Health Care Not Biggest Cost for Baby Boomers

September 17, 2014 ( – A new report from the Employee Benefit Research Institute (EBRI) asks: “Does Household Expenditure Change With Age for Older Americans?”

The EBRI tracked the latest available data, through 2011, for its analysis and found that housing-related costs topped the list as the largest spending category for those between 50 and 64 years old. Maintaining their home is the biggest expense for these Americans and consistently takes up 40% to 45% of their household budget as they age, even as the actual dollar amount spent on their home decreases over time.

Health expenses, on the other hand, increase steadily with age. The EBRI found that in 2011, households with at least one member between 50 and 64 years of age spent 8% of their total budget on health items; that number more than doubled to 19% for those ages 85 and older. The median health care expenditure for households with at least one member 85 or older was $2,814 in 2011, but the average was more than double that, at $6,603.

In fact, the EBRI found that spending increases significantly at the 95th percentile for those age 90 or older, which may be attributed to the high cost of health care. “For some, health care expenses can be heavily skewed toward the end of life,” says Sudipto Banerjee, EBRI research associate, who authored the report.

Food and clothing costs remained mostly flat across age groups as a percentage of total household expenses. And somewhat predictably, transportation and entertainment expenses decreased over time, because as people grew older they did not commute or go out as often.

Still, average household spending decreased between 2005 and 2011 in every age group, even more so among comparatively younger households. “Whether this was a short-run drop in response to the 2008 market crash or part of a long-run trend remains to be seen,” says Banerjee.

The full report, which used data from the Health and Retirement Study (HRS) and the Consumption and Activities Mail Survey (CAMS), is published in the September EBRI Notes at