The Economist’s Corner: Spending Patterns as Seniors Age
By Dr. Edward Seiler, vice president, Economics and Research, Dworbell, Inc.
The Bureau of Labor Statistics, through its Consumer Expenditure Survey provides details on how income and expenditures evolve in our senior years. The following table, based on the 2017 midyear survey, shows that as seniors age their average expenditures decrease more slowly than their net incomes. This implies that the average household in the two oldest generations (born before 1945) needs to tap savings (or other resources) to make ends meet.
The table also shows some interesting details on expenditure categories:
- For all three groups, housing is the biggest expense, accounting for over 30 percent of total spending;
- 40 percent of boomers have mortgages vs. 19 percent for the silent generation;
- Housing expenses jump to over 50 percent of income for oldest generation as more households rent;
- Transportation expenditures decline with age as households own fewer vehicles and travel less; and
- Health care expenditure decreases, on average, from $6,394 (silent generation) to $5,541 (greatest generation). However, on a per capita basis, it increases from $4,000 to $4,300.