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

See all articles by Angela Lyons

Angela Lyons

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Hyungsoo Kim

University of Kentucky

Date Written: April 2007

Abstract

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

Lyons, Angela and Kim, Hyungsoo, No Pain, No Strain: Impact of Health on the Financial Security of Older Americans (April 2007). NFI Working Paper No. 2007-WP-12 , Available at SSRN: https://ssrn.com/abstract=985891 or http://dx.doi.org/10.2139/ssrn.985891

Angela Lyons (Contact Author)

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

440 Mumford Hall, 1301 W. Gregory Drive
Urbana, IL 61801
United States
1-217-418-6086 (Phone)

HOME PAGE: http://https://ace.illinois.edu/directory/anglyons

Hyungsoo Kim

University of Kentucky

Lexington, KY 40506
United States

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