WI21-10: Older Adult Out-of-Pocket Pharmaceutical Spending After Home Mortgage Payoff

Older adult homeowners increasingly carry mortgage debt into retirement. The share of homeowners aged 65 and older with outstanding mortgages doubled between 1989 and 2016, while the outstanding loan-to-value ratio tripled from 13 to 39 percent over the same period (JCHS 2018). This research expands our understanding about the relationship between housing and health by demonstrating spillover impacts between mortgage debt and healthcare, as many older adults struggle to simultaneously pay their health and housing costs. This paper examines changes in out-of-pocket pharmaceutical spending around the time of mortgage payoff to assess whether mortgage payments constrain healthcare spending for some households. Findings suggest that out-of-pocket pharmaceutical spending increased by 25 percent for all households that paid off their mortgage, and by 50 percent for households whose residents were roughly between the ages of 50 and 64 after payoff. This research fills gaps in the literature around household spending changes at mortgage payoff and the relationship between mortgage debt and health expenditures.