Making optimal investment decisions is complex due to the inherent uncertainty and the influence of individual risk preferences. This study investigates the impact of major health events on financial decision-making, focusing on risk-taking behavior and investment horizons. Utilizing data from the SHARE project, which provides a comprehensive longitudinal view of individuals aged 50 and above in Europe, we examine how health shocks such as heart attacks, strokes, and cancer diagnoses alter financial behaviors. Our analysis employs propensity score matching and mediation analysis to understand these dynamics. Results indicate that health shocks significantly deteriorate household financial conditions, reducing income, wealth, and employment probability. However, contrary to expectations, these shocks do not substantially alter risk appetite or investment planning horizons, suggesting a limited mediating role of decreased life expectancy in financial decision-making.
