High-income Households - US - March 2005

SUMMARY

A fairly simple formula can be applied to American consumers: the more money in, the more moneyout. People with high incomes spend more than the general population in virtually every majorexpenditure category. When incomes increase, net worth also climbs. Those Americans with higherincomes are therefore accumulating assets with significant value (primarily a home) and saving morethan the average American household.

These factors translate into a population segment that is an important part of the customer basefor many different industries. For high-income earners, their greater ability to save and investmakes them an important market for the financial service industry. Higher incomes also enable themto travel more, and to take trips that might be too expensive for many Americans, such as resortvacations. But their overall higher level of spending means that they are also of interest tomainstream retailers, including discounters such as Target and Wal-Mart. High-income consumers alsotend to be good customers for online retailers.

This report examines the demographics of high-income households, as well as their expenditures incomparison with the total population. It also provides a detailed examination of their assets andliabilities. Because of their importance as consumers, shopping patterns and attitudes aboutshopping are considered. Finally, given their greater propensity to travel, this report examinesboth domestic and foreign travel, as well as cruise and resort vacations.

This report examines the demographics, finances, and expenditures of households with incomes of$100,000 or more. It also utilizes data from the Simmons National Consumer Survey to examineattitudes about shopping and product attributes, as well as the types of retailers frequented byhigh-income consumers. A section on Internet and catalog shopping details both the likelihood ofusing these types of retailers, as well as the types of products purchases through these avenues. Inaddition, it examines various aspects of travel by high-income Americans to gain more insight intotheir lifestyles as well as their importance to that particular market.

TABLE OF CONTENTS

Introduction and Abbreviations

• Introduction
• Other relevant reports
• Definition
• Abbreviations & terms
• Abbreviations
• Terms

Executive Summary

• One in seven households are high-income
• Most high-income householders are middle-aged whites
• Multiple earners are key to high incomes
• Higher education leads to higher incomes
• Coastal regions are home to more high-income households
• Accumulated wealth rises with income
• Value of financial assets rises sharply at higher income levels
• Non-financial assets are varied
• High-income households are more likely than average to have debts
• Higher incomes lead to higher spending
• Less interest in favoring local retailers
• High-income households are less "price-conscious"
• Shopping venues differ by income
• Internet shopping is popular with high-income consumers
• Travel attitudes and behavior differ by income
• Income is related to differences in travel of older adults

Demographics and Characteristics

• Introduction
• Household incomes
• Figure 1: Median household income, 1990-2003
• Figure 2: Graph: Median household income, 1990-2003
• Figure 3: Lower income limits of top income quintile and top 5%, 1990-2003
• Figure 4: Distribution of households, by income, 2003
• Figure 5: Graph: Distribution of households, by income, 2003
• Figure 6: Median household income, by age of householder, 2003
• Figure 7: Distribution of high-income households, by income, 2003
• Figure 8: Sources of income for high-income households, 2003
• Characteristics of high-income households
• Figure 9: High-income households, by age of householder, 2004
• Figure 10: Graph: High-income households, by age of householder, 2004
• Figure 11: High-income households, by race and Hispanic origin of householder, 2004
• Figure 12: High-income households, by household type, 2004
• Figure 13: High-income households, by presence of children, 2004
• Figure 14: High-income households, by number of earners, 2004
• Figure 15: High-income households, by educational attainment of householder, 2004
• Figure 16: High-income households, by region, 2004
• Figure 17: High-income households, by metropolitan status, 2004
• Figure 18: High-income households, by home ownership, 2004

Assets and Debts

• Introduction
• Assets and debts of high-income households
• Figure 19: Median and mean income and net worth and percent savers, by income percentile, 2001
• Figure 20: Financial assets, by income percentile, 2001
• Figure 21: Stock holdings, by income percentile, 2001
• Figure 22: Non-financial assets, by income percentile, 2001
• Figure 23: Debts, by income percentile, 2001

Expenditures

• Introduction
• Figure 24: Average after-tax income and total average expenditures of high-income consumerunits, 2003
• Figure 25: Graph: Average after-tax income and total average expenditures of high-incomeconsumer units, 2003
• Expenditures of high-income households
• Figure 26: Expenditures of high-income consumer units, by major expenditure category, 2003
• Figure 27: Indexed expenditures of high-income consumer units, by major category, 2003
• Figure 28: Per capita expenditures of high-income consumer units, by major category, 2003
• Figure 29: Indexed per capita expenditures of high-income consumer units, by major category,2003
• Figure 30: Expenditures of high-income consumer units for housing, 2003
• Figure 31: Expenditures of high-income consumer units for transportation, 2003
• Figure 32: Expenditures of high-income consumer units for food and beverages, 2003
• Figure 33: Graph: Expenditures of high-income consumer units for food and beverages, 2003
• Figure 34: Expenditures of high-income consumer units for healthcare, 2003

Shopping

• Introduction
• Attitudes related to shopping
• Figure 35: General attitudes about shopping, January-September 2004
• Local stores versus national chains
• Figure 36: Preference for local stores over chains, by gender, age and race/ethnicity,January-September 2004
• The importance of price
• Figure 37: Influence of price and incentives on shopping, January-September 2004
• Shopping venues
• Figure 38: Types of stores visited, January-September 2004
• Figure 39: Specific stores visited in previous 3 months, January-September 2004
• General merchandise versus specialty stores
• Figure 40: Reasons for shopping at specialty stores, January-September 2004
• Shopping at "favorite" stores
• Figure 41: Reasons for shopping at "favorite" stores, January-September 2004
• Internet and catalog purchases
• Figure 42: Internet use in shopping, January-September 2004
• Purchase incidence: catalogs and online
• Figure 43: Made purchases through catalogs or the Internet, January-September 2004
• Figure 44: Made a catalog or Internet purchase, by gender, age and race/ethnicity,January-September 2004
• Figure 45: Graph: Made purchases through catalogs or the Internet, January-September 2004
• Types of merchandise purchased online
• Figure 46: Goods and services purchased online, January-September 2004
• Types of merchandise purchased through catalogs
• Figure 47: Goods and services purchased from catalogs, January-September 2004
• Summary

Travel

• Introduction
• Attitudes related to travel
• Figure 48: Attitudes about travel and other cultures, January-September 2004
• Figure 49: Interest in other cultures and preference for U.S. travel, by gender, age andrace/ethnicity, January-September 2004
• Foreign and domestic travel and cruises
• Figure 50: Domestic and foreign travel and cruise vacations, January-September 2004
• Figure 51: Domestic and foreign travel, by gender, age and race/ethnicity, January-September2004
• Regions visited
• Figure 52: Foreign travel destinations in the last three years, January-September 2004
• Cruises
• Figure 53: Cruise vacation destinations, January-September 2004
• Resorts
• Figure 54: Visited any resort, January-September 2004
• Figure 55: Visited any resort, by gender, age and race/ethnicity, January-September 2004
• Types of resorts visited
• Figure 56: Types of resorts visited, January-September 2004
• Figure 57: Types of resorts visited, by gender, age and race/ethnicity, January-September 2004
• Summary

Appendix: Research Methodology

• Consumer Research
• Sampling & Weighting
• Presentation & Definition
• Further Analysis
• Trade Research
• Informal trade research
• Formal trade research
• Desk & Internet Research
• Sources
• Definitions
• Forecasts

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