1 A husband age 65 or over and his wife. 2 The total cost of the budget includes an allowance for gifts and contributions. The total represents the weighted average costs of renter and homeowner families. The weights in the lower budget were 40 percent for families living in rental dwellings; 60 percent for homeowners. Average contract rent plus the cost of required amounts of heating fuel, gas, electricity, water, specified equipment, and insurance on household contents. Taxes; insurance on house and contents; water, refuse disposal, heating fuel, gas, electricity, and specified equipment; and home repair and maintenance costs. • The average costs of automobile owners and nonowners were weig lowing proportions of families: Boston, Chicago, New York Philadel for nonowners; all other metropolitan areas, 45 percent for car owners, 95 nonowners; nonmetropolitan areas, 55 percent for car owners, 45 percent for 1 For a detailed description see the 1967 edition of "Standard Metrogen Areas," prepared by the Bureau of the Budget Places with populations of 2,500 to 50,000. NOTE: Because of rounding, sums of individual items may not equal totala. United States as a whole the annual cost of food at home at spring 1967 prices averaged $735. Food away from home-restaurant dinners and snacks--accounted for only 7 percent of total food costs and provided only about one dinner out per month for the couple. Shelter allowances at all three budget levels are based on average costs for rented and owned dwellings having specified characteristics. Rental costs include contract rent, estimated costs of fuel and utilities where these are not part of the rent, and insurance on household contents. Homeowner costs are based on the assumption that couples own their homes mortgage-free. The number of rooms in the dwelling units are the same at all levels: two or three rooms for renters, and five or six for owners. However, at the lower and intermediate levels, rented dwellings have one bath and owned homes one or one and one-half, while at the higher level there are no restrictions on the number of baths in either type of housing. In the lower budget, 60 percent of the couples are assumed to own their homes and 40 percent to rent. Although the rental units at this level meet the basic requirements for health, their average cost of $756 in spring 1967 was based on the lowest third of the distribution of contract rents for all units of the specified size that met these criteria. Homeowner shelter costs averaged $669, or 12 percent lower than rental costs at this budget level. Transportation costs in the lower budget were based on the assumption that all couples in Boston, Chicago, New York, and Philadelphia used public transportation exclusively because of the availability of mass transit in these areas. In other metropolitan areas, costs were derived from the supposition that 45 percent of the couples were car owners, as were 55 percent of those living in nonmetropolitan areas. At the lower budget level, automobile owners were assumed to buy 6-year-old cars which they drove for 4 years. The average U.S. urban cost for automobile and other transportation combined was $191. Clothing costs are based on replacement rates, since retired couples are likely to have a stock of basic clothing items. Although replacement rates do not vary greatly among the three budgets, the lower level provides for lower quality items at lower average prices. In the lower budget the annual clothing allowance for the couple averaged $134 in spring 1967-43 percent below the allow ance in the intermediate budget. Medical care costs were almost identical in all three budgets, approximately $300. The allowance includes hospital and medical insurance as provided by the Federal Medicare program. Since the budgets are designed for couples in reasonably good health and able to take care of themselves, it was assumed that no charges were incurred for the longer term provisions of Medicare. The annual out-of-pocket Medicare costs (which are the same at all levels) include premium charges for medical insurance, and the estimated average annual cost of deductibles and coinsurance. At all budget levels, Medicare costs were 58 percent of the total cost of medical care. Medical care also provides allowances for items not covered by Medicare-dental care, eye examinations and eye glasses, most out-ofhospital prescription and nonprescription drugs, and a checkup visit to a physician by Medicare enrollees who do not use any Medicare services within 1 calendar year. Quantities of dental care were derived from utilization data in the National Health Survey. Allowances for eye care and drugs were developed from data in the BLS 196061 Consumer Expenditure Survey. Medical costs not covered by Medicare are the same in all three budgets except for very minor differences in the cost of eyeglass frames. Budgets at all three levels represent combinations of choices, since most of the items and quantities allowed are determined on the basis of family buying practices. Therefore, at each level there is opportunity for some variation in content and cost. Shelter and transportation in the retired couple's budgets provide separate cost estimates covering alternative ways of living. In the lower budget the cost of consumption for couples who owned homes and automobiles averaged $2,788 in urban areas in spring 1967. By contrast, families who rented and did not own cars had consumption costs amounting to $2,452. (Reverse assumptions-homeowners without cars, etc.would yield even wider differences.) Although alternative shelter costs are available for all areas in the lower budget, automobile ownership is not assumed in four of the largest metropolitan areas in the country-thus narrowing the cost options in these locations. Other variations in outlays to meet individual situations or special family needs might be accomplished even in the lower budget, through economizing in one area in order to allow larger outlays in another. However, an adjustment that omitted any major component of any of the three budgets entirely, for the purpose of cutting costs, would reduce the specified level of living of that budget, because the goods and services stipulated for each level are assumed to be available to the couple from some source-whether paid for or free. The intermediate budget The intermediate budget for retired couples in urban U.S. areas in spring 1967 amounted to $3,857 (table 2). In metropolitan areas, the cost was $3,997; in nonmetropolitan areas, $3,440. Family consumption averaged 94 percent of the total, with the remainder going for gifts and contributions. Costs of food at home in this budget ($937) were based on the USDA moderate-cost food plan, considered suitable for the average U.S. family. It includes larger quantities of milk, eggs, meat, fruits, and vegetables than the low-cost plan. It also allows some higher priced cuts of meat, a few out-of-season foods, and some convenience foods, thus providing more variety with less home preparation than the low-cost plan. The cost of food away from home represented 12 percent of the cost of all food in the budget. At this level, 35 percent of the couples were renters and 65 percent homeowners. Rental shelter costs averaged $968 a year in 1967. Homeowner shelter costs were 19 percent below that of renters-$785. Transportation allowances were somewhat higher in the intermediate than in the lower budget. In all cities, some retired couples were assumed to own automobiles, but automobile ownership was specified for only 1 in 4 couples in New York, and 2 in 5 in Boston, Chicago, and Philadelphia. Car ownership was assumed for 60 percent of the couples in other metropolitan areas and 68 percent in nonmetropolitan areas. At this level, it was specified that all couples purchased a 2-year-old car, which was traded in after 7 years. Transportation costs for owners and nonowners combined averaged $382 for the urban United States. At the intermediate level, the cost of consumption averaged $3,452 in spring 1967 for couples who rented their dwellings and did not own automobiles. For those who owned homes and cars, consumption costs were $3,800. The higher budget The higher budget is more liberal in the quantity and quality of most of its allowances than the intermediate level, but it is not a luxury standard (table 3). Total costs at this level averaged $6,039 in the urban United States in spring 1967. Costs were about $1,200 higher in metropolitan areas than in small cities. Consumption costs accounted for only 88 percent of the total budget at this level. This was the only one of the three budgets in which the income necessary to meet budget costs required the payment of income taxes. Such taxes represented one-third of the nonconsumption costs, with the remainder covering life insurance as well as gifts and contributions. The higher budget uses the USDA liberal-cost food plan, which allows greater variety in general and more meats, fruits, and vegetables than the other two plans. Its higher cost, compared with the moderate plan, results partly from different quantities of foods, but mainly from more expensive choices within the same groups of food. The cost of food at home averaged $1,115, while the allowance for food away from home was $170, or 13 percent of the total food cost. The cost of restaurant dinners and snacks differed among the three budgets not only because of differences in the number of dinners and the size of the snack allowance, but also because of variations in the menus and prices of the dinners. The proportion of homeowners specified for this level (70 percent) was slightly above that contained in the intermediate budget. Shelter costs of $1,076 for urban U.S. homeowners were 26 percent below the average rental shelter cost of $1,449. However, in contrast to the other two levels, there was considerable difference between metropolitan areas and small cities in the variation in homeowner and rental costs. Owners' costs were 27 percent lower than rental costs in metropolitan areas, but only 20 percent below in small cities. The transportation allowance included an automobile for 75 percent of the couples living in Boston, Chicago, New York, and Philadelphia, and for all couples in all other areas. Fifty-five percent of the cars purchased were new; the rest were 2 years old. Both new and used cars were Table 2. Annual costs of an intermediate budget for a retired couple,1 spring 1967 A husband age 65 or over and his wife. ? The total cost of the budget includes an allowance for gifts and contributions. • Average contract rent plus the cost of required amounts of heating fuel, gas, elec- Taxes, insurance on house and contents; water, refuse disposal, heating fuel, gas, driven for 7 years before trade-in. The average In developing the medical care allowance in The average costs of automobile owners and nonowners were weighted by the follow- Places with populations of 2,500 to 50,000. NOTE: Because of rounding, sums of individual items may not equal totals. some of the out-of-pocket Medicare costs. How- A husband age 65 or over and his wife. The total cost of the budget includes an allowance for gifts and contributions. The total includes an allowance of $53 for lodging away from home city. The allow- Average contract rent plus the cost of required amounts of heating fuel, gas, elec- 1,232 1,511 1,113 796 4 Taxes; insurance on house and contents, water, refuse disposal, beating fumi, gan. The average costs of automobile owners and nonowners were weighted by the For a detailed description see the 1967 edition of "Standard Metropolitan Statistical • Places with populations of 2,500 to 50,000. NOTE: Because of rounding, sums of individual items may not equal totals. |