Spending patterns of older persons

revealed in expenditure survey

New estimates point up differences in 

characteristics, incomes, and expenditures of 

younger and older populations within the larger 

group of persons age 65 and over

BETH HARRISON

Interest in the characteristics of older persons is flourishing due 

to the increasing size of the population age 65 and over. 

According to projections by the U.S. Bureau of the Census, 

presented in table 1, every fifth American will be over 65 by the 

year 2040. This reflects the aging of the postwar baby boom and 

declining birth rates during the later decades of this century. 

Clearly, older persons will constitute a rapidly growing political, 

social, and economic force for many years to come.

Within this environment, new estimates from the Bureau of 

Labor Statistics Consumer Expenditure Survey (CE) program are 

likely to be an important tool for trend assessment and policy 

formation. To date, "65 and older" has been the oldest age class 

for which expenditure data have been pub

Beth Harrison is an economist in the Division of Consumer Expenditure Surveys, Bureau of 

Labor Statistics.

Reprinted from October 1986

Monthly Labor Review

fished. (For study purposes, consumer units are assigned to the 

age category of the householder, or "reference person," as 

reported on the survey questionnaire.1) In recently released 

estimates, however, that class has been divided into two groups, 

ages 65-74 and 75 and over. The results reveal that, although 

persons 65 and over are often viewed as a homogeneous group, 

the characteristics, incomes, and needs of the younger and older 

populations within the larger group are actually quite different.

Expenditure differences. Tables 2 and 3 summarize the 

differences in due 1984 characteristics and spending patterns of 

the two major subgroups of older Americans.2 Consumer units in 

the 65-74 age group spent almost 22 percent more on housing 

than those in the 75-and-over group. However, housing accounted 

for a higher share of the older group's total expenditures. The 

expenditure share for fuels, utilities,

15 

U.S. DEPARTMENT OF LABOR 

Bureau of Labor Statistics
MONTHLY LABOR REVIEW October 1986 • Spending Patterns of Older Persons

and public services was also higher for the 75-and-over 

group, even though the amount spent was less than that for 

those age 65-74. The average expenditure on owned 

dwellings was more than one-third higher for those 65-74 

than for the older class. This can be attributed to higher levels 

of homeownership and a higher percentage of consumer units 

still paying on their -mortgages in the younger group. About 

76 percent of those age 65-74 owned their homes compared to 

67 percent of the older group. On the other hand, only 8 

percent of the homeowners in the older group still owed on 

mortgages compared to 33 percent of their younger 

counterparts. There were also large differences in property 

taxes, for which the expenditures of those 65-74 were 33 

percent more than those of the 75-and-over group. This 

reflects the higher rate of homeownership for the younger 

group and also suggests they owned more expensive houses 

or lived in areas with higher property taxes, or both.

Expenditures for transportation accounted for 19 percent of 

the total expenditures of those age 65-74, compared with 13 

percent of the total for those 75 and over. The average 

expenditures of the former age group were more than twice as 

high as those of the latter. Much of the difference can be 

attributed to the higher level of vehicle ownership, 81 percent 

by those aged 65-74, compared to 59 percent by older 

persons. It is also likely that vehicles are used less frequently 

by the older group, further reducing their transportation 

expenditures.

The data for health care confirms the expectation that both 

mean expenditures for health care and the health care share of 

total expenditures are higher for the 75-and-over age group 

than for their younger counterparts. Health care accounted for 

13 percent of the total expenditures of those 75 and over 

compared with 8 percent of the total for those 65-74.

Income differences. Because income is one of the important 

determinants of spending, differences in income may help to 

explain the differences in expenditure patterns. The allowing 

tabulation compares selected income components for the age 

groups.

The mean income before taxes of the 65-74 age group was 

more than one-third higher than for persons 75 and over. The 

largest components of income for both groups were 

retirement income (consisting of Social Security, private, and 

government retirement), which accounted for 53 percent of 

the income of the 65-74 group, compared with 63 percent for 

the 75-and-over group. Wages and salaries made up about 30 

percent of the income of the younger group, which indicates 

that the reference person or other household member was still 

working, while it dropped to 10 percent of income for those 

75 and over. This is consistent with the fact that the average 

number of earners is three times higher for the younger 

group.

The age groups in table 3 differ from those published in 

regular CE releases. The working age groups; those 25-54, are 

combined. Older age groups are subdivided into those 

approaching retirement, those 55-59 and 60-64, and into the 

two groups that are the focus of this article, those 65-74 and 

75 and over.

Since 1980, the Consumer Expenditure Survey has been 

conducted on a continuing basis. As a result, trends for age 

and other demographic groups can be more effectively monitored over time. This article is but one of a series highlight-
ing interesting results from the expenditure survey. As the survey 

continues, additional issues will be covered.

-FOOTNOTES1The terms "household" and "consumer unit" are used interchangeably 

throughout this text. However, the consumer unit definition is the accurate

one for this survey. The Consumer Expenditure Survey is described in 

detail in BLS Handbook of Methods. 1982, ch. 6. Survey results are 

presented in annual reports and bulletins, the most recent of which is 

Consumer Expenditure Survey Results from 1984 , USDL 86-258 (Bureau 

of Labor Statistics, June 22, 1986).

2The Consumer Expenditure Survey is composed of two independent 

surveys: An Interview Survey and a Diary Survey. The results in this 

article are from the Interview Survey.