Social Security has just released a detailed look at consumer spending in 2020 by people aged 55 and older. As with much of Social Security, it’s all about the numbers, and there are lots of them here. But for anyone paying close attention to their income and spending records – aka retirees – it’s helpful to see how you compare with others of similar age and income levels.
Spending patterns change a lot as people and households get older, but the common direction is that people spend less as they age – except on health care. This likely is due to income reductions but also to reductions in activities that use discretionary income – travel, restaurant meals, entertainment, and the like.
Seeing these trends and, especially, their implications for changed spending behavior, can be helpful. Having time to make needed adjustments is nice, too.
The report looks at spending by age, income level, household, and individuals. Here’s a snapshot of household size by age grouping:
Size/Age 55-64 65-74 75+
1 person 31.4 37.2 54.2
2 people 40.4 49.0 37.7
3 or more people 28.2 13.9 8.2
Pick the unit size closest to your situation. If you live with one or more other people, either a partner or friends, spending figures by household size may be more meaningful than individual spending levels.
Likewise, annual household incomes are broken into quartiles — $19,871 or less, $19,872 to $35,794, $35,795 to $65,000, and more than $65,000. The report calls these groups lowest, low-middle, high-middle, and highest. It provides percentile figures and also the average and median spending totals. These last two categories are needed because the lopsided growth of high-income households in recent years has rendered some averages of little meaning, and made midpoint averages more relevant.
Here were the spending averages of these households:
Quartile Lowest Low-Middle High-Middle Highest
Average (“mean”) $26,160 $36,658 $47,631 $78,473
Midpoint (“median) $19,116 $28,660 $37,515 $59,500
25th Percentile $13,712 $21,028 $28,692 $43,456
75th Percentile $28,788 $39,100 $ 50,906 $85,053
Again, pick the group most like you, and compare your spending to it.
Here’s the same breakdown by individuals as opposed to households. If you live alone, this is the measure you should track.
Quartile Lowest Low-Middle High-Middle Highest
Average (“mean”) $22,105 $27,152 $28,092 $41,941
Midpoint (“median) $16,380 $20,656 $21,374 $30,942
25th Percentile $11,796 $14,436 $14,666 $19,784
75th Percentile $23,540 $30,565 $31,696 $47,712
Once your eyes are no longer glazed over by all these numbers, here is a look are household spending sliced into age groups:
Age 55-64 65-74 75+ 65+
Average (“mean”) $64,048 $52,245 $40,716 $47,457
Midpoint (“median) $46,636 $37,384 $30,124 $34,088
25th Percentile $29,071 $24,684 $19,396 $22,032
75th Percentile $74,345 $57,732 $46,636 $53,172