Effects of cost-related medication nonadherence on financial health and retirement decisions among adults in late midlife

Abstract

Objectives Suboptimal adherence to prescribed medications due to cost is known to adversely affect physical health. In this study, we examine whether cost-related nonadherence (CRN) also affects ‘financial health’, e.g. an individual's personal finances or the timing of their retirement. Methods We examine this issue for 2927 adults in late midlife with chronic medical conditions who participated in the Health and Retirement Study and who reported regularly taking medication(s) for their condition over the period 1994 to 2004. We hypothesize CRN may indirectly influence financial health by contributing to the occurrence of negative health shocks. We estimate two sets of models, one to quantify the effects of CRN on the occurrence of adverse health events, and another to quantify the effects of adverse health events on personal finances in 2004 and the timing of retirement. We then derive estimates of the indirect effects of CRN on financial health and on retirement decisions. Key findings Among adults in late midlife, CRN contributes significantly to reduced earnings and premature retirements. These effects happen because CRN raises the risk that serious health shocks occur over time, and such adverse events subsequently limit an individual's ability to continue working and accumulating wealth. Conclusions CRN can threaten more than just personal health. In late midlife, CRN can threaten an individual's ability to continue working and saving towards retirement.