November 2000

 

Income of the Elderly, 1999

  • The average income of an elderly individual (age 65 or older) in the United States in 1999 was $20,714, up from $12,239 in 1974, based on Employee Benefit Research Institute (EBRI) tabulations of data from the March 2000 Current Population Survey (CPS).
  • The percentage of the elderly's income derived from Social Security has fluctuated over time. It declined from 42.0 percent in 1974 to 38.6 percent in 1989. It increased to 44.4 percent in 1994 and declined to 40.1 percent in 1999. In 1999, the average income received from Social Security by an elderly person was $8,285.
  • Income from pensions and annuities accounted for a steadily increasing share of the elderly's income from 1974 to 1999. In 1974, these sources accounted for 14.0 percent of the elderly's income; by 1999, that percentage had increased to 19.4 percent. The average amount an elderly person received in income from pensions and annuities was $4,016 in 1999.
  • 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 19.8 percent in 1999. In 1999, the average amount an elderly person received in income from assets was $4,094. Assets here are defined as stocks and bonds not held in a retirement account, income from rents, royalties, and trusts.
  • Income from personal earnings declined as a percentage of the elderly's income from 21.3 percent in 1974 to 14.9 percent to 1994. In 1999, income from earnings increased to 18.7 percent of the elderly's income. In 1999, the average amount an elderly person received in income from earnings was $3,907.
  • The lower an elderly individual's total income, the greater the percentage of it that comes from Social Security. In 1999, Social Security accounted for 91.4 percent of the total income of elderly individuals in the lowest income quintile, compared with 20.7 percent for those in the highest income quintile.
  • The income quintiles are derived by assigning all individuals ages 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 1999, the lowest income quintile consisted of elderly individuals with an annual income of $6,785 or less. The highest income quintile consisted of individuals with a 1999 income of $26,899 or more.
  • There was a significant difference between the average income of elderly men ($28,240) and that of elderly women ($15,136) in 1999. This is in part attributable to a greater lifetime attachment to the work force among the generation of men that currently constitutes the elderly. Given the increasing role of women currently in the work force, the income gap between the sexes is expected to narrow.
  • Elderly women derived a greater share of their income from Social Security and assets than men in 1999: Social Security accounted for 48.4 percent of elderly women's income, compared with 33.9 percent of elderly men's income. Income from assets accounted for 23.5 percent of elderly women's income, compared with 17.1 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 1999, pensions and annuities accounted for 22.4 percent of elderly men's income, compared with 15.3 percent of elderly women's. Income from earnings accounted for 24.4 percent of elderly men's income, compared with 11.1 percent of elderly women's.
  • These data are from the March supplement to the U.S. Census Bureau's Current Population Survey (CPS). Some research, using data from the Bureau of Economic Analysis' National Income and Product Accounts, and from the Internal Revenue Service,1  has shown that the CPS underestimates the percentage of the elderly's income that comes from employment-based pension plans.

1/For a more detailed discussion of this point, see Silvester J. Schieber, Why Do Pension Benefits Seem So Small? (Washington, DC: Watson Wyatt Wordwide, 1995).

For more information, contact Ken McDonnell (202) 775-6342 or mcdonnell@ebri.org.

Source: Employee Benefit Research Institute tabulations of data from the March 2000 Current Population Survey.