Geographic Variation in Spending Among Older American Households

February 2017, Vol. 38, No. 2
Paperback, 12 pp.
PDF, 1,947 kb
Employee Benefit Research Institute, 2017

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Executive Summary

This EBRI Notes article reports on a study of how spending in older American households (ages 50 and above) varies across different census regions and divisions. The study shows large variations in household spending across the country, suggesting that both individual households and financial firms might benefit from using state- or region-specific spending benchmarks, in addition to national spending benchmarks. Key findings include:



  • There are significant differences in spending levels across different census regions, but the differences are much larger among census divisions, which are smaller geographic units.
  • Variation in total household spending:


    • Among 65-to-74-year-olds living in different census regions, Northeastern households had the highest median annual spending ($41,860), compared with the lowest by Southern households ($32,836).


    • Amng the different census divisions, New England households (CT, RI, MA, VT, NH, and ME) ages 65 to 74 spent the most (median annual spending of $46,019), while households in that age group in the West South Central division (TX, OK, AR, and LA) spent the least ($28,540).


  • Housing and housing-related spending:



    • Since housing and housing-related expenses form a large part of total household expenses, geographic differences in housing and housing-related expenses are consistent with total spending differences. For example, New England households between ages 50 and 64 spent more than 2.5 times more ($30,240 annually) on housing and housing-related expenses than those in the southern states of TX, OK, AR, and LA ($11,948).


  • Variation in health care spending:



    • Geographic differences in health care spending 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 and non-institutionalized. Among those ages 85 and above, the median annual spending among Midwesterners was $3,480, which was 41.5 percent higher than the median ($2,460) in the next-highest spending region (the West).


  • National spending benchmarks:



    • Average household spending declined with age. In 2015, average total annual spending for households between ages 50 and 64 was $53,087, which declined to $34,982 for those ages 85 and above. Median spending levels for the same age groups were $42,235 and $26,497, respectively.


    • Housing and housing-related expenses remained the largest spending category for all age groups above 50, varying between 44 percent and 48 percent of total household spending for different age groups.