At a Glance | November 7, 2019 How Do Older Americans Spend Their Assets? Using the Health and Retirement Study (HRS) and the Consumption and Activities 1 Mail Survey (CAMS), we examine the spending behavior of retirees and near-retirees. RETIREE EXPENDITURES The Spending Patterns of Early vs. Late Retirees Can Differ Significantly 2 Household Expenditures by Category in 2017 Dollars Evidence from retiree spending Vacation/ patterns challenges the assumption Health Dining/ Charity/ 3 Housing Food Care Transportation Arts Clothes Gifts that people can expect to spend a constant level — e.g., 75 percent of preretirement income — every $54.7k 2005 Preretirement 43% 11% 8% 16% 9% 3% 5% year in retirement. Ages 50–64 2009 $49.0k 46% 12% 9% 14% 8% 3% 5% 2013 $49.0k In general, spending declined during 46% 11% 8% 14% 9% 3% 4% retirement. Also, the composition of 2017 $54.5k 46% 11% 8% 14% 10% 3% 5% spending changed over time: While housing remained the largest $42.7k 2005 Early Retirement spending category for every age 41% 12% 12% 13% 9% 3% 7% Ages 65–74 2009 $42.0k group, older households allocated a 44% 12% 11% 12% 9% 3% 6% smaller share of their budgets to 2013 $44.4k 44% 12% 9% 14% 9% 3% 5% transportation and vacations/ 2017 $50.4k entertainment and a larger share of 45% 11% 10% 12% 11% 3% 5% their budgets to health care costs. However, the average annual share of $33.0k 2005 Late Retirement 41% 13% 15% 9% 6% 3% 6% Ages 75+ health costs for the 65–74 and 2009 $33.0k 41% 13% 14% 9% 7% 3% 7% 75-or-older age groups declined after 2013 $37.2k 2007, the year after Medicare Part D 43% 13% 12% 10% 8% 3% 6% went into effect. 2017 $39.5k 46% 11% 11% 10% 8% 3% 6% HEALTH CARE SHARE The Share of Health Costs Has Declined for Retirees Since 2007 Average Annual Share of Health Care in Household Expenditures for Ages 75+ The breakdown of the out-of-pocket health costs for those ages 75 or older indicates that most of the drop in total Out-of-Pocket Health $5.0k Care Expense $4.6k health costs for this age group is Health Insurance 7.6% attributed to health insurance $3.9k and drugs, while other components $4.0k remained unchanged for the most 6.2% part. Prescriptions 4.6% 2.1% Health Services 3.6% 2.4% 3 83+ 65+4+45+22+18+154+4+39+ 79+22+57 31+26 0.6% Medical Supplies 0.8% 2005 2009 2013 2017 SOURCE: Zahra Ebrahimi, “How Do Retirees’ Spending Patterns Change Over Time?,” EBRI Issue Brief, no. 492 (Employee Benefit Research Institute, October 3, 2019). 1. Health and Retirement Study, public use dataset. Produced and distributed by the University of Michigan with funding from the National Institute on Aging (grant number NIA U01AG009740). Ann Arbor, MI (2014, 2015). 2. Percentages may not add to 100 due to rounding. 3. Entertainment: Sum of trips and vacations, tickets to movies and sporting or performing arts events; hobbies and leisure equipment (photography, reading, camping, etc.); dining out in restaurants, cafes, and diners; and take-out food. © 2019 EBRI This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain any and all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org.