Middle-aged Americans who experience a major economic blow are more likely to die during the years that follow than those who don’t.
That’s according to a new study published in the Journal of the American Medical Association.
Shockingly, those who experienced a devastating financial loss – called a “wealth shock” – have a 50% greater risk of dying early. And it doesn’t matter how much money you had to start.
How likely are you to experience a wealth shock?
About 1 in 4 people in the study have had a wealth shock, averaging a loss of about $100,000. Often it was a result of a drop in the value of retirement investments or a home foreclosure.
Some shocks happened during the Great Recession of 2007-2009. Some happened before or after that.
But it didn’t matter if the economy was good or bad – a wealth shock still increased the chance of dying early.
The findings suggest a wealth shock is as dangerous as a new diagnosis of heart disease, says Dr. Alan Garber of Harvard University. Another expert noted that,
We should be doing everything we can to prevent people from experiencing wealth shocks.”
That’s easier said than done if you’re following the conventional financial “wisdom.”
Why Most People Are Vulnerable to a Financial Shock that Can Cause Early Death…
There are two big reasons most Americans are likely to experience a dangerous wealth shock.
In fact, the way most people save and invest for their future makes a major financial shock virtually inevitable…
The first reason is that, according to the Federal Reserve Survey of Consumer Finances, most people have the bulk of their money in investments like the stock market and real estate that can rise or fall (or plunge) at the drop of a hat.
This is called “paper wealth,” meaning any rise in value is only an unrealized or paper gain. It may vanish just when you really need the money.
The numbers people see on their investment or retirement account statements and home appraisals repeatedly sucker many into believing they have real wealth and financial security when they do not.
The second reason many people are vulnerable to a major financial shock is that the Federal Reserve studies also show that most people have little or no safe and liquid cash reserves to tide them over when an emergency strikes.
The impact of stress that comes from a lack of a sizeable rainy-day fund can be devastating… and deadly!
How Can You Protect Yourself from a Financial Shock that Can Cause You to Die Before Your Time?
The answer is two-fold…
Avoid the temptation of the conventional financial advice to have most of your nest-egg in volatile, unpredictable investments.
A strong financial foundation must rest on a bed of safe and liquid cash reserves for stability, accessible resources, and restful nights. Invest only after you have a stable financial base to support you.
- Have a safe and liquid rainy-day fund equal to at least two years of household income. That gives you the peace of mind of knowing you can weather the challenges that life inevitably throws at you.
Why High Cash-Value Dividend-Paying Whole Life Makes the Best Financial Security Blanket – in Good Times and Bad
The kind of whole life policies that the Bank On Yourself concept relies on are the “Swiss army knife” of financial vehicles for many reasons, including…
- Guaranteed, predictable growth every year – even when the market is crashing. Both your principal and growth are locked in
- A 160-year history of positive growth and no losing years, even during the Great Depression and the Great Recession
- Enjoys a four-layer safety net
- Growth that historically has beaten savings and money market accounts and CDs by a country mile
- Give you unmatched liquidity so you can get your hands on money when you need it… for whatever you need… without begging or applying for it… and with no penalties or restrictions for accessing it
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