Older Americans who work spend differently, study shows

There's a popular notion that many older Americans choose to work because they have little other choice. Unable to afford retirement or health care, so the belief goes, those in their 60s, 70s -- and sometimes beyond, stay on the job to pay bills.

A new study by University of Missouri researchers debunks that myth, showing that older workers aren't necessarily working out of necessity. Further, data revealed older Americans who work showed different spending patterns compared to those of non-workers.
Using 2005 Census Bureau data, university researchers compared the financial budgets and expenditures of people ages 55-74 in working and retired households.

They found that older workers spend more money on transportation, eating out, education and insurance, while their non-working counterparts spend greater amounts on health care, cash contributions, food and housing. Older workers also had lower out-of-pocket costs for health expenses, the results showed.

"Older workers spend less on necessities, including food and housing, which implies they aren't working out of need," says associate professor Deanna Sharpe, co-author of the study, titled Spending Patterns of Older Workers. "They also are spending less on health care, which may indicate that workers are somewhat healthier than non-workers."

While need may not be the driving factor for many older workers to stay on the job, Sharpe says, strains caused by the current downturn in financial markets could force some older workers to remain in the labor market to finance their retirement.

Sharpe says that baby boomers, the eldest of whom turn 63 this year, will face increased responsibility for their financial futures as employers shift increasingly to defined contribution retirement plans, such as 401(k)s, from defined benefit pension plans.

University of Missouri researchers plan to continue to study the impact the changing economy is having on the nation's older working population, which is predicted to increase by more than 80 percent by 2016.
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