Inequality in Retirement Readiness; Understanding Mechanisms through Which Early Trauma Undermines Economic Well-Being in Older Adulthood

Background/purpose: Despite improvements over the past 50 years, poverty among older adults remains at 10.3% (NCA, 2022), with an even larger percent experiencing food or housing insecurity near the poverty line. As workers approach traditional retirement age and transition to older adulthood, evidence suggests widespread economic inequality. Emerging research has focused on specific types of early life course trauma (e.g., abuse/neglect) as contributors. However, few studies explored how adverse childhood experiences (ACEs) undermine later economic well-being (e.g., net worth) in a population-based sample. Using an interdisciplinary approach (economics and social work) based on life course perspective and cumulative disadvantage theory, study objectives were to: 1) investigate the extent to which ACEs undermine net worth among U.S. adults nearing retirement, and 2) examine three mechanisms in mid-life (i.e., lower education, work problems, relationship instability) that may explain the relationship between ACEs and net worth.

Methods: Analysis was based on waves of the National Longitudinal Survey of Youth 1979 Cohort, which followed a large U.S. sample of 12,686 individuals born from 1957 to 1964. In the last wave, most participants (n = 5,103) were female (51.2%), married (56.2%), racially/ethnically diverse (30.9% Black, 18.6% Hispanic, 3.0% other), and ranging in age (54-61 years). ACEs were measured with a 5-item index (e.g., physical abuse, emotional neglect, family alcohol abuse). The dependent variable (net worth) was calculated by subtracting household liabilities/debts from assets (e.g., savings/checking accounts, retirement accounts, housing equity). In addition to controls, three proposed mechanisms were measured: education (cognitive abilities), relationship instability (divorce/never married), and work history. Data analyses were conducted using Blinder-Oaxaca decomposition, in which group differences in net worth are divided between observed and unobserved factors. Regressions compared net worth between groups in two ways: no versus any ACEs and level of ACEs (none, 1-2, 3+).

Results: More than half of the sample (55%) experienced at least one ACE; 46% experienced 1-2 ACEs and 9% experienced 3+ ACEs. As hypothesized, median net worth was much higher for the group with no ACEs ($134,000), compared to any ACEs ($56,000; p<.05). Net worth for those with 1-2 ACEs was $72,000 lower than those with no ACEs; the difference was $107,000 for those with high dosage (3+) ACEs. More than two-thirds of differences (68%, p< .05) in net worth between the no and any ACE groups were explained by observed variables, including martial patterns ($16,000), lifetime earnings ($15,000), and cognitive abilities ($37,000).

Conclusion/Implications: Using an interdisciplinary approach with improved measures, a large, population-based sample, and multivariate analyses, this study was one of the first to establish the penalty that childhood adversities exert on survivors’ long-term financial health and to identify causal mechanisms. ACEs undermine retirement readiness and likely aggravate economic inequality in older adulthood. Results support policies to promote economic well-being for older adults (e.g., expanded Social Security, Medicare) and preventative programs earlier in the lifespan. Future research should examine net worth changes in late adulthood (i.e., 70 and above) and evaluate programs aimed at promoting economic equity and justice in older adulthood.