Sustainability Infrastructure

After age 65, Americans consistently spend less: report

“The fact that spending declines broadly, even among those in the highest wealth quartile, suggests that the decline is not related to economic position.”
Wallet with money.
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Story at a glance


  • Although older Americans tend to spend more on gifts and donations as they age, overall spending consistently declines as time goes on.

  • Results of the Health and Retirement Study found spending for single households declines by around 1.7 percent each year.

  • For coupled households, the annual inflation-adjusted decline rose to around 2.4 percent. 

Once Americans reach age 65, their spending consistently declines regardless of whether they’re wealthy or have lower levels of financial resources.

That’s according to a new study from the Rand Corporation.

Researchers assessed data from the Health and Retirement Study and found spending adjusted for inflation declined for single and coupled households by annual rates of around 1.7 percent and 2.4 percent, respectively.

The study was carried out between 2005 and 2019.

“The fact that spending declines broadly, even among those in the highest wealth quartile, suggests that the decline is not related to economic position,” authors wrote. 


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The findings also contradict assumptions spending may be constant or even increase in retirement as individuals take advantage of free time to pursue hobbies or travel. 

Researchers also assessed budget shares, or fractions of total spending that go towards different subcategories. With age, the budget share for gifts and donations increased, a finding that suggests economic position doesn’t worsen with age, even as overall spending declines, the authors said.

Reductions in spending by older people could be due to deteriorating health, which may reduce the trips or vacations, researchers explained. Although spending on healthcare typically rises as individuals get older, data show this increase is not large enough to offset a decline in spending on travel.

“In determining retirement income needs, households and the financial planners should not rely on the common assumption that real spending will be constant or even increase, because this is not supported by household-level spending data,” said Michael Hurd, director of the RAND Center for the Study of Aging, in a release

The report follows research released earlier this year that shows around half of older Americans can’t afford essential expenses. The data, from the University of Massachusetts-Boston, highlighted the financial toll of the COVID-19 pandemic and inflation on seniors. 

These Americans may also face a greater financial risk than their younger counterparts should a recession hit. For one, older Americans who are laid off typically have a harder time finding a new job than younger workers and may ask for higher salaries upon hiring to reflect their years of experience.