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Income of the Aged Chartbook, 2004 Abstract This biennial companion to Income of the Population 55 or Older highlights selected data in charts and tables that are easy to understand. The charts focus on the receipt and shares of income from Social Security, pensions, assets, earnings, and public assistance, effectively illustrating the Social Security program's pivotal role in the economic security of the aged. Keywords aging, employment, retirement, pension, benefits, trends, public policy, Social Security Comments Suggested Citation Social Security Administration. (2006). Income of the aged chartbook, 2004. Washington, DC: Author. http://digitalcommons.ilr.cornell.edu/key_workplace/660 This article is available at DigitalCommons@ILR: http://digitalcommons.ilr.cornell.edu/key_workplace/660
Income of the Aged Chartbook, 2004 Social Security Administration Office of Policy Office of Research, Evaluation, and Statistics 500 E Street, SW, 8th Floor Washington, DC 20254 SSA Publication No. 13-11727 Released: September 2006
Since 1941, the Social Security Administration (SSA) has periodically surveyed the aged to determine their economic status. The fi rst national survey was conducted in 1963. In 1976, SSA s Offi ce of Research and Statistics began compiling a biennial series of reports on the income of the aged based on data collected by the U.S. Census Bureau in its Current Population Survey. These SSA reports are published under the title Income of the Population 55 or Older. The most recent edition of that publication is based on 2004 data, which, along with special tabulations, form the basis of this chartbook. This publication covers the population aged 65 or older. The unit of analysis here, with the exception of measures of poverty, is the aged unit, which is a married couple living together or a person who does not live with a spouse. The age of a married couple is the age of the husband if he is 65 or older; if the husband is younger than 55 and the wife is aged 65 or older, the age of the married couple is the age of the wife. The race and Hispanic origin of a married couple are determined by the husband. The unit of analysis for poverty is persons aged 65 or older. The 2004 sample represented 10,930,000 couples and 15,935,000 single units. The single unit may be a widow(er), a divorced or separated person, a legally married person who does not live with a spouse, or a person who never married. This unit of analysis allows one to measure the economic status of the entire noninstitutionalized aged population separately from that of the family or household in which the unit may live. Lynn Fisher, Nicole Pascua, and Anne DeCesaro prepared this chartbook. Staff of the Division of Information Resources edited the report and prepared the print and electronic versions for publication. Questions related to the content of the charts should be directed to Lynn Fisher at 202-358-6308 or inc.aged@ssa.gov. This chartbook and its companion publication, Income of the Population 55 or Older, are available on our Web site at http://www.socialsecurity. gov/policy. For additional copies, e-mail op.publications@ssa.gov or call 202-358-6274. Preface Linda Drazga Maxfi eld Associate Commissioner for Research, Evaluation, and Statistics September 2006
Definitions and Notes INCOME SOURCES Retirement benefits include Social Security, other public sources such as Railroad Retirement and government employee pensions (military, federal, state, and local), and private pensions and annuities. Social Security includes retired-worker benefi ts, dependents or survivors benefi ts, disability benefi ts, transitionally insured benefi ts, and special age-72 benefi ts. Pensions include regular payments from private pensions and annuities; government employee pensions; Railroad Retirement; and individual retirement accounts (IRAs), Keoghs, and 401(k) plans. Irregular withdrawals (lump-sum payments) from IRAs, Keoghs, and 401(k) plans are not included in the data because they do not fi t the Census Bureau s definition of money income. INCOME Total money income is the sum of all income received by the aged unit before any deductions such as those for taxes, union dues, or Medicare premiums. Total money income does not refl ect nonmoney transfers such as food stamps, health benefi ts, subsidized housing, payments in kind, or fringe benefi ts from one s employment. Total money income does not include capital gains or losses, or irregular withdrawals (lump-sum payments) from IRAs, Keoghs, or 401(k) plans. Aggregate income is the sum of the total money income of all aged units in the population of interest. Several charts in this book present the shares of aggregate income attributable to specifi c sources, such as Social Security. GENERAL NOTES This publication covers the population aged 65 or older. The unit of analysis here, with the exception of measures of poverty, is the aged unit, which is a married couple living together or a person who does not live with a spouse. The age of a married couple is the age of the husband if he is 65 or older; if the husband is younger than 55 and the wife is aged 65 or older, the age of the married couple is the age of the wife. The race and Hispanic origin of a married couple are determined by the husband. The unit of analysis for poverty is persons aged 65 or older. Beginning with data for 2002, respondents may identify themselves in more than one racial group. The White alone and Black alone categories refl ect respondents who reported only one race. All years are calendar years. Nonmarried men and nonmarried women include persons who are separated or married but living apart from their spouse. Persons of Hispanic origin may be of any race. Percentages may not sum to 100 because of rounding.
Income Sources Percentage receiving income from specifi ed source.......................................... 3 Percentage of aged benefi ciary units receiving Social Security benefits, by relative importance of benefi ts to total income......................................... 4 Percentage receiving income from earnings and pensions, by age............................... 5 Percentage receiving income from major sources, by race and Hispanic origin..................... 6 Change in percentage receiving income from major sources.................................... 7 Contents Total Money Income Percentage with various levels of income.................................................. 11 Percentage with various levels of income, by receipt of asset income............................ 12 Median income, by receipt of earnings and retirement benefi ts................................. 13 Median income and percentage distribution of aged units, by age, marital status, and sex of nonmarried persons........................................... 14 Median income, by age................................................................ 15 Median income, by marital status, sex of nonmarried persons, race, and Hispanic origin........................................................... 16 Change in median income, by marital status and race........................................ 17 Shares of Aggregate Income Shares of aggregate income, by source................................................... 21 Shares of aggregate income for the lowest and highest income quintiles, by source........................................................................ 22 Change in shares of aggregate income, by source.......................................... 23 Poverty Status, Based on Family Income Poverty status, by marital status, sex of nonmarried persons, race, and Hispanic origin................................................................ 27 Poverty status, by age................................................................. 28
Contents
Income Sources Social Security is a source of income for nearly all units aged 65 or older. Social Security provides at least half of total income for a majority of beneficiary aged units. Age groups differ in their likelihood of receiving earnings, but not pensions. Receipt of income from major sources varies by race and Hispanic origin.
Social Security is a source of income for nearly all units aged 65 or older. Nearly 9 out of 10 aged units receive Social Security benefi ts. Asset income is the next most common source of income, received by more than half of the aged. Two-fi fths receive retirement benefits other than Social Security, and nearly one-quarter have earnings. Public assistance and veterans benefi ts are each received by only 4%. Percentage receiving income from specified source, 2004 100 90 80 70 Percent 89 Retirement benefits other than Social Security Public and private (2%) Public only (12%) Income Sources 60 50 55 Private only (27%) 40 41 30 20 24 10 4 4 0 Social Security Asset income Retirement benefits other than Social Security Earnings Public assistance Veterans' benefits Income of the Aged Chartbook, 2004 3
Income Sources Social Security provides at least half of total income for a majority of beneficiary aged units. In 2004, 90% of married couples and 88% of nonmarried persons (aged 65 or older) received Social Security benefi ts. Social Security was the major source of income (providing at least 50% of total income) for 54% of aged benefi ciary couples and 74% of aged nonmarried benefi ciaries. It was the only source of income for 11% of aged benefi ciary couples and 29% of aged nonmarried benefi ciaries. Total income excludes withdrawals from savings and lump-sum payments from IRAs or 401(k)s; it also excludes in-kind support, such as food stamps and housing and energy assistance. Percentage of aged beneficiary units receiving Social Security benefits, by relative importance of benefits to total income, 2004 80 Percent All beneficiary units Beneficiary married couples Nonmarried beneficiaries 70 60 66 74 50 54 40 43 30 34 29 20 21 21 10 11 0 50% or more of income 90% or more of income 100% of income 4 Income of the Aged Chartbook, 2004
Aged groups differ in their likelihood of receiving earnings, but not pensions. Earnings are received by a greater percentage of aged units in the youngest group than in the oldest group 44% compared with 7%. In all age groups, there is little or no difference in the likelihood of having public or private pensions. Percentage receiving income from earnings and pensions, by age, 2004 50 40 Percent 44 Earnings Private pensions Public pensions Income Sources 30 27 28 30 30 30 20 10 15 15 16 15 13 7 0 65 69 70 74 Age 75 79 80 or older Income of the Aged Chartbook, 2004 5
Income Sources Receipt of income from major sources varies by race and Hispanic origin. Among units aged 65 or older, whites are most likely to receive Social Security and pensions, followed by blacks and Hispanics. Whites are much more likely than blacks or Hispanics to receive income from assets. Whites are slightly more likely to have earnings than are blacks or Hispanics. Minority aged units are much more likely to receive Supplemental Security Income (SSI) than are whites. Percentage receiving income from major sources, by race and Hispanic origin, 2004 100 90 Percent 91 White alone Black alone Hispanic 80 70 83 76 60 59 50 40 43 30 20 26 23 28 20 24 21 21 10 10 13 0 Social Security Asset income Pensions Earnings 3 SSI 6 Income of the Aged Chartbook, 2004
Receipt of Social Security has become nearly universal. In 1962, 69% of units aged 65 or older received Social Security benefi ts; in 2004, 89% of them did. Most of that increase occurred in the 1960s. Receipt of other pension income, which more than doubled from 1962 to 1992, has decreased slightly since then. The proportion of aged units with asset income, which had been about two-thirds since 1980, has dropped since 1990. The proportion with earnings has declined since 1971 and has been between 20% and 24% since 1980. The proportion receiving public assistance has also declined and is now about a third of its 1962 level. Change in percentage receiving income from major sources, selected years 100 90 Percent Social Security Income Sources 80 70 Asset income 60 50 Pensions 40 30 Earnings 20 10 Public assistance 0 62 67 71 76 78 80 82 84 Year 86 88 90 92 94 96 98 00 02 04 Income of the Aged Chartbook, 2004 7
Total Money Income The aged are an economically diverse group. Income differences by age are associated with differences in marital status. Demographic differences are associated with different levels of income. Median real income has risen substantially over the years.
The aged are an economically diverse group. The median income for units aged 65 or older is $20,481, but there are wide differences within the total group. Eighteen percent have an income of under $10,000, and 17% have an income of $50,000 or more. Percentage with various levels of income, 2004 20 15 10 Percent 18 13 13 10 11.3 17 Total Money Income 5 5 7 6 5 4 3 0 Less than 5,000 5,000 to 9,999 10,000 to 14,999 15,000 to 19,999 20,000 to 24,999 25,000 to 29,999 30,000 to 34,999 35,000 to 39,999 40,000 to 44,999 45,000 to 49,999 50,000 or more Income (dollars) Income of the Aged Chartbook, 2004 11
Total Money Income Receipt of asset income is associated with relatively high median income. The median income of units aged 65 or older with asset income is more than twice that of those with no asset income ($28,844 compared with $13,243). Aged units with no asset income are concentrated in the lowest income categories 32% have a total income below $10,000, and only 16% have an income of $30,000 or more. Among aged units with asset income, 7% have a total income of less than $10,000, and 48% have an income of $30,000 or more. Percentage with various levels of income, by receipt of asset income, 2004 50 40 Percent With asset income 37 With no asset income 48 30 32 25 20 20 14 16 10 7 0 Less than 10,000 10,000 to 19,999 20,000 to 29,999 30,000 or more Income (dollars) 12 Income of the Aged Chartbook, 2004
Receipt of earnings and retirement benefits also affects total income. About 8% of units aged 65 or older have no retirement benefi ts. Of those, 41% have earnings, and their median income is $40,000; 59% have no earnings, and their median income is $0. In the absence of earnings, median income rises markedly with the number of retirement benefi t types received, from $12,672 with one retirement benefi t type to $26,936 with two. For units with both earnings and retirement benefi ts, median income is $37,740 for those with one retirement benefi t type and $53,249 for those with two. Median income, by receipt of earnings and retirement benefits, 2004 60,000 50,000 Dollars With earnings 53,249 With no earnings Total Money Income 40,000 40,000 37,740 30,000 25 26,936 20,000 10,000 12,672 0 0 No retirement benefits One retirement benefit type Two retirement benefit types NOTE: Retirement benefi t types are Social Security, Railroad Retirement, government pension, and private pension or annuity. Income of the Aged Chartbook, 2004 13
Total Money Income Income differences by age are associated with differences in marital status. Median income is generally lower in older age groups. The striking differences by age are due in part to the disproportionate number of nonmarried women in older age groups. In every age group, nonmarried women have a lower median income than nonmarried men or married couples. Median income and percentage distribution of aged units, by age, marital status, and sex of nonmarried persons, 2004 Marital status and sex of nonmarried persons 65 69 70 74 75 79 80 or older Median income (dollars) Married couples 44,299 36,750 30,413 28,490 Nonmarried men 19,194 18,013 17,580 16,939 Nonmarried women 14,611 13,506 13,171 12,679 Percentage distribution of aged units Total percent 100 100 100 100 Married couples 52 46 40 27 Nonmarried men 16 16 15 17 Nonmarried women 31 39 44 56 Total number of aged units (thousands) 7,078 5,999 5,827 7,960 14 Income of the Aged Chartbook, 2004
Median income, by age, 2004 Dollars 30,000 28,969 20,000 22,603 19,290 $53,249 Total Money Income 15,948 10,000 0 65 69 70 74 Age 75 79 80 or older Income of the Aged Chartbook, 2004 15
Total Money Income Demographic differences are associated with different levels of median income for units aged 65 or older. Income is highest for married couples, who have a median income about twice that of nonmarried men and more than 2½ times that of nonmarried women. Median income of white aged units is nearly three-fourths greater than that of black aged units and over three-fourths greater than that of Hispanic aged units. Median income, by marital status, sex of nonmarried persons, race, and Hispanic origin, 2004 40,000 30,000 Dollars 34,900 $28,969 $22,603 $53,249 $19,290 20,000 21,699 $15,948 17,611 10,000 13,151 12,503 12,133 0 Married couples Nonmarried Men Women White alone Black alone Hispanic 16 Income of the Aged Chartbook, 2004
Median real income has risen substantially over the years. Between 1962 and 2004, the income of units aged 65 or older increased even when adjusted for inflation. The increase was 94% for married couples and 98% for nonmarried persons. There were disproportionate increases by race. Between 1967 and 2004, the income of whites increased by 102%; that of blacks increased by 64%. Change in median income, by marital status and race, selected years 40 35 30 25 Thousands of 2004 dollars Married couples White Total Money Income 20 15 10 Nonmarried persons Black 5 0 62 67 71 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 Year Income of the Aged Chartbook, 2004 17
Shares of Aggregate Income Social Security provides the largest share of aggregate income for units aged 65 or older. Shares of income from each source differ greatly by income level. Over time, Social Security has provided the largest share of aggregate income for aged units.
Social Security provides the largest share of aggregate income for units aged 65 or older. Aggregate income for the aged population comes largely from four sources. Social Security accounts for 38.6%, earnings for 26.3%, pensions for 19.7%, and asset income for 12.6%. Only 2.7% comes from other sources. Shares of aggregate income, by source, 2004 Pensions 19.7% Asset income 12.6% Other (including public assistance) 2.7% Social Security 38.6% Shares of Aggregate Income Earnings 26.3% Income of the Aged Chartbook, 2004 21
Shares of Aggregate Income Shares of aggregate income from each source differ greatly by income level. Units aged 65 or older are ranked by total money income and divided into fi ve groups of equal size called quintiles. The largest share of income for units in the lowest quintile comes from Social Security benefi ts (82.6%), and public assistance provides the second largest share (8.4%). For units in the highest income quintile, earnings provide the largest share of income (40.1%). Pensions and Social Security (21.2% and 18.9%) are the next most important, followed by asset income (17.8%). Shares of aggregate income for the lowest and highest income quintiles, by source, 2004 2.3 % 3.5 % 1.2 % Social Security Pensions Asset income Earnings 8.4 % 2.0 % 1.9 % 0.1 % 82.6 % Public assistance Other 18.9 % 21.2 % Lowest quintile 40.1 % Highest quintile 17.8 % NOTE: The quintile limits for aged units for 2004 are $10,399, $16,363, $25,587, and $44,129. 22 Income of the Aged Chartbook, 2004
Over time, Social Security has provided the largest share of aggregate income for units aged 65 or older. In 1962, it provided the largest share, followed closely by earnings. In 2004, Social Security continued to provide the largest share, but by a much wider margin compared with the other major sources of income. The share from asset income increased for over 20 years but has generally declined since the mid-1980s. The share from earnings has had the opposite pattern declining until the mid-1980s and generally increasing since then. The share from pensions had doubled by the early 1990s but has since leveled off. Change in shares of aggregate income, by source, selected years 50 45 40 35 30 25 20 Percent Asset income Social Security Earnings Shares of Aggregate Income 15 Pensions 10 5 0 62 Other (including public assistance) 67 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 Year Income of the Aged Chartbook, 2004 23
Poverty Status, Based on Family Income High proportions of nonmarried and minority persons aged 65 or older are poor or near poor. The oldest age group (80 or older) has the highest poverty rate.
High proportions of nonmarried and minority persons aged 65 or older are poor or near poor. The variations in family income by marital status and by race are refl ected in the poverty rates for those subgroups of the aged. Nonmarried persons and minorities have the highest poverty rates, ranging from 13.1% to 23.9%. An additional 9.6% to 11.3% of nonmarried persons and minorities have incomes between the poverty line and 125% of the poverty line (the near poor). Poverty status, by marital status, sex of nonmarried persons, race, and Hispanic origin, 2004 30 25 20 15 10 5 0 Percent 4.5 Married persons $28,969 3.6 13.1 9.6 17.4 $22,603 10.8 Nonmarried Men Women $19,290 8.3 White alone Poor 6.1 23.9 11.2 Black alone Near poor 18.7 11.3 Hispanic Poverty Status, Based on Family Income Income of the Aged Chartbook, 2004 27
Poverty Status, Based on Family Income The oldest age group has the highest poverty rate. In keeping with the lower median income of older age groups, those groups generally have higher rates of poverty and near poverty (income between the poverty line and 125% of the poverty line). Poverty status, by age, 2004 20 15 10 5 0 Percent 9.2 65 69 4.6 9.6 70 74 5.7 Age 9.1 75 79 7.4 Poor 11.3 80 or older Near poor 9.1 28 Income of the Aged Chartbook, 2004