Despite concerns that aging brings heightened health care costs, the largest spending categories for older Americans are those associated with home-related expenses, according to a new report by Employee Benefit Research Institute (EBRI).
The cost of maintaining a home is typically the biggest expense for older people, confirms the EBRI analysis, “Does Household Expenditure Change With Age for Older Americans?” Tracking data through 2011, EBRI’s analysis examines the spending pattern of the older segment of the U.S. population, specifically the majority of the households that have either reached retirement age or are on the cusp of retirement.
Although the dollar amount spent on home and home-related expenses decrease with age, the share of these costs in household budgets remains stable between 40%-45%, depending on age group.
Average household spending dropped between 2005 and 2011 in every age group, with younger households cutting back spending more than their older counterparts during that period.
“Whether this was a short-tun 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 report, in a statement.
Older households couldn’t avoid spending more on health care costs than younger ones, especially when age played a factor.
In 2011, households with at least one member between ages 50-64 spent 8% of their total budgets on health items, compared with 19% for those age 85 or older.
For adults age 75 and older, health-related expenses occupied the second-largest share of total expenditure. And for nonagenarians, EBRI found a large increase in spending at the 95th percentile, which is attributed to “very high” health care expenses.
“For some, health care expenses can be heavily skewed towards the end of life,” Banerjee said in a statement.
Illustrating this point, in 2011 the median health care expenditure for households with at least one member age 85 and above was $2,814, however, the average spending amount among this demographic was much higher at $6,603.
View the EBRI repot.
Written by Jason Oliva