Where a person lives in the United States can determine how much he or she spends in retirement, according to the Employee Benefit Research Institute.
A new institute study, “Geographic Variation In Spending Among Older American Households,” shows wide differences in spending by households with older people across the country. These differences become more pronounced when a few states are broken out in groups.
“National benchmarks are important and helpful, particularly in shaping national policies,” said Sudipto Banerjee, research associate at the institute and author of the report. “But individual retirees might find regional or local benchmarks that more closely reflect their personal situation to be more useful.”
For instance, in 2015 Northeastern households with residents 65 to 74 years old had the highest median annual spending ($41,860) while the lowest spending was by Southern households ($32,836). But breaking it down further, New England households in Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire and Maine had a median spending amount of $46,019 while those in the Southern states of Texas, Oklahoma, Arkansas and Louisiana spent the least, at $28,540.
Housing and housing-related expenses make up a large part of total household expenses, and geographic differences in these costs are consistent with total spending differences. New England households with residents age 50 to 64 spent almost two and a half times more on housing and housing-related expenses, with an annual median cost of $30,240, than the Southern states, where it was $11,948.
However, for health-care costs, the study says geographic differences do not follow the pattern of total spending or housing-related spending. For example, Midwestern states have much higher health-care expenses than other regions for those ages 75 and above (who are not living in institutional care facilities). Among those 85 and above, the median annual spending among Midwesterners was $3,480, which was 41.5 percent higher than the median of $2,460 in the next-highest-spending region of the West.
Nationally, average household spending declined with age. In 2015, median spending levels for those 50 to 64 were $42,235, while spending for those over 85 was $26,497.
The Employee Benefit Research Institute is a nonpartisan research organization that focuses on health, savings, retirement and economic security issues.