These days, keeping up with the Joneses is more likely to involve night classes than a new sofa. A study on boomer spending habits found middle-aged adults today spend less on leisure and frills than previous generations but more on education, adult children and mortgage debt.
Using government data on consumer spending, National Center for Policy Analysis fellow Pamela Villarreal compared the purchasing habits of 45- to 64-year-olds in 1990 and 2010. During this time, the portion of disposable income spent on food, restaurants, clothing, furniture and new cars all fell. Clothing expenses showed the steepest decline, down 42 percent for 45- to 54-year-olds and 70 percent for 55- to 64-year-olds.
Meanwhile, expenditures on household utilities, insurance premiums and health care were all up, as was spending on adult children. Education expenses increased the most of any spending category — up 80 percent for ages 45-54 and 22 percent for 55-64. There’s no breakdown on how much of this was for children’s educations and how much adults spent on going back to school themselves.
Spending on housing (including mortgage interest, taxes and insurance) is up by a quarter since 1990, and not necessarily because homes were getting bigger and better — for 55-64, half the increase was because of mortgage interest payments. In 1990, though the average 30-year fixed rate mortgage was more than 10 percent, mortgage interest payments made up only 4.3 percent of spending on housing. By 2010, the average interest rate fell to 4.69 percent but made up 6.3 percent of housing costs.
Credit card balances also command a growing share of spending. The average credit card balance for 45-54 has more than doubled, from $3,400 in 1989 to $8,300 in 2007 (not adjusting for inflation). The average balance for 55-64 went from $2,900 in 1989 to $6,900 in 2007.
But lets end on some good news: Boomers are also stashing away more for retirement these days. Pension contributions more than doubled, from 2.7 percent in 1990 to 6.3 percent in 2010 for the younger group and from 2.3 percent to 5.5 percent for older boomers.
Thursday Quick Hits:
• Kennedy Center honorees announced. This year the performing arts center will honor the band Led Zeppelin, along with David Letterman (65), Dustin Hoffman (75), ballerina Natalia Makarova (72) and blues musician Buddy Guy (76). The awards, which take place each year in December, are designed to honor lifetime contributions to American culture through music, dance, drama — or late-night television. Joked Letterman: “I believe recognition at this prestigious level confirms my belief that there has been a mixup. I am still grateful to be included.”
• Suggested savings goals by age. A new report from Fidelity Investments says workers should aim to save at least eight times their final salary before retiring; that’s how much it will take to replace 85 percent of income in retirement. The report also breaks down savings goals by age — at 45, for instance, it suggests workers aim to have about three times their salary saved.
• One in 10 older adults is poor. More than 10 million Americans ages 50 and older lived in poverty last year, according to Census data released Wednesday.
• Senior communities going to the dogs. More nursing homes and retirement communities are beginning to allow animals, either by letting residents bring their own pets, arranging pet visits or keeping community pets. There’s growing evidence that pets can be good for older adults’ health. ”Pet care is one of the few opportunities for people to be a nurturer again,” said Alan Beck, director of the Center for the Human-Animal Bond at Purdue University.
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