Senior Safety Nets Held Firm in 2009

Consumer spending and incomes declined for people of all ages, but many seniors earned and spent more.

By SHARE

Consumer spending among older Americans did not decline last year from 2008 levels. For Americans overall, spending dropped by nearly 3 percent in 2009, according to the government's exhaustive annual look at consumer spending. But expenditures among people ages 65 to 74 rose by about 7 percent, and spending among those 75 and older was little changed from 2008 to 2009. The findings echo a recent report that the poverty rate increased last year for all Americans but fell for people age 65 and older.

[See 8 Money Trends Shaping Seniors' Lives.]

The ability of older consumers to maintain their overall spending last year was accompanied by income levels that also fared better than for the nation as a whole. Household incomes, before taxes, declined by slightly more than 1 percent for all consumers, falling to an average of $62,857 in 2009 from $63,563 in 2008.

For consumers ages 65 to 74, however, pre-tax incomes rose by 4.5 percent in 2009, to an average of $47,286 from $45,232 in 2008. Among the oldest consumers, ages 75 and up, pre-tax income fell by 3.5 percent to $31,676, from an average of $32,886 in 2008. The figures were contained in the 2009 Consumer Expenditure Survey, which is published by the U.S. Bureau of Labor Statistics.

[See 30 Fast-Growing Careers for Older Workers.]

However, for both groups of older Americans, income from Social Security and pensions rose in 2009 from 2008. Because of large consumer price increases in the 2007-2008 period, due largely to a spike in oil prices, the annual cost of living adjustment for Social Security was 5.8 percent for 2009—the largest one-year rise since the COLA program started in 1983.

There has been virtually no consumer price inflation during the past two years. The 2010 COLA was zero and is expected to be zero again in 2011. In a recent assessment of retirement-age poverty, the Center for Retirement Research at Boston College attributed reduced senior poverty to the large 2009 COLA, the one-time economic stimulus payments of $250 to seniors in 2009, and changes in how the government sets poverty thresholds. "This pattern is likely to be reversed in the future as Social Security beneficiaries receive no COLAs in 2010 and 2011 and the poverty threshold increases," the Center's report said.

[See 10 Costs That Could Increase in Retirement.]

To see how your household spending totals compared with the national averages, here is a detailed look at average spending of older Americans in 2009 and 2008 on major household spending categories:

  2009 2008
Spending Categories Age Groups Age Groups
  65-74 75+ 65-74 75+
Food at home $3,567 $2,851 $3,421 $2,667
Food away from home $1,194 $1,338 $1,917 $1,268
Shelter $7,828 $6,464 $7,281 $6,553
Utilities, fuel, public services $3,568 $2,967 $3,538 $3,067
Housekeeping supplies $773 $584 $747 $485
Household furnishings, equipment $1,491 $850 $1,529 $898
Apparel and services $1,322 $793 $1,381 $755
Transportation $7,033 $3,631 $6,740 $4,392
Healthcare $4,906 $4,779 $4,779 $4,413
Entertainment $2,498 $1,587 $2,418 $1,349
Cash contributions $2,087 $2,378 $2,033 $2,291
Personal insurance, pensions $2,669 $964 $2,616 $1,003
Other $4,021 $2,490 $3,033 $2,551
Total average annual expenditures $42,957 $31,676 $41,433 $31,692

Here are the average pre-tax household incomes for the two age groups during:

  2009 2008
Income Sources Age Groups Age Groups
  65-74 75+ 65-74 75+
Wages and salaries $18,760 $6,048 $17,321 $5,185
Social Security and pensions $23,578 $22,038 $22,591 $21,677
Investment income $2,105 $3,067 $2,596 $3,804
Self-employment income $1,813 $58 $2,007 $1,555
Other income $1,030 $504 $717 $665
Total money income before taxes $47,286 $31,715 $45,232 $32,886

There was an enormous swing in self-employment income for the 75+ group of consumers between 2008 and 2009—from $1,555 to only $58 last year. A representative of the Consumer Expenditure Survey (CES) says that only 5 percent of people over age 75 report self-employment income in any given year. This raises the odds of big yearly swings. The CES looks at household units, not individual spending patterns. It uses the age of the primary survey respondent when assigning households to different age groups.