Consumption patterns and economic status of older households in the United States

This article holistically maps the consumption patterns of older Americans and compares the economic status of different groups (clusters) of elderly U.S. consumers. Using data from the 2010–2011 Consumer Expenditure Survey, the analysis focuses on the consumption patterns of households whose heads or spouses were age 65 and over. Our factor and cluster analyses revealed six consumption clusters (listed in order of cluster size): “basic-need-meeters,” “housing burdened,” “healthcare burdened,” “transportation burdened,” “happy retirees,” and “balanced budgeters.” We found that substantial financial vulnerabilities exist for the first three groups, which represent approximately 74 percent of older Americans, and that these vulnerabilities are due to expenses for housing, healthcare, and everyday necessities. These results demonstrate the need for more effective provision and targeting of healthcare services for the vulnerable consumption groups and highlight the importance of timely retirement planning.