How Is Retirement Wealth Affected by Adverse Childhood Experiences?

Introduction

Social Security is the nation’s largest social insurance program and the backbone of the U.S. retirement income system. When Franklin D. Roosevelt proposed the program in 1934, he emphasized the insurance aspect, presenting it as a safeguard against the “hazards and vicissitudes of life.” And those hazards can start early. Many young people suffer from serious negative incidents, such as physical abuse and parental separation, with potentially long-lasting consequences. These adverse childhood experiences (ACEs) have been associated with less education and employment, lower earnings, and higher rates of divorce. Such outcomes are damaging on their own and can also impede the ability to build wealth. But little research has focused on the association between ACEs and wealth as individuals approach retirement. This brief, based on a recent paper, explores this association using the National Longitudinal Survey of Youth 1979 Cohort (NLSY79).¹

The brief proceeds as follows. The first section provides background on ACEs and what is known about their impact. The second section describes the data used to identify ACEs and the methodology relating these events to late-career wealth. The third section presents the results. The final section concludes that all of the ACEs identifiable in the NLSY79 are associated with significant reductions in wealth as people approach retirement. While it is difficult to infer causality given the vast array of childhood issues that accompany ACEs, these differences in wealth persist even when controlling for demographics and family socioeconomic status. The association between ACEs and wealth approaching retirement is a good reminder of the importance of Social Security as a financial backstop – particularly as it provides higher benefits relative to earnings for lower earners, who also tend to have little retirement wealth.

Background

In the 1990s, a seminal study based at Kaiser Permanente’s San Diego Health Appraisal Clinic first laid out the idea of ACEs, identifying 10 experiences that fit into three broad categories: abuse, neglect, and household dysfunction.² In the decades since, a vast literature has linked these experiences to health problems and early mortality.³ A separate literature has connected them to mental health problems in adulthood.⁴

Since this initial flurry of research, more recent studies have found that these physical and mental health impacts spill over to individuals’ finances. Before people even start their careers, ACEs reduce the probability of getting a college degree, one of the best predictors of career earnings.⁵ Once working, those with ACEs have high rates of absenteeism and other issues at work.⁶ Not surprisingly, they also have much higher rates of nonemployment.⁷

While employment outcomes are one obvious way ACEs could impact the accumulation of wealth, less direct ways exist too. Survivors of childhood abuse and neglect are more likely to never marry.⁸ And, once married, middle-aged adults with a history of ACEs are more likely to be divorced or separated.⁹ Marriage has long been linked to faster wealth accumulation, with divorce having negative impacts.¹⁰

Yet, despite this research suggesting the strong potential for ACEs to limit late-career wealth, less research has focused on the topic. The most relevant work finds that, in the United Kingdom, ACEs lead to lower late-career earnings as well as higher poverty rates.¹¹ But the question of how much ACEs impact late-career wealth, and thus retirement security, in the United States remains unanswered.

Data and Methodology

This brief uses data from the 1979-2018 survey years of the National Longitudinal Survey of Youth 1979 Cohort (NLSY79). This survey began as a sample of 12,686 individuals ages 14-22 (born from 1957-1964), who were ages 52-60 at the end of our analysis period. This section first focuses on how ACEs are identified in the data. It then discusses the measure of wealth used for the analysis. Finally, it turns to factors related to respondents’ family background that may coincide with ACEs and could also drive wealth accumulation.

Identifying ACEs

Table 1 lists the five (of 10) ACEs that can be identified in the NLSY79 data. All of these data are retrospective – i.e., they were collected well after the ACE occurred. The first four listed in Table 1 are based on a 2012 NLSY79 module and the last on data collected mostly in 1988.

Figure 1 (on the next page) shows that about half of people experience at least one ACE identified in the NLSY79 data, with parental separation most common and household mental illness least common. Physical abuse, emotional neglect, and alcohol abuse occur at relatively similar rates of 15-18 percent.

The retrospective nature of the data deserves some attention, since individuals may either forget adverse events as they age, exaggerate them to justify poor economic or other outcomes, or inaccurately report such events for a variety of reasons (e.g., shame, trauma, family pride, community norms).¹² However, in the case of physical abuse, emotional neglect, and family alcohol abuse, the NLSY79 estimates in Figure 1 are close to those from other data sources.¹³ But household mental illness does occur at a lower rate in the NLSY79 than in other studies. So, results on this ACE in particular should be interpreted with some caution.¹⁴ The question is whether those with the ACEs identified in Figure 1 have different net worth than those without them.

Data on Net Worth

This analysis measures wealth as assets minus liabilities for the individual’s household.¹⁵ Assets include savings and checking accounts as well as directly held stocks, bonds, and CDs, and the value of retirement accounts such as 401(k)s and IRAs. Assets also include the self-reported value of homes, other real estate, vehicles, and businesses. Debts include money owed on homes, other real estate, vehicles, and businesses, as well as any revolving debt. Figure 2 shows data on median net worth for those without any of the ACEs identified in the NLSY79 versus those with them and illustrates the shortfall that accumulates over the lives of those with ACEs. By the time individuals approach retirement, the net worth of those with ACEs is less than half the level as those without ACEs.

Accounting for Family Background

One reason that individuals with ACEs may experience different wealth accumulation is a less advantaged starting point in life, independent of the adverse experiences emphasized in our analysis. To capture this possibility, the analysis controls for various demographic and family factors: gender, race/ethnicity, mother and father’s education, whether the individual’s parents were ever married, and the household’s total family income in 1978.¹⁶

These controls are potentially important, as individuals who experience ACEs are disproportionately female, Black, and Hispanic, all characteristics that might result in lower net worth near retirement. Additionally, parents of those without any ACEs are slightly more educated than those with an ACE, but are similarly likely to have been married. Median family income is substantially higher for those without ACEs – $53,900 versus $34,100 (in 2018 dollars).

To account for these differences, the brief conducts five regression analyses comparing the median net worth of individuals with no ACEs to those experiencing each identified ACE. The regressions take the following form:

Median net worth = ƒ(specific ACE, demographic and family characteristics)

Results

Figure 3 presents the results for the five ACEs identifiable in the NLSY79, showing both the uncontrolled median difference and the regression results including the control variables in Table 2. Full regression results are available in the Appendix.¹⁷

The results clearly show that each ACE is associated with significant reductions in net worth in retirement. These differences exist whether or not controls are included, but aside from household mental illness, are larger without controls. The uncontrolled results present a stark reality – individuals that have experienced ACEs end up with net worth near retirement that is $48,000 to $85,000 lower than those without ACEs. Compared to the median net worth of $110,000 for those without any ACEs, this represents a relative reduction of 44 to 77 percent. While these differences could be driven by characteristics of their families that go beyond ACEs – like lower household income – this disparity speaks to the ways in which a host of early childhood events, possibly including unobserved ones correlated with ACEs, might shape people’s adult financial outcomes.

Looking at the results with controls, the effect sizes range from $28,000 for those with parental separation to $50,000 for those with a mental illness in their household growing up. These reductions are also considerable – ranging from 25 to 45 percent relative to those without ACEs. And, importantly, these large negative effects are occurring for people who otherwise come from similar households with respect to race, parental education, and parental income. So, beyond these socioeconomic characteristics, it seems likely that ACEs reduce net worth.

Conclusion

Through no fault of their own, the late-career adults analyzed in this brief were exposed to ACEs as children. Those ACEs are correlated with negative impacts on their financial lives. While asserting causality in this sort of analysis is always difficult, given the vast literature on the negative impact of ACEs and the analysis presented here, it is highly likely that ACEs drove these financial deficits.

Reaching late career with lower levels of wealth poses challenges for achieving a secure retirement. Those in this situation are particularly reliant on Social Security benefits. As our society debates changes to Social Security to bring its finances into line, it is worth considering the effect any alterations would have on people with few financial resources. And, it is also worth remembering that those financial shortfalls may be due to events out of their control. After all, Social Security – like other programs ranging from SNAP to Medicaid – serves as insurance against exactly the sorts of circumstances highlighted here.

References

Anda, Robert F., Vladimir I. Fleisher, Vincent J. Felitti, Valerie J. Edwards, Charles L. Whitfield, Shanta R. Dube, and David F. Williamson. 2004. “Childhood Abuse, Household Dysfunction, and Indicators of Impaired Adult Worker Performance.” The Permanente Journal 8(1): 30.

Covey, Herbert C., Scott Menard, and Robert J. Franzese. 2013. “Effects of Adolescent Physical Abuse, Exposure to Neighborhood Violence, and Witnessing Parental Violence on Adult Socioeconomic Status.” Child Maltreatment 18(2): 85-97.

Dube, Shanta R., Robert F. Anda, Vincent J. Felitti, Daniel P. Chapman, David F. Williamson, and Wayne H. Giles. 2001. “Childhood Abuse, Household Dysfunction, and the Risk of Attempted Suicide Throughout the Life Span: Findings from the Adverse Childhood Experiences Study.” JAMA 286(24): 3089-3096.

Easton, Scott and Geoffrey T. Sanzenbacher. 2025. “Adverse Childhood Experiences and Long-term Economic Well-being: Understanding Mechanisms to Explain Group Differences in Net Worth.” Boston College Economics Working Paper 1066. Chestnut Hill, MA: Boston College Department of Economics.

Felitti, Vincent J., Robert F. Anda, Dale Nordenberg, David F. Williamson, Alison M. Spitz, Valerie Edwards, and James S. Marks. 1998. “Relationship of Childhood Abuse and Household Dysfunction to Many of the Leading Causes of Death in Adults: The Adverse Childhood Experiences (ACE) Study.” American Journal of Preventive Medicine 14(4): 245-258.

Fuemmeler, Bernard F., Eric Dedert, F. Joseph McClernon, and Jean C. Beckham. 2009. “Adverse Childhood Events are Associated with Obesity and Disordered Eating: Results from a US Population-based Survey of Young Adults.” Journal of Traumatic Stress: Official Publication of The International Society for Traumatic Stress Studies 22(4): 329-333.

Font, Sarah A., and Kathryn Maguire-Jack. 2016. “Pathways from Childhood Abuse and Other Adversities to Adult Health Risks: The Role of Adult Socioeconomic Conditions.” Child Abuse and Neglect 51: 390-399.

Holden, Karen C. and Hsiang-Hui Daphne Kuo. 1996. “Complex Marital Histories and Economic Well-being: The Continuing Legacy of Divorce and Widowhood as the HRS Cohort Approaches Retirement.” The Gerontologist 36(3): 383-390.

Hughes, Karen, Kat Ford, Mark A. Bellis, Freya Glendinning, Emma Harrison, and Jonathon Passmore. 2021. “Health and Financial Costs of Adverse Childhood Experiences in 28 European Countries: a Systematic Review and Meta-analysis.” The Lancet Public Health 6(11): e848-e857.

Merrick, Melissa T., Katie A. Ports, Derek C. Ford, Tracie O. Afifi, Elizabeth T. Gershoff, and Andrew Grogan-Kaylor. 2017. “Unpacking the Impact of Adverse Childhood Experiences on Adult Mental Health.” Child Abuse and Neglect 69: 10-19.

Metzler, Marilyn, Melissa T. Merrick, Joanne Klevens, Katie A. Ports, and Derek C. Ford. 2017. “Adverse Childhood Experiences and Life Opportunities: Shifting the Narrative.” Children and Youth Services Review 72: 141-149.

Otero, Carolina. 2021. “Adverse Childhood Experiences (ACEs) and Timely Bachelor’s Degree Attainment.” Social Sciences 10(2): 44.

Petruccelli, Kaitlyn, Joshua Davis, and Tara Berman. 2019. “Adverse Childhood Experiences and Associated Health Outcomes: A Systematic Review and Meta-analysis.” Child Abuse and Neglect 97: 104127.

Reuben, Aaron, Terrie E. Moffitt, Avshalom Caspi, Daniel W. Belsky, Honalee Harrington, Felix Schroeder, Sean Hogan, Sandhya Ramrakha, Richie Poulton, and Andrea Danese. 2016. “Lest we Forget: Comparing Retrospective and Prospective Assessments of Adverse Childhood Experiences in the Prediction of Adult Health.” Journal of Child Psychology and Psychiatry 57(10): 1103-1112.

Schurer, Stefanie, Kristian Trajkovski, and Tara Hariharan. 2019. “Understanding the Mechanisms through which Adverse Childhood Experiences Affect Lifetime Economic Outcomes.” Labour Economics 61: 101743.

Stoltenborgh, Marije, Marian J. Bakermans-Kranenburg, and Marinus H. Van Ijzendoorn. 2013. “The Neglect of Child Neglect: a Meta-analytic Review of the Prevalence of Neglect.” Social Psychiatry and Psychiatric Epidemiology 48(3): 345-355.

U.S. Bureau of Labor Statistics. 1979-2018. National Longitudinal Survey of Youth 1979 (NLSY79). Washington, DC.

Appendix

Endnotes

1. Easton and Sanzenbacher (2025). ↩︎
2. See Felitti et al. (1998). For detail on the 10 ACEs and how and whether they are identified in the NLSY79, see the data and methodology section. ↩︎
3. For recent examples, see Hughes et al. (2021) or Petruccelli, Davis and Berma (2019). ↩︎
4. For a recent example, see Merrick et al. (2017). ↩︎
5. Otero (2021). ↩︎
6. Anda et al. (2004). ↩︎
7. Metzler et al. (2017). ↩︎
8. Covey, Menard and Franzese (2013). ↩︎
9. Font and Maguire-Jack (2016). ↩︎
10. For example, see Holden and Kuo (1996). ↩︎
11. See Schurer, Trajkovski and Hariharan (2019). ↩︎
12. For example, see Reuben et al. (2016). ↩︎
13. For physical abuse, Fuemmeler et al. (2009) found a rate of 14.6 percent in the National Longitudinal Survey of Adolescent Health, another U.S.-based study. For emotional neglect, a meta-analysis of 16 independent samples by Stoltenborgh et al. (2013) reported a rate of 18.4 percent. For alcohol abuse, Dube et al. (2001) analyzed a sample of adult Kaiser participants from a slightly older birth cohort than the NLSY79 and found 22.1 percent had at least one parent with an alcohol problem. ↩︎
14. Regarding mental illness, Dube et al. (2001) found that 20.3 percent of its cohort claimed to have lived with someone struggling with this problem. With regard to parental separation, its incidence is hard to compare to other studies, as this ACE combines several events that are often reported independently. ↩︎
15. In the NLSY 1979 Cohort, net worth data are collected every four years. The value used in our analysis is from either the 2012 or 2016 wave, depending on when the individual was last observed. ↩︎
16. Because individuals living with single parents or other family members may not know the education of both parents, separate indicators for not knowing their mother’s or father’s education are included. ↩︎
17. The effect of having just five of the 10 ACEs identifiable in the NLSY79 is unclear. The most likely effect would be that the analysis in Figure 3 understates the effect of ACEs. This understatement would occur if some of the non-ACE group experienced one of the other five ACEs. If these individuals were removed from the non-ACE group, presumably the net worth of the group would go up as people with these adverse experiences are removed. ↩︎