How the growing numbers of aging Americans spend their money will influence the economy for the next few decades, according to the U.S. Bureau of Labor Statistics.
The Census Bureau estimates the population age 65 and older will double by 2050 to 83.7 million from the 43.1 million counted in 2012. Understanding expenditure patterns in later life is crucial to evaluating financial security in retirement, the BLS says in its Beyond the Numbers report issued Thursday.
In 2014, households with a head of household 55 or older made up 41.5 percent of population, compared to 37.5 percent in 2009 and 34.6 percent in 2004, reflecting the aging of the U.S. population, BLS says. For the group as a whole, annual pretax income averaged $58,528.
Overall expenditures decline as people age. Total annual expenditures in 2014 declined from an average of $56,267 for the 55 to 64 age group to $36,673 for the 75-and-older group.
Housing remained the greatest expense in average dollar amount and as a share of the household budget for older households. The percent of families where the head of the household is 55 or older who have housing debt increased from 24 percent in 1992 to 42 percent in 2010. Of the older Americans, spending on housing was greatest for the 55 to 64 age group at $18,006, decreasing to $15,838 for the 65 to 74 group before declining to $13,375 for the 75-and-older group.
Healthcare spending increases with age, and spending on clothing and transportation and contributions for pensions and Social Security decreases. The share of the household budget devoted to healthcare increased with age from 8.8 percent for the 55 to 64 age group, to 15.6 percent for the 75-and-older group.
Clothing and transportation are often related to jobs so the total expenditures decline as people age. Transportation costs decreased from a high of $9,321 for the 55 to 64 age group to a low of $5,091 for the 75-and-older group. Entertainment spending averaged $2,604 for the group as a whole, but declined significantly for those over age 74.
Contributions for pensions and Social Security declined in both dollar amount and as a share of the household budget as people get older. For those 55 to 64, contributions averaged $6,578 or 11.7 percent of the household budget. The amount declines sharply for the 65 to 74 age group to $2,788 or 5.7 percent and for the 75-and-older group, which was $800 and 2.2 percent.