[Excerpt] This CRS report presents data collected by the Census Bureau in the Current Population Survey from 1969 through 2009 about the employment status and the sources and amounts of income received by people aged 65 and older. The report focuses on the sources and amounts of income received by individuals aged 65 and older and by households in which either the household head or the household head’s spouse (if present) was 65 or older in the year of the survey.
Since the 1960s, birth rates have fallen and average life expectancy has increased. Consequently, the number of workers relative to the number of retirees is projected to decline, and retirees will have to stretch their savings and other assets over longer periods of retirement than their parents and grandparents experienced. The aging of the American population and the retirement of the baby boom generation will place financial strains on Social Security, public and private pensions, and on retirees’ personal savings. The increasing number of Americans living to age 80 and older is of particular significance because it is the very old who are most likely to need medical, social, and long-term care services, and who are at the greatest risk of depleting their financial resources and falling into poverty.
Rates of employment among older persons have been rising in recent years. Employment rates fell among men 55 and older from the late 1960s until about 1990. Since then, employment rates have risen for older men, but they remain below the employment rates of the 1960s and 1970s. Among older women, employment rates have steadily increased since the 1960s, but older women’s employment rates today remain lower than those of men the same age.
Earnings, Social Security, pensions, and income from assets – mainly interest and dividends – comprise the majority of income among people 65 and older. Information on pension income has been reported separately on the CPS only since the 1970s. In 1975, Social Security comprised 42% of all income received by people aged 65 and older. Earnings and income from assets each accounted for 20% of the income of the elderly, while pensions made up 14% of their income. Public assistance and other sources each contributed just 2% to the total income of Americans aged 65 and older in 1975. By 2008, Social Security comprised 39% of the income received by people aged 65 and older. Earnings had increased to 26% of the income of the elderly, while income from assets had fallen to 13% of the total. Pensions, including withdrawals from retirement accounts, comprised 20% of the income of the elderly in 2008. Public assistance provided less than 1% of the income of the elderly, and other sources accounted for just 2%.
Although 97% of persons 65 and older had income from at least one source in 2008, in most cases household income is a better measure of available resources than individual income. Median household income rose faster among elderly households than among nonelderly households from 1968 through 2008, but in 2008 the median annual income of households in which the householder or spouse was 65 or older ($30,774) was just 54% of the median income of younger households ($56,604). In 2008, households in which either the household head or the household head’s spouse (if present) was 65 or older had an average of 1.7 residents, compared to an average of 2.7 residents in households in which neither the head nor spouse was 65 or older.
The poverty rate among people aged 65 and older fell from 25.0% in 1968 to 9.7% in 2008. Growth in real wages—and in the Social Security and pensions based on wages—contributed to the decline in the percentage of older Americans living in poverty; however, because the poverty threshold is indexed to rising prices, the poverty line has fallen relative to median income.