Posts Tagged "mortgage payment"
February 17, 2022
Mortgage Payoff Frees Up Money for Meds
Paying off the mortgage frees up a lot of money for other things. The homeowners in one study splurged on big-ticket items.
Older homeowners, however, are adding another priority: medications.
After a mortgage payoff, workers and retirees ages 50 to 64 spent 50 percent more on prescription drugs in a comparison with households who had no major changes in their monthly housing costs, according to a new study by Harvard’s Joint Center for Housing Studies and funded by the U.S Social Security Administration.
The mortgage is typically a homeowner’s largest monthly expense. If medication spending rises when this big bill is eliminated, it supports the argument that some aging homeowners who are still carrying a mortgage may be choosing housing over necessary medical care.
This research is particularly relevant at a time older Americans are entering retirement with more debt. In 2016, four in 10 retirees had a mortgage – double the share in the late 1980s.
Not surprisingly, the researchers found some indication that lower-income workers and early retirees benefited more from eliminating their monthly payments. They have difficulty paying even for essential expenses, and the increase in their prescription purchases after paying off the home loan appeared to be larger than for higher-income groups with fewer constraints.
The researchers split the homeowners into two age groups – under and over 65. While homeowners under 65 sharply increased their drug spending after the mortgage payments ended, the Medicare beneficiaries did not.
The level spending after Medicare eligibility indicates that the program relieves some of the pressure on the family budget, the researchers said. Medicare also provides an average $5,000 annually to subsidize low-income retirees’ medications under the Low Income Subsidy program.
But for older homeowners who are too young to get Medicare but are still paying a mortgage, the study “raises serious concerns for health care quality and the costs to treat poorly managed conditions,” the researchers said.
To read this study, authored by Christopher Herbert, Jennifer Molinsky, Samara Scheckler, and Kacie Dragan, see “Older Adult Out-of-Pocket Pharmaceutical Spending after Home Mortgage Payoff.”
September 7, 2021
700,000 Retirees are Behind on Mortgages
In the second half of 2020, the number of retired homeowners who fell behind on their mortgage payments doubled to about 1 million per month.
By July of this year, it had dropped to 680,000 retirees. The federal Consumer Financial Protection Bureau (CFPB), which issued the report on homeowners over age 65, said about 12 percent of this population is vulnerable to imminent foreclosure and possibly homelessness. Some of the people who are having the hardest time paying their loans either have disabilities or are over 75.
But most the retirees in the CFPB report are largely reliant on Social Security, so their income is stable. To understand why they’re having problems paying the mortgage requires reading the tea leaves in the CFPB report. More than half of the retirees with past due mortgages live with at least two other people, including children and teenagers.
Lower-income people in multigenerational households typically share the burden of paying their living expenses. If a retired homeowner’s adult family member lost a job because of the pandemic, the homeowner might not be getting the money she needs to pay the mortgage. The CFPB survey confirms this is occurring: more than a third of older homeowners who are behind on their mortgages said a family member was unemployed.
Many of the people who are struggling had less than $25,000 in retirement income or were people of color. Their family members in the multigenerational households – presumably people of color – also may have worked in lower-paid jobs and bore the brunt of last year’s layoffs and reduced hours at work. …Learn More