How the retired spend on food

July 31, 2012

Grocery expenditures are stable in aging households, unlike health care costs, which rise.

The good news about food expenditures for older Americans is that the percentage stays flat as people age, and as households move from the pre-retirement stage deeper into their post-retirement years.

Median spending on food in 2009, the latest figures available (in 2010 dollars) were: $4,622 (12% of total household expenses) for people age 50-64; $3,896 (12%) for people 65-74; $3,555 (13%) for people 75-84; and $2,844 (12%) for people 85 and older, reported the Employee Benefit Research Institute (EBRI).

EBRI defines food expenditures as “food and drink, including alcoholic beverages that are bought in grocery and other stores. Dining out is not included.” Data comes from two components:  First, the national Health and Retirement Study of households with people 50 and older, sponsored by the National Institute on Aging and the Social Security Administration, and administered by the University of Michigan; second, the Consumption and Activities Mail Survey, which is updated every two years.

It is the context of these figures that should matter to supermarkets, we feel at The Lempert Report. As Boomers age and comprise more of this study group in coming years, we expect that food expenditures could rise—because Boomers throughout their lives haven’t been quick to compromise on their desires.  Still, that may not translate info freer spending on preferred items and brands at food retailers, because of numerous economic pressures these households face, according to the EBRI data. 

For example, “home and home-related expenses remain the single-largest spending category for older Americans [42%-47%, depending on age bracket], followed by health care expenses [9%-18%, depending on age bracket],” said Sudipto Banerjee, author of the latest EBRI study, Expenditure Patterns of Older Americans, 2001-2009.  “However, health care spending is the only component which steadily increases with age.”

The study also found:

  • Retired households spend 80% on average of what working households spend, though their earnings are 57% of working households.
  • Household consumption steadily declines with age.
  • Demographic sub-groups such as singles, African-Americans and high school dropouts outspend their resources in retirement.