Seniors Spending More on Credit Cards, Mortgages
February 11, 2014
Seniors are spending more money on mortgages and loans, says USA Today.
A new report by Pamela Villarreal, senior fellow at the National Center for Policy Analysis, details exactly how older Americans are spending their money these days.
One of the most notable aspects of modern senior spending is an increase in credit card debt.
- In 1989, the average credit card balance for 65 to 74 year olds was $2,100.
- That number has increased to $6,000 today.
- For those age 75 and above, one could not even measure the average credit card balance in 1989. But in 2010, that number was at $4,600.
Seniors spend the majority of their expenses on housing-related costs, from housing maintenance to property taxes to insurance and mortgage interests.
- For 54 to 74 year olds, housing spending is 32.8 percent of expenditures.
- For those age 75 and older, housing expenditures are 36.7 percent of total spending.
Health care is another area of increased spending, with 11.4 percent of expenditures of 65 to 74 year olds going to health care. For those 75 and older, that figure is 14.7 percent.
But the fastest-growing expenses for seniors 65 to 75? All sorts of entertainment -- from exercise equipment to photography gear to boats and even video games. Number two is pets and hobbies, which has averaged 5.8 percent of senior expenditures. Also in the top five are cars and trucks. Both for seniors age 65 to 74 and age 75 and above, new and used vehicles represent 2.6 percent of expenditures, a category that has been growing at 6.5 percent since 1990.
Of note, education is an extremely fast-growing expenditure for seniors, growing at a rate of 14.5 percent since 1990. However, it only represents 0.5 percent of total spending. These costs are not just education costs for seniors themselves, but for their children and grandchildren.
For older Americans, the article notes that pre-retirees and retirees need to be sure to factor inflation into their spending plans. Notably, they should use the Consumer Price Index for the elderly (CPI-E), rather than the Consumer Price Index for all consumers (CPI-U), as it tends to have a higher inflation rate (from 1982 to 2011, the CPI-E rose at 3.1 percent, compared to the CPI-U's 2.9 percent).
Source: Robert Powell, "Seniors Overspend on Mortgage, Credit Cards," USA Today, February 8, 2014.
Browse more articles on Tax and Spending Issues