Over the past 25 years, the spending patterns of retirees (age 65 and over) have moved in response to increases (and falls) in the costs of goods and services, changes in retirement income and shifts in priorities. More seniors carry mortgage and credit card debt than in the past, but generally the economic well-being of seniors has improved, particularly in the area of discretionary spending. How have their spending habits changed?
Using the Bureau of Labor Statistics Consumer Expenditure Survey (CES), I look at the past 25 years’ worth of expenditures for a particular group of seniors: those in the northeastern region of the United States. This region, as defined by the BLS, includes nine states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Why the Northeast? This region has the highest median age in the United States. The median age in the United States is 37.3 years old, but according to the America Community Survey, seven of the nine states in the Northeast region are in the top 10 states with the highest median age. Maine tops the rest of the country with a median age of 43.2 years.
Many retirees flock to warmer climates to live, but in some states seniors are “aging in place,” while younger generations leave to look for job opportunities and lower costs of living outside of the states in which they grew up. Does this mean that these states will face an economic burden? Not necessarily; but policymakers and those in the health care and long-term care industries face tough decisions on the cost of providing care for those choosing to age in place.
What is the point of caring how seniors spend their money? In and of itself, there is not an immediately obvious policy point here. However, public policy is often shaped by perceptions policymakers have about the economic condition of communities and groups of people that may differ from the reality.