Wednesday, September 26, 2007
Older Americans are an economically diverse group. In 2006, the median income of individuals age 65 and older was $16,890, but incomes varied widely around this average. Twenty-three percent of Americans 65 or older had incomes of less than $10,000 in 2006, while 12% had incomes of $50,000 or more. As Congress considers reforms to Social Security and the laws governing pensions and retirement savings plans, it may be helpful to examine how changes to one income source would affect each of the others, and thus the total income of older Americans
Older persons receive income from a variety of sources, including earnings, pensions, personal savings, and public programs such as Social Security and Supplemental Security Income. Using data from the March 2007 Current Population Survey, this report describes the number of elderly receiving income from each of these sources and the extent to which income from each source is either concentrated at the high end or low end of the income distribution or is evenly distributed.
Retirement benefits from Social Security and pensions are the most common sources of income among the aged. In 2006, Social Security paid benefits to 86% of Americans age 65 and older. Social Security is also the largest single source of income among the aged. Sixty-eight percent of Social Security beneficiaries age 65 or older receive more than half of their income from Social Security. For 39% of elderly recipients, Social Security contributes more than 90% of their income, and for one-quarter of recipients, it is their only source of income. In 2006, 35% of people age 65 and older received income from a private or public pension. Among people age 65 and older who reported income from a government pension, the median annual amount was $14,400. Among recipients of private pensions, the median amount received in 2006 was just $7,200.
Many Americans prepare for retirement by saving and investing some of their income while they are working. Of the 36.0 million Americans age 65 or older who were living in households in 2006, 19.4 million (54%) received income from assets, such as interest, dividends, rent, and royalties. Most received small amounts of income from the assets they owned. Of all individuals age 65 or older who received income from assets in 2006, half received less than $1,685.
Earnings from work continue to be an important source of income for older Americans, especially those under age 70. Although there was a trend toward earlier retirement from about 1960 to 1985, over the past 20 years more Americans have continued to work at older ages. In 2006, median earnings of individuals aged 55-61 who worked were $37,000, while the median earnings of workers aged 62-64 were $30,000. Among workers 65 and older, median earnings were $19,000. Poverty among those age 65 and older has fallen from one-in-three older persons in 1960 to less than one-in-ten today. While the overall rate of poverty is relatively low, it remains high for women, minorities, the less-educated, and people over age 80.