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4 The Military Exchange System

4 The Military Exchange System

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(AAFES), with $8.8 billion in annual sales. During its 111 years of operation, AAFES

has evolved from a purveyor of discounted basic necessities to a multichannel retailer

with over 3,000 stores and restaurants and movie theaters, as well as catalogs and a

growing Internet site. A survey found its prices are just 2.5% higher than Walmart’s, but

shoppers get the added benefit of forgoing sales taxes.

Within the U.S., AAFES stores, also called the PX for ‘post exchange,’ serve as

de facto community centers for 11.5 million active or retired military service members

and their families. Overseas, AAFES stores give troops the chance to connect with

American culture and commerce through their broad selection of DVDs and electronics

in addition to basic drugstore goods.

For grocery shopping, military personnel, including retirees, turn to a network of

281 stores (including about 95 overseas) operated by the Defense Commissary Agency

(DeCA, www.commissaries.com). With annual sales of about $5 billion, DeCA

generates revenues roughly equivalent to a conventional supermarket chain. Federal

law does not allow the agency to make a profit, however, and products are sold at only

a 5% markup from cost.


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83.1 Overview

The American Pet Products Association (APPA, www.americanpetproducts.org)

estimates that 79.7 million U.S. households (65% of all households) own pets. For

comparison, in 1988, 56% of U.S. households owned a pet. Some 46% of all

households today own more than one pet.

Topping the list of most-owned pets in 2016, there are 95 million freshwater fish

in 12.3 million U.S. homes. Cats, with 85.8 million felines owned by 42.9 million

household, are the second-most-popular pets in the U.S. Owned by more households

than any other pet, 77.8 million pet dogs are owned by 54.4 million households.

83.2 Pet Owners Demographics

The following percentages of adults have pets (source: The Harris Poll



• Female:


• Male:



• 18-to-35:

• 35-to-47:

• 48-to-66:

• 67 and older:






• Hispanic:

• White:

• African American:





• $34,999 or less:

• $35,000 to $49,999:

• $50,000 to $74,999:

• $75,000 to $99,999:

• $100,000 or more:







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• High school or less:

• Some college:

• College graduate:

• Post graduate:






• West:

• Midwest:

• South:

• East:





83.3 Pets As Family

In a recent Harris Poll, 92% of dog-owners and 91% of cat-owners said they

consider their pet to be a member of the family. Fifty-seven percent (57%) of pet

owners said they frequently let their pet sleep in the bed with them; 23% say they never

do this.

One-third of pet owners (33%) frequently purchase holiday presents for their pet;

27% occasionally do so. Twenty percent (20%) of pet owners frequently buy their pets

birthday presents; 17% do so occasionally.

83.4 Spending On Pets

According to the APPA, spending on pets has been as follows:

• 2004:

$34.4 billion

• 2011:

$50.8 billion

• 2005:

$36.3 billion

• 2012:

$53.3 billion

• 2006:

$38.5 billion

• 2013:

$55.7 billion

• 2007:

$41.2 billion

• 2014:

$58.0 billion

• 2008:

$43.2 billion

• 2015:

$60.3 billion

• 2009:

$45.5 billion

• 2016:

$62.8 billion

• 2010:

$48.4 billion

The distribution of spending on pets in 2016 is estimated as follows:


$24.0 billion

Veterinarian care:

$15.9 billion

Supplies and over-the-counter medicines:

$15.0 billion

Pet services, boarding, and grooming:

$ 5.7 billion

Live animal purchases:

$ 2.1 billion


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The yearly cost of buying, feeding, and caring for pets tops what Americans

spend on movies, video games, and recorded music combined.

Pet owners spend a combined $2.6 billion on holiday gifts for their pets,

according to the APPA. One quarter of pet-related expenditures occur between

Thanksgiving and Christmas.

83.5 Market Resources

American Pet Products Association, 255 Glenville Road, Greenwich, CT 06831.

(203) 532-0000. (www.americanpetproducts.org)


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84.1 Profile

Eighteen percent (18%) of all U.S. adults are retired, a figure that has increased

by 6% in the last five years and will further increase as Baby Boomers exit the

workforce over the next few decades.

According to the Employee Benefit Research Institute (EBRI, www.ebri.org),

about 72% of Americans expect to remain engaged in some type of work after they

officially retire. Almost half (47%) said they left their jobs sooner than they had


A study by EBRI based on data from the University of Michigan Institute for

Social Research (ISR, http://home.isr.umich.edu/) found that only 14% of people retire

as planned. Overall, 38% of older workers retire before the age they had planned, and

48% retire after the age they had planned.


“Before age 62, actual retirement is higher than

expected retirement. But by age 65 the opposite

is the case. Eighty-one percent (81%) of workers

expect to retire before age 65, but only 64%

actually do so.”



According to Trends In Retirement Satisfaction In The United States, published

in May 2016 by the Employee Benefit Research Institute, 48.6% of retirees say their

retirement is “very satisfying.”

84.2 Retiree Consumers

International Demographics (www.themediaaudit.com) provides the following

characteristics of retirees:


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Eighty-three percent (83%) of retired adults in the U.S. own their own home.

Thirty percent (30%) of retired adults have stocks and CDs.

Thirteen percent (13%) of new automobile purchasers are retired, compared with

11% five years ago. Eight percent (8%) of adults who have a car loan are retired,

compared to 6% five years ago.

Sixteen percent (16%) of adults who frequently stay in hotels are retired, compared

to 14% five years ago.

Adults who are retired are 6% more likely than the average U.S. adult to frequently

dine out at a full-service restaurant; retirees now make up nearly 20% of all adults

who frequently dine out.

Fourteen percent (14%) of adults taking an ocean cruise are retired.

Compared with the average U.S. adult, those who are retired spend nearly 30%

more time watching broadcast television, 14% more time watching cable television,

and 25% more time reading a daily newspaper.

Retired adults spend only 89 minutes per day online, 26% less than the average

U.S. adult.

Ranked by retirees as a percentage of community population, the largest retiree

markets are as follows:

• Ocala, FL:


• Fort Myers-Naples, FL:


• Daytona Beach, FL:


• West Palm Beach, FL:


• Melbourne-Titusville-Cocoa, FL:


The most affluent retirees can be found in larger markets such as Washington,

D.C., where the average retired adult earns $64,000 in household incom e and

investment returns. San Jose, Fort Myers-Naples, San Francisco, and Long Island

follow with household incomes of more than $50,000.

84.3 Saving For Retirement

A study by the Center for Retirement Research (CRR) at Boston College

(http://crr.bc.edu), published in the November 2015 issue of The Journal of Retirement,

estimates 65% to 85% of pre-retirement income is a reasonable “replacement rate” for

most retirees, depending on the type of household.

The CRR estimates that 52% of Americans may not be able to maintain their

standard of living which it defines as having an income that falls no more than 10%

below the replacement rate.

The biggest problems face those with no private pension at all: 68% of these

Americans are expected to fall short. Those covered by defined-benefit plans – in

which pensions are linked to a worker’s salary – have the least difficulty: only 20% are

deemed at risk. Of those in defined-contribution plans, 53% likely will not reach the

replacement rate.


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84.4 Post-Retirement Spending

Change in Household Spending After Retirement, published in December 2015

by the Employee Benefit Research Institute, reports that in the first year or two of

retirement, 46% of households spend more than during their working years.

By the sixth year of retirement, 33% are spending more than they had in their

pre-retirement years. Post-retirement spending as a percentage of pre-retirement

spending in the sixth year of retirement is as follows:

• Spending less than 80% of pre-retirement income:


• Spending 80% to 100% of pre-retirement income:


• Spending 100% to 120% of pre-retirement income:


• Spending 120% or more of pre-retirement income:



“Many households spend more rather than less

after retirement.”

Demo Memo, 12/1/15


84.5 Financial Security

Household incomes of retirees are distributed as follows (percent with such

income, source: International Demographics):

• Under $50,000:


• $50,000 and above:


• $75,000 and above:


• $100,000 and above:


Social security provides, on average, about 40% of retirement income.

The percentage of retirees by amount of liquid assets is as follows:

Less than $100,000: 70%

$100,000 and above: 30%

$250,000 and above: 14%

The Employee Benefit Research Institute put the gap between what Americans

need for retirement and what they have saved at $4.6 trillion. If Social Security benefits

were to be eliminated, the deficit would rise to $8.5 trillion.


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84.6 Primary Influences On Age Of Retirement

Research shows that debt and health are primary influences that determine

when people retire.

An assessment by the Center for Retirement Research at Boston College found

that 33% of adults ages 62-to-69 without debt were still working, while 46% with debt

were. The study also reported that the percentage of 62-to-69-year-olds with debt grew

from 48% to 62% between 1998 and 2010. Among those with debt, the median

amount owed was $32,130.


“Older Americans with debt are more likely to

delay retirement, according to a study by the

Center for Retirement Research at Boston

College. The study finds a growing share of older

Americans in debt and their debt load rising.”

Demo Memo


A study by the National Bureau of Economic Research (www.nber.org) reported

that among men age 62, the percentage who work full-time is 44% for those in good

health, 39% for those in fair health, 18% for those in poor health, and 4% for those in

terrible health. Conversely, the percentage of men age 62 and older who are fully

retired rises from 41% for those in good health to 46% for those in fair health, 68% for

those in poor health, and 87% for those in terrible health.


“Poor health leads to an earlier retirement and

the National Bureau of Economic Research

documents just how much health matters. The

differences are striking.”

Demo Memo



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84.7 Trends in Retirement and Semi-Retirement

According to an April 2016 survey by Gallup (www.gallup.com), the average are

U.S. workers anticipate they will retire is 66, up from 64 in 2006 and 60 in 1995.

Retirement, however, does not suggest that people will no longer work – many will

transition into semi-retirement employment or self-employment.

Thirty-one percent (31%) of non-retired U.S. adults foresee they will retire after

age 67, the current minimum age for receiving full Social Security retirement benefits.

Another 38% expect to retire between the ages of 62 and 67, spanning the existing

Social Security age thresholds for benefits eligibility, while 23% expect to stop working

before they turn 62 – that is, before becoming eligible for any Social Security retirement


Few plan to retire completely nowadays, and by age 65 many Baby Boomers will

have already transitioned into semi-retirement. Many surveys suggest work will be

routine during Baby Boomers’ older years. An AARP (www.aarp.org) national poll of

Boomers found that 80% intend to work at least part time during their ‘retirement’ years.

According to the Social & Demographic Trends Project at Pew Research Center

(www.pewsocialtrends.com), 52% of working adults ages 40-to-64 say they may delay

their retirement; an additional 16% say they expect never to stop working.

Most who choose to continue working after age 60, or even 65, will likely find a

new source of income; relatively few will remain in their current jobs. In fact, many have

already left their career jobs.

According to the Bureau of Labor Statistics (www.bls.gov), just 60% of 60 yearolds are currently employed. But according to the AARP, 16% of older Baby Boomers

are self-employed, compared with 10% of the overall workforce.

Aside from a desire to stay active, there will be a wide variation in the lifestyles of

retiring Boomers. According to Nancy Schlossberg, Ph.D., a professor emeritus of

education at the University of Maryland and author of Retire Smart, Retire Happy:

Finding Your True Path in Life (2005, APA Life Tools), most retirees fall into one of a

half-dozen distinct categories. There are ‘continuers,’ who maintain work ties in their

chosen fields; ‘adventurers,’ who strike out in entirely different career paths; and

‘searchers,’ who try one organization after another until they find their niche. A lesser

number may become ‘easy gliders,’ who take each day as it comes, or ‘retreaters,’ who

would rather sit on the couch and watch television.


“I believe the word ‘retirement’ in a decade will be

a quaint, charming term that people used to use.”

Larry Minnix, President

American Association of Homes

and Services for the Aging



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