Using Home Equity Improves Retiree Health

While the strategic use of home equity can provide financial relief for retirees, a new study co-authored by Ohio State University researcher Stephanie Moulton finds that it is also good for their health.

Every $10,000 that Medicare beneficiaries extracted from their homes greatly improved their success in controlling a chronic or serious disease, according to a summary of the OSU research published by the Squared Away blog that’s affiliated with the Center for Retirement Research at Boston College.

Among the retirees who had hypertension or heart disease, for example, one standard used to determine whether the condition was under control was whether blood pressure levels stayed below 140/90, which the medical profession deems an acceptable level. The people who tapped their home equity were more likely to stay below these levels than those who did not.

This is one of several studies in recent years to tie financial security to home equity, a resource many retirees are reluctant to tap. A study in 2020 found that older homeowners were less likely to skip medications due to cost after they had extracted equity through a refinancing, home equity loan, or reverse mortgage.

But this new research is the first attempt to connect the strategy to retirees’ actual health. The analysis followed the health of more than 4,000 homeowners for up to 15 years after they were diagnosed with one of four conditions – lung disease, diabetes, heart conditions, or cancer.

The researchers’ assessment that retirees who pulled out home equity were better able to control these conditions than the people who did not was based on a survey asking the retirees how they feel, as well as biomarkers that were part of the survey data, including lung capacity, glucose levels, and even how long someone lived after a diagnosis.

Withdrawing home equity, the researchers said, has “large, positive, and economically significant” health benefits.

The lesson here is that home equity can improve retirees’ quality of life – but only if they are willing to use it.

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