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How Does Wealth Change Around Key Life Milestones?

Jan 20, 2021

Key Takeaways

  • Homeownership, retirement, marriage, and children are associated with long-run wealth increases, likely due to changes in spending and saving habits.
  • Disability, health shocks, and divorce are associated with long-run wealth reductions.
  • Certain life events are fully anticipated and planned for, and uncertainty can be overcome through various forms of insurance.

 

Financial wellness can be shaped by many different events during one’s lifetime. Prudential engaged Stanford economists Gopi Shah Goda PhD. and Jialu L. Streeter PhD. to explore how wealth changes around key life milestones. The research project, funded by Prudential, found strong evidence that many of the milestones examined – including marriage, homeownership, childbirth, divorce, health shocks, and disability – resulted in statistically meaningful per person changes in wealth accumulation in the long run.

 

The changes in wealth represent a significant portion of overall wealth and are positive for many milestones, but negative for disability, health shocks, and divorce. The results suggest that those without lapses in health insurance and those who have access to workplace savings plans may minimize their losses to wealth in the face of certain negative events.

 

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To learn more, read How Does Wealth Change Around Key Life Milestones?   PDF Opens in a new window

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