Largest Expense for Most Senior Citizens is
Maintaining a Home
Health care cost is number two for older Americans,
reports new study
care expenses can be heavily skewed towards the end of life!
September 18, 2014 - Although health expenses
increase steadily with age, and remain a cause of concern, home and
home-related expenses are the largest spending category for older
Americans, according to a new report by the nonpartisan Employee Benefit
Research Institute (EBRI).
The EBRI analysis, which tracks data through 2011
(the latest available), confirms that the cost of maintaining a home is
typically the biggest expense for older people.
Although the dollar amount spent on home and
home-related expenses decrease with age the share of these costs in
household budgets remain stable at between 40‒45 percent, depending on
The EBRI report also found that average household
spending dropped between 2005 and 2011 in every age group, and
relatively younger households cut back spending more than older
households during that period. Whether this was a short-run drop in
response to the 2008 market crash or part of a long-run trend remains to
be seen, said Sudipto Banerjee, EBRI research associate, and author of
The two components of household expenditures which
show a declining pattern across age groups are transportation expenses
and entertainment expenses - as expected, since people tend to commute
and eat out less often as they age. By comparison, food and clothing
expenses (as a share of total expenditure) remain more or less flat
across the different age groups.
Health Expenses Increase Steadily
The EBRI analysis found that health expenses
increase steadily with age. In 2011, households with at least one member
between ages 50‒64 spent 8 percent of their total budget on health
items, compared with 19 percent for those age 85 or over.
Health-related expenses occupy the second-largest
share of total expenditure for those over age 75. EBRI found a large
increase in spending at the 95th percentile for those age 90 or older,
which can be attributed to very high health care expenses.
For some, health care expenses can be heavily
skewed towards the end of life, Banerjee said.
For example, he said, in 2011, the median
(mid-point, half above and half below) health care expenditure for
households with at least one member 85 and above was $2,814, while the
average was much higher at $6,603.
The full report, Does Household Expenditure Change
With Age for Older Americans? is published in the September EBRI
Notes, online at www.ebri.org
The analysis examines the expenditure pattern of
the older segment of the U.S. population, a majority of the households
having either reached retirement age or on the cusp of retirement. The
data come from the Health and Retirement Study (HRS) and the Consumption
and Activities Mail Survey (CAMS), which is a supplement of the HRS.
The Employee Benefit Research Institute reports it
is a private, nonpartisan, nonprofit research institute based in
Washington, DC, that focuses on health, savings, retirement, and
economic security issues. EBRI does not lobby and does not take policy
positions. The work of EBRI is made possible by funding from its members
and sponsors, which include a broad range of public, private, for-profit
and nonprofit organizations. For more information go to
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