The FRED Blog has tapped into Consumer Expenditures Survey (CES) data before, to track reading and smoking across different groups of consumers. Today, Dia de los Muertos, we use CES data to discuss life…and other insurance purchases.
The FRED graph above shows consumer expenditures on life insurance and other personal insurance for three age groups:
- mid-20s to mid-30s in green
- mid-40s to mid-50s in orange
- mid-60s to mid-70s in red.
We omit the in-between age groups to keep the graph uncluttered and emphasize our main points: Insurance purchases increase with age, and the oldest consumers are buying larger and larger amounts.
Income increases with age, so the fact that spending also increases with age is not surprising. This summary of the Survey of Consumer Finances shows that average household income is lowest when the reference person is 35 years or younger. The same survey also shows that income peaks between ages 45 and 54, so the increased insurance purchases by even older consumers is not exclusively driven by income.
The data above exclude health insurance premiums and illustrate a change in spending patterns brought about by a particular population cohort: those 57 years of age and older. These boomers were born within the time span of 1946 and 1964 and the youngest of them turned 57 this year. Over the past 20 years, they have spent, on average, as much on life and other personal insurance as consumers a decade younger.
And speaking of age: FRED turned 30 this April and is a bona fide millennial. FRED will surely be spending more time and attention on life and other personal insurance data in years to come.
How this graph was created: Search for and select “Expenditures: Life and Other Personal Insurance by Age: from Age 25 to 34.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Expenditures: Life and Other Personal Insurance by Age: from Age 45 to 54” and “Expenditures: Life and Other Personal Insurance by Age: from Age 65 to 74.” To change the line colors, use the choices in the “Format” tab.
Suggested by Diego Mendez-Carbajo.