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TABLE 2-15.-DISTRIBUTION OF NET WORTH, BY AGE OF HOUSEHOLDER AND ASSET BY TYPE

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Source: U.S. Bureau of the Census. "Household Wealth and Asset Onwership: 1984." Current Population Reports Series P-70, No. 7 (July 1986).

The holdings of the elderly differ from those of the nonelderly. For example, the elderly as a group have a smaller share of their equity in a business or profession and a larger share in savings, checking, or money market accounts than the nonelderly. In 1984, 5 percent of the net worth of elderly households was in a business or profession compared to 10 percent of the net worth of all households (including the elderly). At the same time, 30 percent of elderly net worth was in savings and checking accounts, compared to only 18 percent of the net worth of all households. Additionally, the elderly have a small share of their equity tied up in their homes than the nonelderly. In 1984, 39 percent of the net worth of elderly households was equity in their home compared to 41 percent of the net worth of all households.

Chart 2-19

DISTRIBUTION OF TOTAL NET WORTH BY ASSET
TYPE FOR OLDER HOUSEHOLDS: 1984

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Source: U.S. Bureau of the Census. "Household Wealth and
Asset Ownership: 1984. Current Population Reports Series
P-70, No. 7 (July, 1986)

CONSUMPTION PATTERNS

The economic well-being of the elderly is ultimately reflected in the relative standard of living they can sustain. The elderly generally consume fewer goods and services than the nonelderly and spend slightly higher proportions of their total budgets on essentials. Persons age 75 and older spend 70 percent of their consumption dollars on housing (including utilities), food and medical care, compared to only 54 percent spent by younger households on these items (table 2-16 and chart 2-20). The one service or commodity that the elderly spend more on in actual dollars than the nonelderly is health care.8

8 Data on consumption patterns are from the U.S. Bureau of Labor Statistics, Consumer Expenditure Survey: Interview Survey, 1986.

TABLE 2—16.—AVERAGE ANNUAL EXPENDITURES OF URBAN CONSUMER UNITS BY TYPE OF EXPENDITURE AND AGE OF HOUSEHOLD: 1986

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Source: U.S. Bureau of Labor Statistics. Consumer Expenditure Survey, U.S. Department of Labor, 1986.

THE ELDERLY SPEND LESS THAN THE NONELDERLY, EVEN WHEN SPENDING IS ADJUSTED FOR HOUSEHOLD SIZE

Older households consume less than younger households because they have less household income to spend, fewer people in the household to support, and different needs than younger households. Data from the 1986 Consumer Expenditure Survey show that consumer units with a reference person age 65 to 74 or age 75 and over have average incomes before taxes that are, respectively, only 63 percent and 44 percent as great as the average income of all consumer units under age 65.9 Spending by older consumer units is substantially lower than the average spending by younger consumer units. In 1986, units with a reference person age 65 to 74 spent $16,898 and those with a reference person age 75 and older spent $11,746 compared to average spending of $24,788 by younger consumer units.

To some extent, elderly households need to buy less overall and spend on a different mix of purchases because they have fewer members than nonelderly households. In 1986, the average 65 to 74-year-old urban consumer unit had 1.9 persons and the average 75 and older consumer unit had only 1.6 persons compared to younger urban consumer units which has 2.8 persons. However, even when adjusted for unit size, older households spent less than younger households.

Because older households are smaller, they devote a larger share of their budgets to costs that vary little with household size. Utilities, food and health care, in particular, were more significant expenses for the elderly than the nonelderly. For example, in 1986, utility costs as a percentage of the budget were 9 percent for 65- to

9A consumer unit is a term used to denote: one or more unrelated persons living together who pool their income to make joint expenditure decisions; all members of a household who are related; or a person living alone or who lives with others but is financially independent. For readability, the term "household" is used interchangeably with "consumer unit" in this section. However, the reader should note that a household-generally defined as all persons sharing a housing unit-can include more than one consumer unit. A reference person is the member of the household that is first mentioned as the owner or renter of the home.

74-year-old units and 12 percent for 75 and older units, compared to only 7 percent for younger consumer units. Housing and food combined take up an increasing share of the elderly's budget (chart 2-20).

HOUSING

AND
FOOD

Chart 2-20

EXPENSES FOR HOUSING AND FOOD FOR TWO
OLDER AGE GROUPS: 1986

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CONSUMER UNITS 65-74

CONSUMER UNITS 75+

Source: U.S. Bureau of Labor Statistics, Consumer

Expenditure Survey, 1986

Food costs represented over 17 percent of the expenditures for older consumer units compared to 15 percent for younger units. Older households spent significantly less on clothing, transportation, pensions, life insurance, and entertainment than did their younger counterparts. Older and younger units spent about the same proportion (21 percent and 23 percent, respectively) on shelter and furnishings.

HEALTH CARE IS THE ONLY BUDGET CATEGORY ON WHICH THE ELDERLY SPEND MORE MONEY THAN THE NONELDERLY

One of the greatest threats to the economic security of the elderly is the high out-of-pocket cost of health care, which consumes an increased share of the reduced budgets of the average elderly household. The elderly spend more on health care-both in actual dollars and as a percentage of total expenditures-than the nonelderly. Consumer units with a reference person age 65 to 74 paid an average of $1,537 and those with a reference person age 75 and older paid $1,761 in out-of-pocket health costs in 1986 compared to an average of $914 paid by younger units. Because the total budget of the elderly is smaller, the share spent on health care is substantially higher than the share spent by the nonelderly. Consumer units age 65 to 74 and 75 and older spent 9 percent and 15 percent

respectively of their budgets on health care compared to 4 percent by younger units.

The major health expense for urban elderly households in 1986 was health insurance, including Medicare (chart 2-21). Despite the fact that older households have lower incomes and fewer household members, urban elderly units spent over three times as much as their younger counterparts on health insurance ($641 v. $302) and twice as much on prescription drugs and medical supplies ($326 v. $154). Expenditures for medical services by older and younger households were relatively equal in dollar terms ($669 v. $459), but such expenditures represented half of all health costs for younger households compared to about four-tenths for older urban units. There was little difference in the patterns of health expenditures for households headed by people 65-74 and people 75 and over from the pattern for older households as a group.

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