Academic journal article Monthly Labor Review

Retirement Expenditures for Whites, Blacks, and Persons of Hispanic Origin: The Relationship between Income and Expenditure Level Reveals Differences in Spending Patterns among Retirees of Different Groups; Housing, Food, and Transportation Are the Largest Expenditure Components

Academic journal article Monthly Labor Review

Retirement Expenditures for Whites, Blacks, and Persons of Hispanic Origin: The Relationship between Income and Expenditure Level Reveals Differences in Spending Patterns among Retirees of Different Groups; Housing, Food, and Transportation Are the Largest Expenditure Components

Article excerpt

This article looks at the demographics and expenditures of retirees by three large groups--Hispanics, African-Americans, and Whites. (1) In this article, the terms "Blacks" and "African-Americans" will be used interchangeably. Due to the relationship between income and expenditure level--people with high incomes tend to spend more--this study uses the shares of total expenditures that are spent on the various components to compare differences in spending patterns among the groups.

The data used in this article are from the Consumer Expenditure Interview Survey from the first quarter of 1996 through the first quarter of 2001. The sample includes 833 Hispanic, 1,364 African-American, and 14,268 White consumer units. (2) For the purpose of this study, the race/ethnic group of the consumer unit is determined by the reference person. Similarly, only the reference person needs to be retired to qualify a husband-and-wife consumer unit as retired. Retirement is often defined with reference to two characteristics: nonparticipation in the paid labor force and receipt of income from pensions, Social Security, and other retirement plans. However, for this article, the respondents had only to report that they were retired.

Demographics

The distribution of retired male and female consumer units is relatively even for the White group (52 percent men and 48 percent women) and the Hispanic group (54 percent men and 46 percent women). (See table 1.) However, for the African-American group, 62 percent of its retiree population is female, and 38 percent is male. In large measure this reflects variation in the distribution of family composition (husband-and-wife only, single (3), and other consumer units, which includes husband and wife with children, single parent, grandparents living with their grandchildren, and so forth) of retirees across groups. Forty percent of the retired White group are husband-and-wife consumer units; 45 percent are single; and 15 percent are other consumer units. In comparison, just 18 percent of the retired Black group are husband-and-wife consumer units; 48 percent are singles; and 34 percent are other consumer units. For the Hispanic group, 29 percent are husband-and-wife consumer units; 34 percent are singles; and 27 percent are other consumer units.

Whites are spread somewhat equally among the four geographical regions, ranging from 21 percent in the Northeast to 28 percent in the South. In contrast, Black retirees are much more heavily concentrated in the South, with almost half (49 percent) of the retired Black consumer units residing in that region, and Hispanic retirees are concentrated in the South (41 percent) and the West (40 percent).

Expenditures

Housing, food, and transportation are the largest expenditure components, accounting for about two-thirds of the average retired consumer unit's budget. (See table 2.) African-American and Hispanic retirees allocate a larger percentage of their expenditures to food than do white retirees. Hispanic retirees allocate a larger percentage of their total expenditures to transportation than do those in the other groups. African-Americans spend a larger percentage than either Whites or Hispanics on housing.

Food. Of the three groups, Hispanics allocate the largest share on total food (20.5 percent) and on food at home (17.5 percent), compared with Blacks (17.9 percent and 15.3 percent, respectively) and Whites (15.1 percent and 11.2 percent, respectively). This can partially be explained by the fact that on average, Hispanic retirees' households are larger. White retirees, however, allocate a larger share to food away from home than do the other two groups. They also spend a larger share on alcoholic beverages than do the other groups, and Black retirees spend the least.

Housing. The spending on housing accounts for the largest share of total expenditures for all groups. However, Black retirees allocate a larger share to housing (35 percent) than do either Whites (31. …

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