Adverse Childhood Experiences and Retirement Security

Adverse childhood experiences (ACEs) — such as abuse, neglect, and household dysfunction — are linked to significantly lower wealth as individuals approach retirement, even after accounting for parental income and education, according to a new issue brief by the Center for Retirement Research at Boston College (CRR). In short, childhood adversity can have lifelong economic consequences. However, as teachers know, public education can be one of the most powerful institutions for helping to reduce those consequences. As Microsoft Copilot puts it, “Educators may never see the retirement accounts of the children they serve — but their influence is present in every dollar those children will one day save.” NCTR wholeheartedly agrees.

The new CRR brief — “How Is Retirement Wealth Affected by Adverse Childhood Experiences?” – explains that ACEs have previously been associated with less education and employment, lower earnings, and higher rates of divorce. While such outcomes are “damaging on their own and can also impede the ability to build wealth,” the CRR study explains, little research has focused on the association between ACEs and wealth as individuals approach retirement. This new brief explores this connection using the National Longitudinal Survey of Youth 1979 Cohort (NLSY79) and is based on a December 2025 study by Geoffrey T. Sanzenbacher, a research fellow at CRR and a professor of the practice of economics at Boston College, and Scott Easton, an associate professor of social work at Boston College and chair of their health and mental health fields of practice.

[The NLSY79 is a longitudinal project — a research design involving repeated observations of the same variables (e.g., people) over long periods of time — that follows the lives of a sample of American youth born between 1957-1964; the cohort originally included 12,686 respondents ages 14-22 when first interviewed in 1979.]

BACKGROUND

As background, the CRR brief explains that in the 1990s, a study based at Kaiser Permanente’s San Diego Health Appraisal Clinic first laid out the idea of ACEs, identifying ten experiences that fit into three broad categories: abuse, neglect, and household dysfunction. Since then, ACEs have been linked to health problems and early mortality, and a separate literature has connected them to mental health problems in adulthood.

More recent studies have found that these physical and mental health impacts also carry 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,” the CRR brief explains. Once working, “those with ACEs have high rates of absenteeism and other issues at work,” as well as much higher rates of nonemployment, the brief continues.

Furthermore, while employment outcomes “are one obvious way ACEs could impact the accumulation of wealth,” the brief notes, “less direct ways exist too.” For example, survivors of childhood abuse and neglect “are more likely to never marry,” and once married, middle-aged adults with a history of ACEs are more likely to be divorced or separated. This is pertinent because marriage has long been linked to faster wealth accumulation, with divorce having negative impacts, studies have shown. However, despite this research suggesting the strong potential for ACEs to limit late-career wealth, less research has focused on the topic, the CRR brief points out.

DATA AND METHODOLOGY

Using data from the 1979-2018 survey years of the NLSY79, this section of the CRR brief 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.

Five ACEs that can be identified in the NLSY79 data are:

1. Parental separation due to the death of a parent, parental divorce, or residence with only non-family members.
2. Physical abuse before age 18, defined as hitting, beating, kicking or physically harming (except for spanking).
3. Emotional Neglect, defined as receiving “a little” or “none at all” of parental love and affection while growing up (before age 18).
4. Family alcohol abuse, defined as, before age 18, living with a problem drinker or alcoholic.
5. Household mental illness, defined as living before age 18 with anyone who was depressed, mentally ill, or suicidal.

About half of people experience at least one of these five ACEs identified in the NLSY79 data, with parental separation most common at 31.7 percent, and household mental illness least common at 7.1 percent. Physical abuse, emotional neglect, and alcohol abuse occur at relatively similar rates of 15-18 percent.

[It should also be noted that there are five other ACEs, not identified in the NLSY79. These are:

1. Witnessing family violence
2. Physical neglect
3. Incarcerated parent
4. Sexual abuse
5. Emotional abuse

 The absence of any NLSY79 data explains their exclusion from the CRR brief.]

The CRR brief also points out that the “retrospective nature” of the NLSY79 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).” However, the brief also emphasizes that in the case of physical abuse, emotional neglect, and family alcohol abuse, the NLSY79 estimates are close to those from other data sources. Also, 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,” CRR underscores.

PRE-RETIREMENT NET WORTH

Next, CRR examines whether those with the five ACEs identified in the NLSY79  have different net worths than those without them, measuring wealth as assets minus liabilities for the individual’s household.

[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.]

Doing so discloses that median (not average) net worth for those without any of the ACEs identified in the NLSY79 is dramatically higher versus those with them. Specifically, by the time individuals approach retirement, the net worth of those with ACEs is less than half the level as those without ACEs.

CRR suggests that 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 CRR’s analysis. To attempt to “capture” this possibility, the CRR analysis controls for various demographic and family variables: 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.

Why? CRR stresses 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. In addition, 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. [A regression analysis is a statistical method to understand how a dependent variable changes when one or more independent variables are varied. It helps to determine which variables significantly impact an outcome and by how much.]

In doing so, CRR finds that the results “clearly show that each ACE is associated with significant reductions in net worth in retirement” and that these differences exist whether or not controls are included.

“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,” CRR stresses. (Emphasis added.)

Put another way, compared to the median net worth of $110,000 for those without any ACEs, this represents a relative reduction of 44 to 77 percent, CRR underscores.

Finally, “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,” CRR continues.

Also, 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, CRR emphasizes. “These reductions are also considerable – ranging from 25 to 45 percent relative to those without ACEs,” CRR highlights, 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,” CRR underscores. (Emphasis added.) CRR therefore concludes that “[w]hile 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.”

THE ROLE OF EDUCATION

If ACEs undermine long‑term financial stability, as CRR finds, can schools make a difference? Can the trajectory of ACEs’ impact — not just on students’ retirement security but on the rest of their lives — be changed?

Consider the following points made by Microsoft Copilot when asked to provide a synthesis of the CRR brief and what it means for teachers, school counselors, and public education personnel.

Schools Are Often the First—and Sometimes Only—Protective Environment — ACEs often occur in the home. Schools can provide predictable routines; emotionally safe environments; adults who model stability and care; and opportunities for achievement that build self‑efficacy.  “These protective factors can buffer the developmental harms that later translate into lower earnings and wealth,” Microsoft Copilot points out.

Academic Success Is a Major Mediator Between ACEs and Adult Wealth —

The CRR brief notes that ACEs are associated with less education, which in turn affects future earnings and wealth accumulation. Microsoft Copilot stresses that educators can influence this pathway by:

• Identifying students whose academic struggles may be trauma‑related;
• providing targeted academic supports;
• using trauma‑informed instructional practices; and
• ensuring students with ACEs stay connected to school and graduate.

“Every additional credential — high school diploma, CTE certification, college degree — raises lifetime earnings and retirement wealth,” Microsoft Copilot reminds us.

School Counselors Play a Direct Role in Mitigating ACE‑Related Risks — Counselors can provide early mental‑health support; teach coping and emotional regulation skills; connect families to community resources; help students navigate crises (divorce, abuse, instability); and support postsecondary planning that increases long‑term economic mobility.

Therefore, since ACEs “correlate with lower employment and higher divorce rates, counselors’ work on social‑emotional skills and relationship building has long‑term financial implications,” Microsoft Copilot notes.

Trauma‑Informed School Practices Are Economic Interventions — The CRR brief emphasizes that ACEs have lifelong economic consequences, not just emotional ones. Thus, “trauma‑informed practices are not just compassionate—they are preventive economic policy,” Microsoft Copilot stresses, giving the following examples:

• Restorative discipline instead of punitive discipline;
• Training staff to recognize trauma responses;
• Building strong student–adult relationships;
• Creating calm, predictable classroom environments; and
• Avoiding practices that inadvertently retraumatize students.

“These approaches help keep students engaged in school, which is directly tied to future earnings and wealth,” Microsoft Copilot explains.

Public Education Personnel Can Help Break Intergenerational Cycles —

Microsoft Copilot argues that because ACEs often stem from family dysfunction, schools can be a stabilizing force that interrupts cycles of poverty, abuse, neglect and low educational attainment. “By supporting students today, educators influence not only their immediate well‑being but also their retirement security decades later, as the CRR brief shows,” Microsoft Copilot emphasizes

The CRR Brief Reinforces the Importance of Social Safety Nets—Which Educators Help Students Access — The CRR brief concludes that Social Security is especially important for individuals with ACEs because they tend to have lower lifetime earnings and less retirement wealth. Furthermore, as Microsoft Copilot points out, school personnel often help families access food assistance; health care; mental‑health services; housing supports; disability services; and early intervention programs. As Microsoft Copilot explains, “These supports reduce household stress and improve children’s developmental outcomes, which can improve their long‑term economic trajectory.”

Educators Are Not Therapists—But They Are Lifelong Influencers — The CRR brief underscores that early adversity shapes adult outcomes in ways that last into retirement. As Microsoft Copilot underscores, this means:

• A caring teacher can change a child’s economic future.
• A school counselor can alter a student’s life trajectory.
• A bus driver, cafeteria worker, or secretary can be a stabilizing adult presence.

“Public education personnel collectively form a protective network that can counteract the long-term harms of ACEs,” Microsoft Copilot concludes.

NCTR strongly agrees and is proud and honored to work with teachers’ and education support personnel’s retirement systems in helping support not only these public employees’ future retirement security, but also the future — and ultimate retirement security — of the students they love.

• Center for Retirement Research at Boston College (CRR): “How Is Retirement Wealth Affected by Adverse Childhood Experiences?”