Recently, there has been significant growth and awareness of work well-being, orwellness, programs. These programs includedigital platforms and apps, on-site fitness centers,mindfulness/stress reduction tools, healthy snacks and standingdesks.

In addition to promoting healthfulness, how do wellness programsimpact our human capital?

What is human capital? While most people think of capital ascash, machinery or a tangible object, there is capital that can beattributed to a human being. This capital is known by economists as“human capital.”

Human capital is based on the premise that investment inattributes such as education, job skills and personal health andwellness, will have value over one’s lifetime to employers and tosociety as a whole.

The amount of this value is known as the return onhuman capital. How is this return measured? Most studies havefocused on an individual’s earnings as a function of their amountof education.

Despite differing results, there has been general agreement thatinvestment in human capital (primarily measured by education), canincrease earnings, as well as lower crime and poverty rates.

Additionally, human capital can also impact the length andquality of a person’s retirement years. Morningstar, a well-knowninvestment research firm, has factored human capital into itsinvestor lifetime asset allocationmodel.

According to Morningstar, a person owns two kinds of assets: (a)financial capital (stocks, bonds, cash, etc.) and (b) humancapital, which includes wellness, and yields an income stream overone’s lifetime.

In Morningstar’s model, a person allocates their resources overhis or her lifetime between financial capital and humancapital.

A younger person will tend to have a greater portion of humancapital while a person at or near retirement will generally have agreater degree of financial capital as his or her human capitalnaturally diminishes.

However, regardless of age, wellness can increase humancapital.

Wellness can also have benefits from a retirement standpoint:Greater work productivity can add to one’s financial wealth (i.e.,his or her savings pension and 401(k)); and it can enhance his orher “return to human capital” horizon, resulting in greater earningpower in later years, including after retirement.

In summary, many factors impact retirement, including age,health, tax bracket and wellness. Human capital, unlike machines,is not a static investment.

Human capital can depreciate but can also be enhanced over aperson’s lifetime through education, skills and investment inwellness, including at home and in the workplace.

While people ultimately accumulate their own human capital,corporate and social programs can also impact its quality, quantityand return.

NOTE: Information presented herein is for discussion andillustrative purposes only and is not a recommendation or an offeror solicitation to buy or sell any securities. Past performance isnot a guarantee of future results.

Frederic Slade is AVP-Senior Director, Investments forPentegra Retirement Services.