No Pain, No Strain: Impact of Health on the Financial Security of Older Americans
NFI Working Paper No. 2007-WP-12
39 Pages Posted: 13 May 2007
Date Written: April 2007
This study uses data from the 2002 and 2004 Health and Retirement Study to investigate the impact that health problems have on the financial strain of older Americans. Two-stage probit models are estimated for a series of financial ratio guidelines that take into account household solvency, liquidity, and investment asset accumulation. We test our models using a subjective measure of self-reported health status and two objective measures of health that control for the severity of specific health conditions. The results show that health problems significantly increase the likelihood of financial strain for older individuals, and the magnitudes of the effects vary by the type of financial strain and how health status is defined. Those most likely to experience some type of financial strain are those with severe chronic conditions. The results provide insight into the future financial security of older Americans and have important implications for health policy and research.
Suggested Citation: Suggested Citation