Here's how spending habits change with age
Which age groups in America were bigger spenders in 2020? To provide answers, Giving Assistant compiled the following information from the Bureau of Labor and Statistics.
Food away from home
- Average annual spending in 2020 for all consumer units: $2,375
- Under 25 years of age: $1,923
- Age 25-34: $2,665
- Age 35-44: $3,141
- Age 45-54: $3,000
- Age 55-64: $2,217
- Age 65-74: $1,696
- Age 75 years and older: $1,197
The pandemic deeply impacted restaurants with diners turning more toward their home kitchens. Several restaurants and food retailers expanded options for delivery and ordering in, with even convenience stores like 7-Eleven now offering delivery options. A report by PYMNTS found 39% of consumers feared for their health amid the height of the pandemic and relied on ordering in food to halt the risk of contagion.
This increase in demand for delivery impacted generations differently as ordering online became more widespread and normalized. Older generations were found to be slower adopters of online ordering, which may account for their lower spending habits. Baby boomers specifically have been found to cook at home more during the height of the COVID-19 pandemic.
A look at shopping trends of different age groups
Ask which age groups are the biggest spenders, and a lot of finger-pointing may occur. Generational debates about who spends the most, who saves the most, and who is the most financially savvy have infected the cultural lexicon over the years, especially with how unpredictable the economy has been over the past couple of decades.
To take a closer look at the shopping trends of different age groups, Giving Assistant compiled statistics collected by the Bureau of Labor and Statistics that examined spending habits of Americans in 2020. Data were collected from surveys conducted by the BLS twice per year. The values are average spending per year per “consumer unit.” A CU is generally a group of people related by blood, marriage, or adoption, but it also includes households where individuals living together are financially independent, and those living together and making financial decisions together.
The average income of CUs in all age groups was $74,949 after taxes. The mean expenditure of all CUs was $61,334.
Here’s the takeaway: People aged 35-44 were the highest spenders in the most categories, owning five out of 10 categories listed here. However, one thing to consider when looking at this reporting is the impact of the pandemic and safer-at-home and social distancing mandates, which were at their height at the time the data was collected. Several variables came into play, especially when looking at highly impacted industries like the restaurant and automotive industries.
Ready to let the finger-pointing begin? We kick off by examining which age groups dine at home. Prepare for some surprises.
Health care
- Average annual spending in 2020 for all consumer units: $5,177
- Under 25 years of age: $1,350
- Age 25-34: $3,320
- Age 35-44: $4,579
- Age 45-54: $5,465
- Age 55-64: $5,684
- Age 65-74: $6,695
- Age 75 years and older: $6,627
The pandemic saw the public vacillating on how to approach health care. Peterson-KFF’s Health System Tracker studied information from the National Health Expenditure and Centers for Medicare and Medicaid Services, revealing health spending and consumption tripled from past averages, reaching $4.1 trillion. This was a 9.7% increase from 2019 to 2020.
Many chose to skip or postpone doctor visits and elective surgeries to avoid exposure to COVID-19, leading to a decline in the use of health services by 8.4%. Despite this, health care prices rose by 2.5%. The highest spenders on medical services were ages 45-54 with an annual average of $1,083.
Transportation
- Average annual spending in 2020 for all consumer units: $9,826
- Under 25 years of age: $7,300
- Age 25-34: $10,277
- Age 35-44: $12,617
- Age 45-54: $12,316
- Age 55-64: $10,287
- Age 65-74: $7,676
- Age 75 years and older: $4,205
The automotive industry has been on a wild ride since COVID-19 struck. In April 2020, U.S. sales dropped by 47%. With in-person restrictions making visits to dealerships difficult, many buyers went online for their purchases. Still, there was the issue of supply versus demand, with supply chain issues and microchip shortages adding to the delays. And with fewer people commuting to work, the necessity for owning a vehicle was not as great for many.
Another trend that sprang out of this was used car sales. Ages 35-44 were the highest spenders in this category with an average annual spend of $3,573. For car rentals, the 45-54 age group came out on top here, spending on average $952 annually.
Despite limitations in terms of access to vehicles, use of public transportation didn’t climb either, potentially due to COVID-19 restrictions. The age group that took public transportation the most was 35-44, spending an average of $335 for the year. During 2020, though, some positive changes also began, including a 43% upturn in electric vehicles.
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