rewrite this title Massive Survey Shows How Generations Spend – NerdWallet

American households spent an average of $539 on bakery products and $131 on postage and stationery in 2024. Those are a few of the quirkier spending habits tracked and categorized in the Consumer Expenditure Surveys, a nationwide survey of more than 30,000 people. The federal government has conducted detailed expenditure surveys since 1888.

The Bureau of Labor Statistics releases this data, which includes spending details on hundreds of items for different generations, in one-year batches. While it may seem outdated by the time it’s released — particularly last year, when the 2024 data release was delayed until December due to the federal government shutdown — the tradeoff is specificity: We can put the spending patterns of specific groups of Americans under a magnifying glass.

The average dollar amount spent isn’t the best way to understand this data. Varying incomes can distort the meaning behind raw dollar amounts. For example, a younger household may spend a smaller dollar amount at restaurants than an older household, but if the younger household has a lower income, they may still be devoting a larger percentage of their income to eating out.

Instead, comparing the share of spending to the average income for each demographic reveals how much income each expense category eats up. Income reported in this survey is pre-tax.

Housing, transportation and food make up the core of American budgets. These three expenses used, on average, 48% of a household’s income in 2024. (The BLS measures spending by household, or what they call a “consumer unit.” That term includes families and other groups who pool their income and expenditure decisions. Roommates, on the other hand, are distinct consumer units.)

Core spending takes up the greatest share of income for the youngest and oldest generations.

That trend can be explained, in part, due to changes in income. Peak earning occurs in middle age. Even if the dollar value of household spending goes up as someone approaches middle age, the increase in household income, on average, outpaces the increase in spending.

Once workers retire, income generally falls. Core expenses as a share of income rises, even if the dollar value of spending doesn’t change.

Housing eats up a bigger share of income than any other spending category — 25.2%.

Following the trend seen in overall core spending, housing costs are high for Gen Z (30.8% of income) and drop for Millennials (24.5% of income), before bottoming out with higher-earning Gen Xers (21.6% of income).

Despite a lower average income for baby boomers, they’ve managed to keep mortgage, rent and taxes as a share of income at a level comparable to Gen X (9.9% of income and 9.7%, respectively), the generation with the smallest share of income devoted to those expenses. A rising level of paid-off mortgages for baby boomers may contribute to that trend. About 54% of homeowners over 65 didn’t have a mortgage in 2024 compared to 19% of homeowners between 45 and 54, according to the Bureau of Labor Statistics.

But the survey’s housing category encompasses a broad range of expenses related to owning and maintaining a home, not just rent and mortgage payments. And the share of income devoted to those housing-related expenses, such as maintenance and utilities, is highest for the two oldest generations — baby boomers and the silent generation. Their lower average income explains much of that increase.

In sum, shedding a mortgage makes a difference, but it doesn’t eliminate all housing spending in retirement.

If you currently have a car payment, it might seem like that’s the biggest slice of transportation spending. And it might be — while you have that payment.

But on average, less than half of transportation dollars go toward vehicle purchases.

After a car is paid off, people continue to spend on fuel, insurance and maintenance. Comparing periodic purchases (replacing a car every 10 years) with ongoing expenses can be difficult on an individual basis. But, when viewed from a populationwide perspective, it’s easier to see: Ongoing transportation costs, not car payments, are the bigger driver of transportation spending.

Housing, food and transportation are core spending categories across all generations. Other categories may be just as essential, but not as applicable across all age groups — childcare, for example.

Medical expenses are different. The fact that income tends to fall in retirement may, to a certain extent, explain away the increases in the share of income devoted to many expenses, but it fails to capture the significance healthcare costs have on retirees.

Individuals may spend decades becoming acclimated to healthcare costs using less than 5% of their income only to discover they spend more on healthcare than food in retirement. New expenses during a time of falling income are much different than new expenses during a time of rising income.

About the author

Kurt Woock started writing for NerdWallet in 2021. Prior to joining NerdWallet, Kurt was a writer and educator for Colorado PERA, a retirement system for public employees. Before that he was a legislative editor for the Colorado General Assembly. Kurt has a B.A. from Valparaiso University and an M.A. in journalism from the University of Missouri-Columbia. He lives in Chicago.