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Do adverse health shock s induce myopic financial planning?
By Jialu L. Streeter
Health and financial planning have both been found to be crucial to long-term financial stability. However, the impact of a health shock on financial plan-ning horizon was not directly tested. This article traces the trajectories of the financial planning horizon before and after the occurrence of work-limitinghealth shocks, using longitudinal panel data from the Health and RetirementStudy. Results show that, during the 10 years following a health shock, individ-uals are 20 to 39% more likely to focus on the near term (i.e., the next fewmonths) than baseline levels. Moreover, people with lower socioeconomic sta-tus or poor general health are more prone to switching to myopic planningafter a health shock
Source: Online Library
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