Wealth, prevention, and longevity: Integrating health into portfolio decisions

Abstract This paper presents a novel framework for integrating preventive health expenditures into a lifetime portfolio selection model under uncertain lifetimes. Building on financial portfolio optimization and actuarial mortality modeling, we examine how health investments influence individual longevity and financial decisions. In our model, age at death is treated as a random variable, and individuals allocate a fraction of their wealth to prevention in order to reduce mortality risk and extend life expectancy. This endogenous link between health spending and survival allows us to explore the dynamic interplay between wealth accumulation, longevity, and health-related behavior over the life cycle. Through numerical simulations, we illustrate how optimal prevention strategies vary systematically by gender, age, and country-specific mortality profiles. The results highlight how personal characteristics and demographic factors shape the trade-offs between consumption, investment, and health. Our findings offer valuable insights for both individual financial planning and the design of public health policies in an era of increasing longevity and growing economic-health interdependence.