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COLOGNE, Germany — Want to build wealth? Your family transitions might matter more than you think. A groundbreaking study from Norway reveals that the timing of major family events – like becoming a parent, experiencing the death of your parents, or welcoming grandchildren – can significantly impact your wealth accumulation over decades.
The research, published in the journal Social Forces, followed nearly 48,000 Norwegians born in 1953 from age 40 to 64, tracking how their wealth changed alongside key family milestones. The findings challenge conventional wisdom about wealth building, suggesting that it’s not just about how much you earn or save but also about when certain family events occur in your life.
Perhaps most surprisingly, people who had children later in life or remained childless generally accumulated more wealth than those who became parents earlier. Those who experienced the death of their parents later in life also tended to build more wealth than those whose parents died earlier, particularly after age 55.
The study, led by scientists from the Max Planck Institute for Demographic Research, identified six distinct patterns of family life courses. At one end of the spectrum were childless individuals whose parents died either early (around age 45) or late (around age 59). At the other end were those who became parents and grandparents early, creating what researchers called “four-generation families” – situations where great-grandparents, grandparents, parents, and children were all alive simultaneously for about 15 years.
The wealth differences between these groups were substantial. By 2017, the gap between the highest and lowest wealth groups translated to about $32,600 in gross wealth (before subtracting debts) and nearly $36,000 in net wealth (after subtracting debts).
Interestingly, childless individuals started with the lowest wealth positions at age 40 but showed the strongest increase over time, eventually catching up to or surpassing many parent groups by their late 50s. This might be because they had fewer financial obligations and more opportunities to invest and save.
The study also found that those who became parents and grandparents later in life consistently maintained higher wealth positions. This supports the idea that delaying parenthood might allow for better financial foundation-building in early adulthood – a critical time for major investments like housing.
The Six Groups Of Family Patterns Related To Wealth
Group 1 (5% of the sample): Childless individuals whose parents died early, around age 45. While starting with lower wealth at age 40, they showed significant wealth growth over time.
Group 2 (6%): Childless individuals whose parents died later, around age 59. Similar to Group 1, but with even stronger wealth growth in their later years.
Group 3 (18%): Those who became parents later (average age 28) and grandparents much later (average age 60), with early parental death (around age 45). This group maintained consistently high wealth positions throughout the study period.
Group 4 (20%): Early parents (age 23) and grandparents (age 50) whose parents died relatively early (age 48). This group showed declining wealth positions over time.
Group 5 (24%): The “four-generation family” group – early parents (age 22) and grandparents (age 48) whose parents lived longer (dying around age 60). Despite having the most living generations simultaneously, this group showed lower wealth accumulation.
Group 6 (27%): Later parents (age 28) and grandparents (age 60) whose parents also lived longer (dying around age 60). This group consistently maintained the highest wealth positions.
It’s worth mentioning again that the research took place in Norway, a country known for its strong social welfare system but also for having surprisingly high wealth inequality. While Norway offers universal benefits and strongly regulates employment, it has relatively weak regulation of capital and housing markets. This combination has created a society where family wealth – particularly through housing ownership – plays a crucial role in economic inequality.
If wealth were a novel, this research suggests that family timing would be a major plot point, not just a footnote. While we can’t all write our life stories with perfect precision, understanding how these chapters affect our financial narrative might help us craft a better ending. After all, the best stories – like the best financial plans – often come from understanding not just what happens, but when it happens.
Paper Summary
Methodology
The researchers used Norway’s comprehensive population and tax registers, which provided detailed information about family events and wealth for 47,945 people born in 1953. They tracked these individuals’ wealth between ages 40 and 64, measuring both gross wealth (financial assets and property) and net wealth (after subtracting debts). They also recorded when people experienced three key family transitions: the death of their parents, becoming a parent themselves, and becoming a grandparent.
Using advanced statistical techniques, they grouped people into six distinct patterns based on when these family events occurred in their lives. They then analyzed how wealth accumulation differed between these groups while accounting for factors like gender and education.
Key Results
The study found that the timing of family transitions matters significantly for wealth accumulation. People who became parents later (around age 28) generally maintained higher wealth positions than those who became parents earlier (around age 22-23). Childless individuals showed strong wealth growth over time, despite starting from lower positions at age 40.
Those who experienced their parents’ death later in life (around age 60) tended to accumulate more wealth than those whose parents died earlier (around age 45-48), particularly after age 55. This might be because later inheritances often coincide with a time when people are better positioned to invest rather than spend the money.
Study Limitations
The study couldn’t track wealth before age 40 or include step-family relationships. It also couldn’t account for wealth that might be underreported, particularly among the very wealthy. Additionally, the findings might reflect pre-existing wealth inequalities inherited from parents rather than just the effect of family transitions.
Discussion & Takeaways
The research suggests that having more living family generations doesn’t necessarily translate to greater individual wealth. In fact, families with more generations alive simultaneously often showed lower individual wealth levels, possibly because family resources were distributed among more members.
The findings also highlight how standard life course patterns – like having children in your late 20s – might align better with societal structures and thus facilitate better wealth accumulation. This raises important questions about how social policies might better support those who follow different family patterns.
Funding & Disclosures
The research was supported by the Research Council of Norway through its Centres of Excellence funding scheme, and the first author received a scholarship from the Cologne Graduate School in Management, Economics, and Social Sciences of the University of Cologne. The authors declared no conflicts of interest. The data used in the study came from Norwegian national registers and can be accessed by other researchers through application to the appropriate Norwegian authorities.
