Middle-aged or older adults who experience a sudden loss of their net worth are at a significantly higher risk of death than adults who are able to hang on to their life savings, according to a study published Tuesday in the Journal of the American Medical Association (JAMA).
More specifically, the study found that people who experience a “negative wealth shock” — who lose 75 percent or more of their total wealth during a two-year period — are 50 percent more likely to die within the next 20 years.
The study’s findings also suggest that such money shocks are not uncommon among middle-aged and older adults in the United States. More than 25 percent of the study’s participants lost most of their nest eggs during the 20 years of the study.
“Our findings offer new evidence for a potentially important social determinant of health that so far has not been recognized: sudden loss of wealth in late middle or older age,” said Carlos Mendes de Leon, the study’s senior author and professor of epidemiology and global public health at the University of Michigan, in a released statement.
Other studies have found a relationship between a major loss of net worth — as happened to many Americans during the Great Recession of 2007-2009 — and short-term health problems, including depression, anxiety, suicide, substance abuse and heart disease. The current study is, however, the first one to look at the long-term effects of a large financial loss — and not just after the Great Recession. The people in this study lost their life savings at different times during a 20-year period.
For the study, de Leon and his co-authors, which included researchers at both the University of Michigan and Northwestern University, used data collected from 8,714 participants in the ongoing National Institute on Aging’s Health and Retirement Study, which began in 1992. All the participants were born between 1931 and 1941, and were between the ages of 51 and 61 when they joined the study. Every two years, they answered questions about their health and financial status.
The financial information included the value of their assets, such as homes, businesses, individual retirement accounts, checking and savings accounts, investment holdings and vehicles, as well as their liabilities, such as outstanding medical bills, mortgages, credit card debt and home equity loans.
De Leon and his co-authors analyzed 20 years of the data, from 1994 to 2014. They found that 2,430 of the participants — or about one in four — experienced at least one serious financial setback during that period. The median loss was 92 percent of total net worth at a median value of $101,548. Another 749 participants were in “asset poverty” — no home, savings or other assets — at the beginning the study.
A total of 2,823 of the participants died during the study period. Of these, 816 were among those who experienced a wealth shock, and 380 were among the group who began the study with no accumulated wealth.
Based on that data, the researchers determined that the relative risk of dying from any cause was 50 percent higher over the 20 years for those who experienced a wealth shock compared to those who maintained their assets. That was only slightly lower than the 67 percent higher relative risk of premature death among the group who had no savings at the start of the study.
“The most surprising finding was that having wealth and losing it is almost as bad for your life expectancy as never having it,” said Lindsay Pool, the study’s lead author and a research assistant professor of preventive medicine at Northwestern University.
The data also revealed that losing your home was the asset-related factor most strongly linked to an increased risk of dying prematurely, although the risk was also found among those who lost their savings and kept their home.
Limitations and implications
The study comes with several important limitations. Most notably, it was an observational study, so it can’t prove that wealth shock causes an increased risk of premature death. Also, the information about assets and liabilities was self-reported by the study’s participants, and may not, therefore, have been accurate.
Also, as Dr. Alan M. Garber, a professor of health policy at Harvard University, points out in an accompanying editorial, the people who lost their wealth in the study tended to have lower incomes and poorer health than those who retained their assets.
“These characteristics are associated with increased mortality, raising the possibility that differences in characteristics that the study did not assess, including health behaviors and refined measures of health status at [the start of the study], might contribute to the excess mortality attributed to the wealth status,” he writes.
Still, the study’s findings have several plausible explanations. As its authors note, declining financial resources can reduce people’s spending on health-related goods and services and cause them to delay seeking medical care — factors that can have long-term health consequences.
In addition, the stress caused by a large economic loss can produce both psychological and physiological changes that increase the risk of a wide range of health problems. Over time, those problems raise the risk of premature death.
“This shows clinicians need to have an awareness of their patients’ financial circumstances,” Pool said. “Why are people dying, and can we intervene at some point in a way that might reverse the course of that increased risk?”
Garber agrees. “An opportunity to build empathy and offer support,” he writes in his editorial, “will elude clinicians who fail to recognize such a profound event and its meaning for their patient’s future.”