Housing Expenditures of the Elderly: Trends in Consumer Credit A Profile of Nursing Home Users Under Age 65 Projections of National Health Expenditures Recent Legislation Affecting Families Charts From Federal Data Sources Journal Abstracts and Book Summary Expenditures on a Child by Husband-Wife Families, 1992 Expenditures on a Child by Single-Parent Families, 1992 Feature Articles Housing Expenditures of the By F.N. Schwenk Family Economics Research Group Housing is of paramount economic importance to elderly households. It represents a substantial portion of the net worth of owners. Also, housing expenses are the highest category of expenditures for elders. Using the 1990 Consumer Expenditure Survey, this paper describes out-of-pocket expenditures by elderly owners and renters with a special analysis for widows who are often faced with the decision of whether or not to sell their home. Results indicated that elderly homeowners allocate 32 percent of expenditures to housing; renters spend 43 percent. Housing expenses are not significantly different for owners and renters. Elders and their financial advisers cannot assume that selling a house and renting an apartment will lower housing expenses. N early four of five elderly net worth (40 percent, on average) (2). The American Association of Retired meals on wheels, home chores, and home health care programs are designed to make it possible for people to stay in their homes. Equity conversion plans, such as reverse mortgages, are economic tools for the elderly who need access to their home equity but wish to remain in their homes. The costs of living in these homes, that is, the out-of-pocket expenditures, are presented in this paper. Expenditures on housing and other goods and services are reported for owners and renters who are age 65 or older. In addition, a subgroup of widows is highlighted. The housing expenditures of elderly widows living in single-family, detached houses that they own are compared with those of widows living in rented apartments. 2 ☆ US GOVERNMENT PRINTING OFFICE 1993 715-013- 1302/86254 Family Economics Review Data Data for this study are from the interview component of the 1990 Consumer Expenditure Survey (CE), conducted by the Bureau of the Census for the Bureau of Labor Statistics. The CE is an ongoing survey that collects data on household expenditures, income, and major socioeconomic and demographic characteristics. A national sample of consumer units' is interviewed once each quarter for five consecutive quarters; the first interview is used only for bounding purposes. Using a rotating sample design, about one-fifth of the sample is replaced each quarter. The 1990 CE, with a response rate of 86 percent, contains information from about 20,000 interviews. Quarterly expenditure data are multiplied by four to provide estimates of annual expenditures. For this study, consumer units that had a reference person or spouse 65 years or older were selected. This sample of 4,363 units was weighted to represent the 21 million elderly consumer units in the Nation. The subsample of widows included 590 women who owned a single-family, detached house and 263 women who rented a high-rise, flat, or garden apartment. A consumer unit consists of either: (1) all members of a particular household who are related by blood, marriage, adoption, or other legal arrangement; (2) two or more people living together who pool their incomes to make joint expenditure decisions; or (3) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent. To be considered financially independent, at least two the three major expense categories (housing, food, and other living expenses) have to be provided by the respondent. Who Owns Their Home? Elderly households may own or rent their home-a detached house, duplex, apartment (high-rise, flat, or garden), mobile home, or other dwelling. Seventy-eight percent own their homes (figure 1). They have equity; in fact, 80 percent of owners do not have a mortgage. These data are presented two ways: home ownership rates by socioeconomic and demographic characteristics are shown in table 1, p. 4, and the same characteristics as a percentage of owners and renters are shown in table 2, p. 5. The two tables provide different views of the same data. First, table 1 shows that family type and marital status are related to home ownership. About two-thirds of women or men who live alone are homeowners, whereas 90 percent of husband-wife families are homeowners. Marital status distinguishes home ownership among those who are not married. Seventy-one percent of widows and widowers, 61 percent of never-married people, and Rent apartment Rent other Own single-family detached Own other type dwelling 56 percent of divorced and separated people are homeowners. Those in the younger age ranges are more likely to be homeowners (85 percent of those ages 65-69 compared with 69 percent of those ages 80 or older). In the older age groups, renters may once have been owners. They may have sold their home for equity conversion or reasons related to location or maintenance. White households have a higher rate of home ownership than other races. Education is also related; those with some college education are more likely to be homeowners. In addition to characteristics of the family, characteristics of the dwelling affect home ownership. Detached homes and mobile homes are nearly always owned when lived in by elders; 94 percent of detached homes and 92 percent of mobile homes are owned, not rented. About half of town houses and 2-, 3-, or 4-plexes and about onequarter of apartments are owned. Rural elderly families are more likely than urban families to be homeowners; 87 percent of rural units, compared with 76 percent of urban units, own their home. The mean total expenditures for owners is more than half again that for renters....Even so, housing expenses are only slightly higher for owners... Table 2 describes the characteristics of owners and renters and the type and location of dwellings that are owned and rented. Over half of the owned units are owned by husband-wife families, whereas over half of the rented units are occupied by females living alone, often widows. The age category with the largest proportion of owners is 65-69 years; one-third of owners are this age. Among renters, the largest proportion is 80 years or older; one-third of renters are in this age category. A larger proportion of owners than renters had college experience; 28 percent of owners, 18 percent of renters. Eighty-two percent of owned units are single-family, detached houses; 62 percent of rental units are apartments. Eighty-two percent of owned units and 91 percent of rented units are in urban areas. Mean expenditures for housing, and the subcategories of shelter and utilities; household operations; and furnishings and equipment are shown together with expenditures for other categories of goods and services. Shelter for owners includes mortgage interest,1 property taxes, insurance, and repairs and maintenance expenses. Shelter for renters includes rent and tenants' insurance. Since utilities are often included in the rent, it is not possible to separate utilities from shelter. Therefore, they are combined for both renters and homeowners. Household operations include personal services, laundry and cleaning supplies, postage, and similar expenses. Services for housekeeping, gardening, and care of invalids are part of household operations. Furnishings and equipment include textiles, furniture, floor coverings, and appliances. 'In the CE survey, mortgage principal is considered to be an investment, not consumption, so is not included as a housing expenditure. |