How Experiencing Adversity in Childhood May Halve Your Retirement Savings

The Impact of Childhood Challenges on Financial Security in Later Life

Household situations such as parental separation, substance abuse, or mental health issues can have lasting effects on a child's future income and financial well-being.

Main Insights

• Research indicates that adults who faced significant difficulties during childhood possess 44% to 77% less wealth in their 50s and 60s compared to those without such experiences.

• Factors like reduced earnings, increased unemployment, and less stable relationships contribute to the long-term financial disadvantages linked to early adversity.

• Strategies such as maximizing catch-up retirement contributions, seeking sustainable employment in later years, and postponing Social Security can help bridge the savings gap.

According to a recent analysis by the Center for Retirement Research at Boston College, experiencing abuse or parental divorce as a child can significantly diminish a person's financial resources in adulthood, which in turn affects retirement readiness.

The December 2025 study found that individuals aged 52 to 60 who endured adverse childhood experiences (ACEs)—including emotional neglect, family mental illness, or alcoholism—had a much lower net worth than their peers who did not face such challenges.

Drawing from a long-term survey of over 12,500 participants conducted between 1979 and 2018, the researchers discovered that the median net wealth for those without childhood adversity was $110,000, while those who had faced such hardships had 44% to 77% less. These findings accounted for differences in parental income and education.

Why This Is Important

While you cannot alter your past, you can influence your financial future. If early hardships have set you back in saving for retirement, experts recommend focusing on actionable steps now—such as increasing catch-up contributions, finding work that remains manageable as you age, and carefully timing when to claim Social Security to maximize your benefits.

Geoffrey Sanzenbacher, co-author of the study and an economics professor at Boston College, explains that net worth near retirement reflects a lifetime of opportunities and challenges, including employment history and savings ability.

He notes that those who experienced adversity in childhood often accumulate less wealth due to factors like higher unemployment, increased likelihood of divorce, and lower rates of marriage.

“Individuals with these backgrounds tend to achieve lower educational levels, score lower on cognitive assessments, work less frequently, and earn less when employed. These elements collectively reduce net worth,” Sanzenbacher says. “They also tend to marry less often and face higher divorce rates.”

How to Address a Savings Shortfall

If you find yourself behind on retirement savings due to early-life challenges, consider these practical steps:

• Boost your retirement contributions: Individuals aged 50 and above can make additional contributions to retirement accounts. In 2026, those over 50 can contribute up to $8,000 extra to their 401(k), and those aged 60-63 can contribute as much as $11,250.
• Assess your job stability: Evaluate whether your current role is sustainable until retirement. If not, consider transitioning to a position better suited for the later stages of your career.
• Delay claiming Social Security: Although benefits can begin at age 62, waiting until full retirement age (67 for those born in 1960 or later) or even longer can significantly increase your monthly payments. Each year you delay beyond full retirement age, up to age 70, your benefits grow by 8% annually.

Sanzenbacher also highlights the value of programs like Social Security and SNAP for those affected by adverse childhood experiences. Since Social Security is designed to replace a higher percentage of pre-retirement income for lower earners, it can be especially beneficial for this group.

“Social Security’s universal coverage and progressive benefit structure provide substantial support, particularly for those without access to a 401(k) or with lower-paying jobs,” Sanzenbacher adds.