Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108AGING IN THE 21S T CENTURY 62 wealth quartile experience declines in spending that are substantially greater than expected. Spending can decrease at retirement for other reasons. Blau (2008) finds that there is no mean change in spending at retirement, but some households experience a significant drop in spending at retirement. Unexpected events such as a layoff or health events that lead to early retirement can lead to lower lifetime resources and thus, a significant drop in spending. Where Does the Money Go? CAMS collects longitudinal information on 32 categories of durable and non-durable spending, which can be aggregated into categories like health, leisure, transportation and so on. Hurd and Rohwedder (2010b) show that, as people age, they spend less on transportation, vacations and food, and more on health care, donations and gifts. Similarly, an EBRI report (EBRI 2012) shows that spending steadily decreases with age. The share of the budget spent on different categories changes as well. For example, home-related expenses represent 47% of the budget for people aged 50 to 64. These expenditures drop to 44% of the budget for people aged 65 to 74. Transportation costs drop from 14% of the budget of 50- to 64-year-olds to only 8% for those 85 and older. The same share is spent on food (about 12%) and clothing (about 3%) after retirement as before. Entertainment expenses account for about the same share of the budget before retirement and in early retirement, taper- ing off after age 86. One category rises dramati- cally: health costs account for about 9% of costs between ages 50 and 64, doubling to 18% after age 85. Comparing expenditures from 2001 to 2009 for each age group shows that housing and home-related costs remain the largest category of expense for all age groups in both periods. The other age-related patterns of change remain about the same as well. Spending declines appear to level off fairly quickly after retirement. Household spending drops by 5.5% in the first two years after retirement, and by 12.5% in the third to fourth year of retirement. Spending declines slow after that. However, changes in spending are not all about declines: a large percentage of households actually increase their spending in retirement (EBRI 2015b). Spending patterns at older ages also vary in important ways depending on whether an individual is single or part of a couple and de- pending on his or her level of economic resources (Hurd and Rohwedder 2010b). Figures 3-4a-c show income, wealth and total spending across nine age groups and whether individuals are part of a couple or not. As expected, income declines over time, and for nearly every age group couples have more than double the income of singles. Singles spend more of their wealth as they age to supplement their income. Despite the much greater economic resources of couples, Figure 3-4c shows that they spend much less proportionally than singles. Some of this difference can be accounted for by the fact that two can share some living expenses. Couples spend twice as much on clothing as singles but much less than twice on housing and housing- related costs. The share of the household budget spent on transportation is lower for singles with low levels of economic resources; whereas couples even in the lowest wealth category do not reduce their spending on transportation. Another study suggests that couples save on health care costs related to caregiving (EBRI 2016b). Looking at OOPM expenses over a two- year period for those aged 65 and older, the aver- age spending per person on doctor visits, dentist visits, and prescription drugs is about $2,500 (in 2016 dollars) for both single and couple house- holds. But couples spend less on in-home health care and nursing-home expenses than singles. DeLeire and Kalil (2010) study the associa- tion between various components of consumption expenditure and happiness in CAMS. Only one type of expenditure is positively related to happiness: entertainment. The boost in happiness associated with leisure spending comes, in part, from the increase in social connections that are often a part of leisure activities. Households with less retirement wealth are more likely to experience declines in spending at retirement and are also more likely to retire early because of poor health. As people age, they spend less on transportation, vacations and food, and more on health care, donations and gifts.