Pension Income of the Elderly and Characteristics of Their Former Employers; and Retirement Annuity and Employment-Based Pension Income Among Individuals Age 50 and Over: 2005

March 2007, Vol. 28, No. 3
Paperback, 16 pp.
PDF, 965 kb
Employee Benefit Research Institute, 2007

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Executive Summary

Pension Income of the Elderly and Characteristics of Their Former Employers


SIPP data: This analysis uses the latest data from the Survey of Income and Program Participation (SIPP) to focus on who among the elderly (age 65 and over) receive income from defined benefit pensions.


Elderly receiving pension income up slightly: About 38 percent of Americans 65 or older are receiving pension income from their own former employers (both public and private sectors) and about 46 percent had pension income from either their own or their spouse’s former employer in 2003 (the latest data), a slight increase from five years earlier.


Factors affecting receipt of pension income: As has been the case for some time, males, whites, those with high educational levels, and retirees from unionized jobs are far more likely than their comparison groups to receive income from a pension. Also, the oldest of the elderly (age 80 and over) are more likely to have pension income than the “younger” elderly.


Replacement rates: For those receiving a pension, the median replacement rate was 27 percent in the first year of retirement (meaning the percentage of income earned just prior to retirement that is replaced by the pension income. While these rates vary, the replacement rate can be expected to fall for private-sector retirees, since most private-sector pensions are not indexed to inflation. The older the retiree, the lower the replacement rate was.


Retirement Annuity and Employment-Based Pension Income Among Individuals Age 50 and Over: 2005


CPS data: This analysis uses data from the Current Population Survey (CPS) March 2006 Supplement to examine pension and annuity income for a younger group (the population age 50 and over) to take into account the prevalence of early retirement options.


Annuity/pension income increases with age: Only 19 percent of those age 50–60 had annuity and/or pension income in 2005, yet they had far higher income than those over 60. This suggests that many people who retired early may have done so because they were eligible for early retirement benefits and/or were able to buy a large annuity, and therefore no longer needed to work for financial reasons.