement, who are more vulnerable to health issues and have less time to rebuild a loss.The University of Zurich study found that negative stock market returns even make "investors more prone to driving errors and lapses." A market loss of as little as 1.5 percent (which can happen on an almost daily basis during periods of higher market volatility) was reported by another economics journal last year to increase the number of fatal car accidents by 0.5 percent,

The health risks connected to a major market decline

If health risks are evident with modest market declines, you have to wonder how many people fall ill, have accidents or die prematurely when markets crash by 50 percent or more, as has happened twice since 2000.

Another study by the University of California-San Diego examined patient records for every hospital in California over nearly three decades. It found a connection between market declines and hospital admissions, particularly for mental health conditions like anxiety, panic attacks and major depression. When the market fell nearly 25 percent, the study reported, "Hospital admissions (immediately) spiked over 5 percent."

The University of California-San Diego's study's conclusion: "Stock market declines today result in psychological distress today," meaning there's an alarming immediacy to the effects of a market decline.

Such statements are particularly worrisome considering that Americans generally have very little savings outside of the stock market and real estate, according to the Federal Reserve Survey of Consumer Finances. These are the two assets that have proved most vulnerable during economic crises.

Market volatility is a fact of life

Since 1929, we've had three market crashes where the Dow took between 16 and 25 years to recover to pre-crash levels. The current bull market is now 10 years old, making many people believe we are due for a major correction.

No one knows when that will happen, of course. But market volatility is a fact of life: We had two market corrections of 10 percent or more last year.

Related: Stock Market Falls as Trade War Between the U.S. and China Gets Nastier by the Day

Entrepreneurs and business owners, by their nature, are risk-takers. But they are also forward-looking and proactive. Have you yourself taken steps to cushion your finances -- and your health -- against potential market losses? Now is the time, before the next major correction, to diversify your retirement savings. If you need an incentive, just consider: Your life may depend on it.

Pamela Yellen

Financial security expert

Pamela Yellen is a financial security expert, a two-time NY Times best-selling author and President of Bank On Yourself. Pamela's latest book is "Rescue Your Retirement: Five Wealth-Killing Traps of 401(k)s, IRAs and Roth Plans – and How to Avoid Them."

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