Income of the Elderly,
- The average annual income of an elderly individual (age
65 or older) in the United States in 1998 was $19,970, up
from $12,239 in 1974, based on Employee Benefit Research
Institute (EBRI) tabulations of data from the March 1999
Current Population Survey (CPS).
- The percentage of the elderly's income derived from
Social Security declined from 42.0 percent in 1974 to
38.6 percent in 1989. It increased to 44.4 percent in
1994 and declined to 40.3 percent in 1998. In 1998, the
average income received by the elderly from Social
Security was $7,932.
- Income from pensions and annuities accounted for a
steadily increasing share of the elderly's income from
1974 to 1998. In 1974, these sources accounted for 14.0
percent of the elderly's income; by 1998, that percentage
had increased to 19.9 percent. The average amount an
elderly person received in income from pensions and
annuities was $3,966 in 1998.
- Income from assets increased between 1974, when it
accounted for 18.2 percent of the elderly's income, and
1984, when it accounted for 28.2 percent. It declined to
17.6 percent in 1994 and increased to 20.4 percent in
1998. In 1998, the average amount an elderly person
received in income from assets was $4,070. Assets here
are defined as stocks and bonds not held in a retirement
account and income from rents, royalties, and trusts.
- Income from earnings declined as a percentage of the
elderly's income from 21.3 percent in 1974 to 14.9
percent in 1994. In 1998, income from earnings increased
to 18.2 percent of the elderly's income. In 1998, the
average amount an elderly person received in income from
earnings was $3,522.
- The lower an individual's total income, the greater the
percentage of it that comes from Social Security. In
1998, Social Security accounted for 89.8 percent of the
total income of elderly individuals in the lowest income
quintile, compared with 19.1 percent for those in the
highest income quintile.
- The income quintiles are derived by assigning all of the
individuals age 65 and older to one of five groups based
on income so that there is an equal number of individuals
in each group. The income ranges of the quintiles vary
from year to year. In 1998, the lowest income quintile
consisted of individuals with a 1998 income of $6,524 or
less. The highest income quintile consisted of
individuals with a 1998 income of $26,000 or higher.
- There was a significant difference between the average
income of elderly men ($27,038) and that of elderly women
($14,834) in 1998. This is in part attributable to
greater lifetime attachment to the work force among the
generation of men that currently makes up the elderly.
Given the increasing role of women in the work force, the
income gap between the sexes will narrow.
- Elderly women derived a greater share of their income
from Social Security and assets than men in 1998. Social
Security accounted for 48.1 percent of elderly women's
income, compared with 34.2 percent of elderly men's
income. Income from assets accounted for 23.8 percent of
elderly women's income, compared with 17.8 percent of
elderly men's income.
- Elderly men derived a larger share of their income from
employment-based sources, including pensions and
annuities and earnings, than elderly women. In 1998,
pensions and annuities accounted for 23.8 percent of
elderly men's income, compared with 14.5 percent of
elderly women's income. Income from earnings accounted
for 22.1 percent of the elderly men's income, compared
with 11.6 percent of elderly women's income.
- These data are from the March supplement to the CPS. Some
research has shown that the March CPS underestimates the
percentage of the elderly's income that comes from
employment-based pension plans. This research also uses
data from the Bureau of Economic Analysis' National
Income and Product Accounts and from the Internal Revenue
1/ For a more detailed discussion of this point, see
Sylvester J. Schieber, Why Do Pension Benefits Seem so Small?
Watson Wyatt Worldwide (Washington, DC, 1995).
For more information, contact Ken McDonnell (202) 775-6342 or
Source: Employee Benefit Research Institute tabulations of
data from the March 1999 Current Population Survey.