Income of the Elderly, 1995

The average income of an individual aged 65 and over in 1995 was $17,553, up from $12,239 in 1974, based on Employee Benefit Research Institute (EBRI) tabulations of data from the March 1996 Current Population Survey (CPS).

The percentage of the elderly's income coming from Social Security declined from 42.0 percent in 1974 to 38.6 percent in 1989. It increased to 41.7 percent in 1992 and to 44.4 percent in 1994. In 1995, the percentage of the elderly's income coming from Social Security declined to 42.8 percent.

Income from pensions and annuities accounted for a steadily increasing share of the elderly's income from 1974 to 1994. In 1974, these sources accounted for 14.0 percent of the elderly's income; by 1994, that percentage had increased to 20.0 percent. In 1995, pensions and annuities accounted for 19.0 percent of the elderly's income.

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. The percentage of the elderly's income coming from assets then declined to 25.2 percent in 1989 and to 18.2 percent in 1995.

Income from earnings declined as a percentage of the elderly's income from 21.3 percent in 1974 to 14.9 percent to 1994. In 1995, income from earnings increased to 17.8 percent of the elderly's income.

The lower an individual's total income, the greater the percentage of it that comes from Social Security. In 1995, Social Security accounted for 88.8 percent of the total income of elderly individuals in the lowest income quintile, compared with 21.1 percent for those in the highest income quintile.

There was a significant difference between the average income of elderly men ($23,483) and of elderly women ($12,520) in 1994. This is in part attributable to men's greater lifetime attachment to the work force.

Elderly women derived a greater share of their income from Social Security and assets than men. In 1995, Social Security accounted for 51.2 percent of elderly women's income, compared with 36.6 percent of elderly men's. Income from assets accounted for 22.9 percent of elderly women's income, compared with 14.8 percent of elderly men's.

Elderly men derived a larger share of their income from employment-based sources, including pensions and annuities and earnings, than elderly women. In 1995, pensions and annuities accounted for 22.6 percent of elderly men's income, compared with 14.1 percent of elderly women's. Income from earnings accounted for 23.6 percent of the elderly men's income, compared with 10.0 percent of elderly women's.

The data presented in this fact sheet comes 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 uses data from the Bureau of Economic Analysis' National Income and Product Accounts and the Internal Revenue Service.*

For more information, contact Ken McDonnell (202) 775-6342.

Source: EBRI Databook on Employee Benefits, Third edition, 1995.
*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).
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