A Longitudinal Analysis of the Impact of Chronic Conditions on Wealth Change
Jinkook Lee, Ohio State University
Hyungsoo Kim, University of Kentucky
We examine the impact of chronic conditions on wealth changes of elders aged 70 or older for ten year time period. Using the two waves of the Asset and Health Dynamics of the Oldest Old (AHEAD) data and three waves of the Health and Retirement Study, we conduct longitudinal analysis, providing further insight on how negative health changes in later life influence elders’ wealth and how such influence differ across different socio-economic status of elders. We find that both existing chronic health problems and new health events accelerate wealth depletion, and that such effects are significant for both mild and severe types of chronic conditions. Specifically, for the ten years, existing mild and severe chronic conditions lead to 8.4 % and 16% wealth depletion respectively, while new severe health events lead to 17.6% wealth depletion. Our findings highlight the importance of active preparation for later life, both financially and behaviorally.