Center for Retirement Research
Center for Retirement Research Working Papers
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TITLE:
Understanding Expenditure Patterns in Retirement
AUTHOR(S):
Barbara A. Butrica
Joshua H. Goldwyn
Richard W. Johnson
DOCUMENT TYPE: Article
- Download the Document (PDF format - 47 K) - January 2005
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Executive summary
ABSTRACT:
Understanding the consumption needs of retirees is critical to assessing the adequacy of retirement income and the possible impact of Social Security reform on the well-being of older Americans. This study uses data from the Health and Retirement Study, including a recent supplemental expenditure survey, to analyze spending patterns and consumption needs for adults ages 65 and older. Results indicate that typical older married adults spend 84 percent of after-tax household income, and nonmarried adults spend 92 percent of after-tax income. Even at older ages individuals devote a larger share of their expenditures and income to housing than any other category of goods and services, including health care. Fully 8 percent of married adults report after-tax incomes that fall short of our estimated basic-needs threshold, consisting of housing, health care, food, and clothing. By comparison, only 3 percent of married adults have incomes below the official poverty level.