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<h1 itemprop="headline">Shifting Income Sources of the Aged</h1>
<div id="hByline">by <span itemprop="author">Chris&nbsp;E. Anguelov, Howard&nbsp;M. Iams, and Patrick&nbsp;J. Purcell</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr>&nbsp;72, <abbr title="Number">No.</abbr>&nbsp;3, 2012 (released August 2012)</div>
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<p id="synopsis" itemprop="description">Traditional defined benefit pensions, once a major source of retirement income, are increasingly giving way to tax-qualified defined contribution (<abbr class="spell">DC</abbr>) plans and individual retirement accounts (<abbr class="spell">IRA</abbr>s). This trend is likely to continue among future retirees who have worked in the private sector. This article discusses the implications of those trends for the measurement of retirement income. We conclude that Census Bureau's Current Population Survey (<abbr class="spell">CPS</abbr>), one of the primary sources of income data, greatly underreports distributions from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s, posing an increasing problem for measuring retirement income in the future. The <abbr class="spell">CPS</abbr> and other data sources need to revise their measures of retirement income to account for periodic (irregular) distributions from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s.</p>
<hr />
<div class="eightypercent">
<p>Chris Anguelov and Patrick Purcell are with the Division of Policy Evaluation, Office of Research, Evaluation, and Statistics (<abbr class="spell">ORES</abbr>), Office of Retirement and Disability Policy (<abbr class="spell">ORDP</abbr>), Social Security Administration (<abbr class="spell">SSA</abbr>). Howard Iams is a senior research advisor to <abbr class="spell">ORES</abbr>, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>.</p>
<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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<h2>Introduction</h2>
<div class="abbrtable">
<table role="presentation">
<caption>Selected Abbreviations</caption>
<tr>
<td><abbr class="spell">BLS</abbr></td>
<td>Bureau of Labor Statistics</td>
</tr>
<tr>
<td><abbr class="spell">CPS</abbr></td>
<td>Current Population Survey</td>
</tr>
<tr>
<td><abbr class="spell">DB</abbr></td>
<td>defined benefit</td>
</tr>
<tr>
<td><abbr class="spell">DC</abbr></td>
<td>defined contribution</td>
</tr>
<tr>
<td><abbr class="spell">IRA</abbr></td>
<td>individual retirement account</td>
</tr>
<tr>
<td><abbr class="spell">NCS</abbr></td>
<td>National Compensation Survey</td>
</tr>
<tr>
<td><abbr class="spell">PEU</abbr></td>
<td>primary economic unit</td>
</tr>
<tr>
<td><abbr class="spell">SCF</abbr></td>
<td>Survey of Consumer Finances</td>
</tr>
<tr>
<td><abbr>SIPP</abbr></td>
<td>Survey of Income and Program Participation</td>
</tr>
<tr>
<td><abbr class="spell">SSA</abbr></td>
<td>Social Security Administration</td>
</tr>
</table>
</div>
<p>In the United States, retirement incomes are supported largely by three pillars: Social Security benefits, employer-provided pensions, and personal savings (including nonhousing wealth and home equity).<sup><a href="#mn1" id="mt1">1</a></sup> Some individuals continue working in retirement to supplement their income, but most older Americans discontinue <span class="nobr">full-time</span> work. A relatively small proportion of retirees also receive income from welfare programs, such as Supplemental Security Income. This article discusses the prevalence of personal retirement savings plans in 2009, the increase in personal retirement account assets among the older population in the past two decades, and the implications of these trends for the accurate measurement of the income of the aged in the Census Bureau's Current Population Survey&nbsp;(<abbr class="spell">CPS</abbr>).</p>
<p>Since the early 1960s, the Social Security Administration (<abbr class="spell">SSA</abbr>) has published information on the income of the aged. Early reports were based on <abbr class="spell">SSA</abbr> surveys conducted in 1963, 1968, and 1972; since 1976, reports have been based on the <abbr class="spell">CPS</abbr> Annual Social and Economic Supplement. The share of aged people's income attributable to pensions rapidly increased in the 1960s and 1970s, peaking at 20&nbsp;percent in 1992 and again in 2004. After 2004, the pension share of income gradually decreased to 18&nbsp;percent in 2009 and 2010 (Federal Interagency Forum on Aging Related Statistics 2012, Table&nbsp;9a; <abbr class="spell">SSA</abbr>&nbsp;2012).</p>
<p>Pension income's decreasing share of total income for the aged partly reflects the traditional defined benefit (<abbr class="spell">DB</abbr>) plan's decreasing share of total retirement assets. Over half of the $17.8&nbsp;trillion in total retirement assets at the end of the fourth quarter of 2011 were held in individual retirement accounts (<abbr class="spell">IRA</abbr>s) and defined contribution (<abbr class="spell">DC</abbr>) retirement plans ($4.9&nbsp;trillion and $4.5&nbsp;trillion, respectively) (Investment Company Institute 2012; Federal Retirement Thrift Investment Board 2012). Based on these data, the share of retirement assets held in traditional <abbr class="spell">DB</abbr> plans and annuities decreased from 59&nbsp;percent in 1992 to 47&nbsp;percent in 2011. The decreasing proportion of assets in traditional pensions and the increasing share of total retirement assets in <abbr class="spell">IRA</abbr>s and <abbr class="spell">DC</abbr> retirement plans could partly account for the decreasing share of pension income in the income of the aged because the <abbr class="spell">CPS</abbr> appears to undercount distributions from <abbr class="spell">DC</abbr>&nbsp;plans.</p>
<p>Income has historically been underreported in household surveys, and several studies have concluded that pension income is underreported in the <abbr class="spell">CPS</abbr> (Bosworth, Burtless, and Anders 2007; Roemer 2000; Schieber 1995). Woods (1996) observes that the Census Bureau did not consider <abbr class="spell">IRA</abbr> distributions to be income in the 1990 <abbr class="spell">CPS</abbr>, and Czajka and Denmead (2011) conclude that the <abbr class="spell">CPS</abbr> does not clearly ask about distributions from retirement accounts such as <abbr class="spell">IRA</abbr>s and <abbr class="spell">DC</abbr> plans.</p>
<p>The <abbr class="spell">CPS</abbr> measures <abbr class="spell">IRA</abbr> distributions as money income if they occur &quot;regularly,&quot; like annuity payments. However, because most <abbr class="spell">IRA</abbr> distributions are irregular, they are not measured as income in the <abbr class="spell">CPS</abbr>. In addition, very few <abbr class="spell">DC</abbr> plan participants take their retirement distributions as annuities (Brown and others 2008). Excluding periodic (irregular) distributions misses much of the money distributed from <abbr class="spell">IRA</abbr>s and <abbr class="spell">DC</abbr> plans that supports retirement consumption. As retirees increasingly rely on periodic distributions from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s, the problem of underreporting pension income in the <abbr class="spell">CPS</abbr> could become increasingly serious.</p>
<p>Although much of the money distributed from retirement accounts is not captured in the <abbr class="spell">CPS</abbr>, the Internal Revenue Service records distributions from tax-qualified retirement accounts (such as <abbr class="spell">DC</abbr> plans and standard <abbr class="spell">IRA</abbr>s) and considers them to be taxable deferred income.<sup><a href="#mn2" id="mt2">2</a></sup> When traditional employer-offered <abbr class="spell">DB</abbr> plans were more prevalent, most pension income was received as annuity payments and was counted as income by the <abbr class="spell">CPS</abbr> and other household surveys.<sup><a href="#mn3" id="mt3">3</a></sup> Because of the shift from <abbr class="spell">DB</abbr> pensions to tax-qualified retirement savings plans over the past 30&nbsp;years, much retirement income has gradually disappeared from survey-based measures of the income of the aged. Distributions from retirement accounts are not accurately measured by surveys that were designed in an era dominated by <abbr class="spell">DB</abbr> pensions.</p>
<p>Analysts have documented that substantial distributions from <abbr class="spell">IRA</abbr>s are not measured in the <abbr class="spell">CPS</abbr>. Tax records indicate that hundreds of billions of dollars are withdrawn from retirement savings plans in a calendar year. Bryant, Holden, and Sabelhaus (2011) estimate from tax records that <abbr class="spell">DC</abbr> plan and <abbr class="spell">IRA</abbr> taxable distributions for persons older than age&nbsp;60 were $529&nbsp;billion in 2007. These tax-recorded distributions are substantially greater than those recorded in household surveys. Looking at withdrawals from <abbr class="spell">IRA</abbr>s in 2006, Sabelhaus and Schrass (2009, 20) estimate that the <abbr class="spell">CPS</abbr> recorded withdrawals of only $6.4&nbsp;billion, while the Federal Reserve Board's Survey of Consumer Finance (<abbr class="spell">SCF</abbr>) recorded $95.2&nbsp;billion, and an Investment Company Institute survey recorded $71.6&nbsp;billion. From 2006 tax records, the authors estimate that all tax returns recorded $124.7&nbsp;billion in distributions from <abbr class="spell">IRA</abbr>s, and tax returns for primary taxpayers aged&nbsp;55 or older recorded $105.7&nbsp;billion in distributions. Czajka and Denmead (2011) compare distributions from <abbr class="spell">IRA</abbr>s and <abbr class="spell">DC</abbr> accounts reported in the <abbr class="spell">CPS</abbr> to Internal Revenue Service administrative data on payouts, <abbr class="spell">SCF</abbr> data on distributions, and data on retirement plan withdrawals from the Census Bureau's Survey of Income and Program Participation (<abbr>SIPP</abbr>). The authors document substantial underreporting in the <abbr class="spell">CPS</abbr>, as the other data sources all indicate substantially greater distributions and payouts.</p>
<p>If longstanding trends in employer-sponsored retirement plans persist, the share of income attributable to traditional <abbr class="spell">DB</abbr> pensions will continue to diminish in the future. Consequently, estimates of the income of the aged based on the <abbr class="spell">CPS</abbr> will show increasing shares from other sources such as Social Security. In addition, the income of the aged is likely to appear to decline among the upper half of the income distribution, where pension income historically has concentrated (Federal Interagency Forum on Aging Related Statistics 2012, Table&nbsp;9b).</p>
<h2>Current Pension Status</h2>
<p>To assess the importance of <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s in the current labor force, and hence to future retirees, we use three different surveys: The National Compensation Survey (<abbr class="spell">NCS</abbr>), the <abbr>SIPP</abbr>, and the <abbr class="spell">SCF</abbr>. Even though three different organizations conduct these surveys using different sample frames, respondents, and questions, their results all indicate the rising importance of tax-qualified retirement savings accounts.</p>
<p>The Bureau of Labor Statistics (<abbr class="spell">BLS</abbr>) conducts the <abbr class="spell">NCS</abbr>. Both the <abbr class="spell">NCS</abbr> and the <abbr>SIPP</abbr> collect data indicating the type of retirement plan (either <abbr class="spell">DB</abbr> or <abbr class="spell">DC</abbr>) for current workers. The <abbr class="spell">NCS</abbr>, a nationally representative survey of employers in the private sector and in state and local government, asks employers to report the retirement plan characteristics for their employees. The <abbr>SIPP</abbr> is a nationally representative household survey of labor force participants that includes questions on respondents' retirement plan characteristics. We adjust the reported <abbr>SIPP</abbr> data on <abbr class="spell">DC</abbr> plans with matched <span class="nobr">W-2</span> tax records following the methodology of Dushi and Iams (2010). Both the <abbr class="spell">NCS</abbr> and the <abbr>SIPP</abbr> provide national estimates of the type of pension available to employees and of employee participation. The most recent <abbr>SIPP</abbr> data are for summer 2009 and we compare them to <abbr class="spell">NCS</abbr> data for 2009.<sup><a href="#mn4" id="mt4">4</a></sup></p>
<p>The third survey, the <abbr class="spell">SCF</abbr>, is conducted by the National Opinion Research Center for the Federal Reserve Board. The <abbr class="spell">SCF</abbr> is considered the best survey for estimates of wealth, in part because its sample frame comprises a nationally representative sample of primary economic units (<abbr class="spell">PEU</abbr>s) supplemented by additional high-income families selected from income tax records (Cagetti and De Nardi 2008; Meijer, Karoly, and Michaud 2010). The <abbr class="spell">SCF</abbr> data provide evidence of the rising prevalence and value of tax-qualified retirement savings accounts over the past two decades.</p>
<h2>Offer, Participation, and <span class="nobr">Take-up</span> Rates</h2>
<p>The majority of <abbr class="spell">US</abbr> <span class="nobr">full-time</span> workers are offered a retirement plan by their employers (Table&nbsp;1). About <span class="nobr">three-quarters</span> of private sector <span class="nobr">full-time</span> workers and more than 90&nbsp;percent of state and local government <span class="nobr">full-time</span> workers are offered a plan. The percentage of all employees who participate in a retirement plan is the participation rate. The denominator of the participation rate includes all workers, whether offered a plan or not. The percentage of employees with employer plan offers who are actually enrolled in the plan is called the &quot;take-up rate&quot; (Dushi and Iams 2010). Participation and <span class="nobr">take-up</span> rates vary between private- and public-sector workers and by work hours. Rates are higher among <span class="nobr">full-time</span> workers than <span class="nobr">part-time</span> workers and they are higher among state and local government workers than among private-sector workers. The highest participation and <span class="nobr">take-up</span> rates are found among <span class="nobr">full-time</span> public-sector&nbsp;workers.</p>
<div class="table" id="table1">
<table>
<caption><span class="tableNumber">Table&nbsp;1. </span>Pension plan offer, participation, and <span class="nobr">take-up</span> rates by sector of employment, full- or <span class="nobr">part-time</span> status, and data source, 2009 (in&nbsp;percent)</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" id="c1">Hours of work and data source</th>
<th id="c2">Offer rate</th>
<th id="c3">Participation rate</th>
<th id="c4">Take-up rate</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" id="r1">Private sector</th>
</tr>
<tr>
<th class="stub0" id="r2" headers="r1 c1">Full-time</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" id="r3" headers="r1 r2 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r1 r2 r3 c2">76</td>
<td headers="r1 r2 r3 c3">61</td>
<td headers="r1 r2 r3 c4">80</td>
</tr>
<tr>
<th class="stub1" id="r4" headers="r1 r2 c1"><abbr>SIPP</abbr></th>
<td headers="r1 r2 r4 c2">75</td>
<td headers="r1 r2 r4 c3">66</td>
<td headers="r1 r2 r4 c4">88</td>
</tr>
<tr>
<th class="stub0" id="r5" headers="r1 c1">Part-time</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" id="r6" headers="r1 r5 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r1 r5 r6 c2">39</td>
<td headers="r1 r5 r6 c3">22</td>
<td headers="r1 r5 r6 c4">55</td>
</tr>
<tr>
<th class="stub1" id="r7" headers="r1 r5 c1"><abbr>SIPP</abbr></th>
<td headers="r1 r5 r7 c2">50</td>
<td headers="r1 r5 r7 c3">32</td>
<td headers="r1 r5 r7 c4">65</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" id="r8">State and local government</th>
</tr>
<tr>
<th class="stub0" id="r9" headers="r8 c1">Full-time</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" id="r10" headers="r8 r9 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r8 r9 r10 c2">99</td>
<td headers="r8 r9 r10 c3">95</td>
<td headers="r8 r9 r10 c4">96</td>
</tr>
<tr>
<th class="stub1" id="r11" headers="r8 r9 c1"><abbr>SIPP</abbr></th>
<td headers="r8 r9 r11 c2">93</td>
<td headers="r8 r9 r11 c3">88</td>
<td headers="r8 r9 r11 c4">95</td>
</tr>
<tr>
<th class="stub0" id="r12" headers="r8 c1">Part-time</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" id="r13" headers="r8 r12 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r8 r12 r13 c2">41</td>
<td headers="r8 r12 r13 c3">37</td>
<td headers="r8 r12 r13 c4">89</td>
</tr>
<tr>
<th class="stub1" id="r14" headers="r8 r12 c1"><abbr>SIPP</abbr></th>
<td headers="r8 r12 r14 c2">74</td>
<td headers="r8 r12 r14 c3">52</td>
<td headers="r8 r12 r14 c4">70</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="4">SOURCE: <abbr class="spell">BLS</abbr> (2009); authors' calculations based on the wave&nbsp;3 topical module of the <abbr>SIPP</abbr> 2008 panel matched to <span class="nobr">W-2</span> records. </td>
</tr>
<tr>
<td class="lastNote" colspan="4">NOTE: <abbr>SIPP</abbr> respondents are asked whether a plan is offered to anyone at the firm where they are employed, regardless of whether it is offered to the respondent. </td>
</tr>
</tfoot>
</table>
</div>
<p>Table&nbsp;2 shows that the <abbr class="spell">DC</abbr> plan was the type most widely held among <span class="nobr">full-time</span> private-sector workers, with about <span class="nobr">one-half</span> to <span class="nobr">three-fifths</span> participating (51&nbsp;percent in <abbr class="spell">NCS</abbr>, 61&nbsp;percent in <abbr>SIPP</abbr>). Only about <span class="nobr">one-quarter</span> (24&nbsp;percent) of <span class="nobr">full-time</span> private-sector workers participated in a <abbr class="spell">DB</abbr> plan. By contrast, the majority of <span class="nobr">full-time</span> state and local government workers participated in a <abbr class="spell">DB</abbr> plan (87&nbsp;percent in <abbr class="spell">NCS</abbr>, 73&nbsp;percent in <abbr>SIPP</abbr>), and <span class="nobr">one-fifth</span> to <span class="nobr">two-fifths</span> participated in a <abbr class="spell">DC</abbr> plan (20&nbsp;percent in <abbr class="spell">NCS</abbr>, 41&nbsp;percent in&nbsp;<abbr>SIPP</abbr>).</p>
<div class="table" id="table2">
<table>
<caption><span class="tableNumber">Table&nbsp;2. </span>Pension plan participation rate by type of plan, sector of employment, full- or <span class="nobr">part-time</span> status, and data source, 2009 (in&nbsp;percent)</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" id="c1">Hours of work and data source</th>
<th id="c2"><abbr class="spell">DB</abbr></th>
<th id="c3"><abbr class="spell">DC</abbr></th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="2" class="panel" id="r1">Private sector</th>
</tr>
<tr>
<th class="stub0" id="r2" headers="r1 c1">Full-time</th>
<td colspan="2"></td>
</tr>
<tr>
<th class="stub1" id="r3" headers="r1 r2 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r1 r2 r3 c2">24</td>
<td headers="r1 r2 r3 c3">51</td>
</tr>
<tr>
<th class="stub1" id="r4" headers="r1 r2 c1"><abbr>SIPP</abbr></th>
<td headers="r1 r2 r4 c2">24</td>
<td headers="r1 r2 r4 c3">61</td>
</tr>
<tr>
<th class="stub0" id="r5" headers="r1 c1">Part-time</th>
<td colspan="2"></td>
</tr>
<tr>
<th class="stub1" id="r6" headers="r1 r5 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r1 r5 r6 c2">9</td>
<td headers="r1 r5 r6 c3">16</td>
</tr>
<tr>
<th class="stub1" id="r7" headers="r1 r5 c1"><abbr>SIPP</abbr></th>
<td headers="r1 r5 r7 c2">17</td>
<td headers="r1 r5 r7 c3">20</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="2" class="panel" id="r8">State and local government</th>
</tr>
<tr>
<th class="stub0" id="r9" headers="r8 c1">Full-time</th>
<td colspan="2"></td>
</tr>
<tr>
<th class="stub1" id="r10" headers="r8 r9 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r8 r9 r10 c2">87</td>
<td headers="r8 r9 r10 c3">20</td>
</tr>
<tr>
<th class="stub1" id="r11" headers="r8 r9 c1"><abbr>SIPP</abbr></th>
<td headers="r8 r9 r11 c2">73</td>
<td headers="r8 r9 r11 c3">41</td>
</tr>
<tr>
<th class="stub0" id="r12" headers="r8 c1">Part-time</th>
<td colspan="2"></td>
</tr>
<tr>
<th class="stub1" id="r13" headers="r8 r12 c1"><abbr class="spell">NCS</abbr></th>
<td headers="r8 r12 r13 c2">34</td>
<td headers="r8 r12 r13 c3">5</td>
</tr>
<tr>
<th class="stub1" id="r14" headers="r8 r12 c1"><abbr>SIPP</abbr></th>
<td headers="r8 r12 r14 c2">44</td>
<td headers="r8 r12 r14 c3">45</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="onlyNote" colspan="3">SOURCE: <abbr class="spell">BLS</abbr> (2009); authors' calculations based on the wave&nbsp;3 topical module of the <abbr>SIPP</abbr> 2008 panel matched to <span class="nobr">W-2</span> records. </td>
</tr>
</tfoot>
</table>
</div>
<h2>Participation in <abbr class="spell">DC</abbr> Plans</h2>
<p>In 2009, about 68&nbsp;percent of all wage and salary workers younger than age 65 worked for employers that offered <abbr class="spell">DC</abbr> plans, and nearly 57&nbsp;percent participated in them (Table&nbsp;3). That represents a <span class="nobr">take-up</span> rate of about 83&nbsp;percent. The participation rate varies by age, marital status, education, sex, race/ethnicity, and earnings level. Younger workers, unmarried workers, those with less education, <span class="nobr">non-Hispanic</span> black workers, Hispanic workers, and those in the lower income quartiles all had below-average participation rates. Perhaps most striking, workers whose 2008 earnings were in the lowest earnings quartile had a participation rate in 2009 of only about 25&nbsp;percent, while those with earnings in the top quartile had a participation rate of about 81&nbsp;percent.<sup><a href="#mn5" id="mt5">5</a></sup> <span class="nobr">Take-up</span> rates for workers in the lowest quartile were also much lower than average.</p>
<div class="table" id="table3">
<table>
<caption><span class="tableNumber">Table&nbsp;3. </span>Tax-qualified retirement savings <abbr class="spell">DC</abbr> plan offer, participation, and <span class="nobr">take-up</span> rates: All wage and salary workers younger than age&nbsp;65, by selected characteristics, 2009 (in&nbsp;percent)</caption>
<colgroup span="1" style="width:18em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Characteristic</th>
<th scope="col">Offer rate</th>
<th scope="col">Participation rate</th>
<th scope="col">Take-up rate</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub2" scope="rowgroup">Total</th>
<td>67.9</td>
<td>56.6</td>
<td>83.4</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Age</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;64</span></th>
<td>70.3</td>
<td>60.2</td>
<td>85.6</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">45&ndash;54</span></th>
<td>72.2</td>
<td>62.8</td>
<td>87.0</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">35&ndash;44</span></th>
<td>70.5</td>
<td>59.9</td>
<td>85.0</td>
</tr>
<tr>
<th class="stub1" scope="row">Under 35</th>
<td>61.3</td>
<td>47.4</td>
<td>77.3</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Marital status</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row">Married</th>
<td>71.2</td>
<td>61.0</td>
<td>85.7</td>
</tr>
<tr>
<th class="stub1" scope="row">Never-married, widowed, or divorced</th>
<td>62.3</td>
<td>50.0</td>
<td>80.3</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Education</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row">College graduate</th>
<td>78.6</td>
<td>69.4</td>
<td>88.3</td>
</tr>
<tr>
<th class="stub1" scope="row">Some college</th>
<td>68.5</td>
<td>55.8</td>
<td>81.5</td>
</tr>
<tr>
<th class="stub1" scope="row">High school or less</th>
<td>58.4</td>
<td>46.2</td>
<td>79.1</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Sex</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row">Men</th>
<td>68.6</td>
<td>58.2</td>
<td>84.8</td>
</tr>
<tr>
<th class="stub1" scope="row">Women</th>
<td>67.2</td>
<td>55.0</td>
<td>81.8</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Race and ethnicity</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row">White, <span class="nobr">non-Hispanic</span></th>
<td>70.7</td>
<td>59.6</td>
<td>84.3</td>
</tr>
<tr>
<th class="stub1" scope="row">Black, <span class="nobr">non-Hispanic</span></th>
<td>63.5</td>
<td>50.0</td>
<td>78.7</td>
</tr>
<tr>
<th class="stub1" scope="row">Hispanic</th>
<td>53.1</td>
<td>43.9</td>
<td>79.7</td>
</tr>
<tr>
<th class="stub1" scope="row">Other <span class="nobr">non-Hispanic</span></th>
<td>67.5</td>
<td>57.9</td>
<td>85.8</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Individual earnings in 2008</th>
<td colspan="3"></td>
</tr>
<tr>
<th class="stub1" scope="row">Highest quartile</th>
<td>86.9</td>
<td>81.3</td>
<td>93.6</td>
</tr>
<tr>
<th class="stub1" scope="row">Second quartile</th>
<td>77.3</td>
<td>67.3</td>
<td>67.1</td>
</tr>
<tr>
<th class="stub1" scope="row">Third quartile</th>
<td>66.0</td>
<td>52.7</td>
<td>79.8</td>
</tr>
<tr>
<th class="stub1" scope="row">Lowest quartile</th>
<td>41.5</td>
<td>25.3</td>
<td>61.0</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="onlyNote" colspan="4">SOURCE: Authors' calculations based on the wave&nbsp;3 topical module of the <abbr>SIPP</abbr> 2008 panel matched to <span class="nobr">W-2</span> records. </td>
</tr>
</tfoot>
</table>
</div>
<h2>Contributions to <abbr class="spell">DC</abbr> Plans</h2>
<p>For <abbr class="spell">DC</abbr> plans, both the participation and contribution rates are much higher among higher earners. Table&nbsp;3 shows the relationship between contributions and earnings reported by <abbr>SIPP</abbr> respondents at a given time among a cross section of the population, using 2008 earnings quartiles. Table&nbsp;4 shows the relationship between contributions and earnings using <span class="nobr">10-year</span> annual real average earnings ranked by decile. Table&nbsp;4 uses earnings data from employer-provided <span class="nobr">W-2</span> records for 1996 through 2007 matched to results from the 2004 <abbr>SIPP</abbr> panel and indexed using the Consumer Price Index for Urban and Clerical Workers (<abbr class="spell">CPI</abbr>-W). These matched earnings data, which we believe are more accurate than self-reports, reveal noticeably higher participation and contribution rates among workers with higher earnings. The participation rate rises sharply from almost 6&nbsp;percent in the first (lowest) earnings decile to nearly 51&nbsp;percent in the sixth decile, and continues to rise to about 78&nbsp;percent in the tenth (highest) decile. The contribution rate (the percentage of salary contributed to a <abbr class="spell">DC</abbr> account) increases from about 3&nbsp;percent in the lowest decile to more than 7&nbsp;percent in the highest two deciles (Dushi, Iams, and Tamborini 2011).</p>
<div class="table" id="table4">
<table>
<caption><span class="tableNumber">Table&nbsp;4. </span>Participation and contribution rates in <abbr class="spell">DC</abbr> plans, by <span class="nobr">1997&ndash;2006</span> annual average earnings decile (in&nbsp;percent)</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">10-year annual average earnings decile</th>
<th scope="col">Participation rate</th>
<th scope="col">Contribution rate</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">1st (lowest)</th>
<td>5.5</td>
<td>3.4</td>
</tr>
<tr>
<th class="stub0" scope="row">2nd</th>
<td>15.8</td>
<td>4.0</td>
</tr>
<tr>
<th class="stub0" scope="row">3rd</th>
<td>26.6</td>
<td>4.0</td>
</tr>
<tr>
<th class="stub0" scope="row">4th</th>
<td>35.6</td>
<td>4.3</td>
</tr>
<tr>
<th class="stub0" scope="row">5th</th>
<td>42.7</td>
<td>4.6</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">6th</th>
<td>50.6</td>
<td>5.1</td>
</tr>
<tr>
<th class="stub0" scope="row">7th</th>
<td>53.2</td>
<td>5.3</td>
</tr>
<tr>
<th class="stub0" scope="row">8th</th>
<td>62.0</td>
<td>6.1</td>
</tr>
<tr>
<th class="stub0" scope="row">9th</th>
<td>69.6</td>
<td>7.4</td>
</tr>
<tr>
<th class="stub0" scope="row">10th (highest)</th>
<td>77.7</td>
<td>7.1</td>
</tr>
<tr class="shaded">
<th class="stub0" scope="row">Number of observations</th>
<td>21,235</td>
<td>9,350</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="3">SOURCE: Dushi, Iams, and Tamborini (2011).</td>
</tr>
<tr>
<td class="note" colspan="3">NOTES: Estimates are for workers aged&nbsp;<span class="nobr">35&ndash;61</span> with <span class="nobr">W-2</span> tax record earnings in 2006, weighted using 2004 <abbr>SIPP</abbr> weights. <span class="nobr">Ten-year</span> average reflects <span class="nobr">W-2</span> tax record real inflation indexed (<abbr class="spell">CPI</abbr>-W) earnings from 1997 to 2006.</td>
</tr>
<tr>
<td class="lastNote" colspan="3">All earnings are inflation-adjusted to 2006 dollars. The rates in each cell are calculated for that cell subsample.</td>
</tr>
</tfoot>
</table>
</div>
<h2>Account Balances</h2>
<p>Tax-qualified retirement accounts&mdash;such as <abbr class="spell">IRA</abbr>s and <span class="nobr">401(k)</span>-type <abbr class="spell">DC</abbr> plans&mdash;are growing in prevalence and value. Most money held in <abbr class="spell">DC</abbr> accounts upon job termination at older ages is &quot;rolled over&quot; to <abbr class="spell">IRA</abbr>s, and most <abbr class="spell">IRA</abbr> money reflects rollovers rather than direct investments (Sabelhaus and Schrass 2009; Holden and Schrass 2010; Bryant, Holden, and Sabelhaus 2011). Some <abbr class="spell">DB</abbr> plans also offer <span class="nobr">lump-sum</span> distributions (<abbr class="spell">BLS</abbr> 2009, 2010). <abbr>SIPP</abbr> data show that the proportion of individuals holding either an <abbr class="spell">IRA</abbr> or a <abbr class="spell">DC</abbr> account increased from less than <span class="nobr">one-quarter</span> to over <span class="nobr">one-third</span> between 1998 and 2009 (Chart&nbsp;1). The prevalence was much higher among those aged&nbsp;<span class="nobr">65&ndash;69</span> than among those aged&nbsp;70 or older in each year, although the difference between age groups has decreased in recent&nbsp;years.</p>
<div class="chartCenter">
<div class="chart700" id="chart1">
<div class="title">Chart&nbsp;1.<br>Share of individuals aged&nbsp;65 or older who have an <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span>: 1998, 2006, and 2009</div>
<div class="scrollChart"><img src="v72n3p59-chart01.gif" alt="Bar chart with tabular version below." width="345" height="330" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;1. </span>Share of individuals aged&nbsp;65 or older who have an <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span>: 1998, 2006, and 2009</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">65 to 69</th>
<th scope="col">70 or older</th>
<th scope="col">All persons 65 or older</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">1998</th>
<td>37.1</td>
<td>18.8</td>
<td>24.3</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>43.0</td>
<td>31.2</td>
<td>34.6</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>45.3</td>
<td>33.8</td>
<td>37.4</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="4">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: Authors' calculations based on <abbr>SIPP</abbr> 1996, 2004, and 2008 panels.</div>
</div>
</div>
<p>The <abbr class="spell">SCF</abbr> collects detailed financial data, including holdings in different forms of tax-qualified retirement accounts such as <abbr class="spell">IRA</abbr>s and employer-sponsored <abbr class="spell">DC</abbr> plans, every 3&nbsp;years. The <abbr class="spell">SCF</abbr> also indicates that tax-qualified retirement savings plans increased over time in both prevalence and value.<sup><a href="#mn6" id="mt6">6</a></sup></p>
<p><abbr class="spell">SCF</abbr> data show that the prevalence and value of retirement accounts increased dramatically in the last two decades in younger and older households alike. The prevalence among <abbr class="spell">PEU</abbr>s headed by a person aged&nbsp;65 or older increased from about <span class="nobr">one-fifth</span> in 1992 to about <span class="nobr">two-fifths</span> in 2007 (Chart&nbsp;2). The prevalence of tax-qualified retirement accounts is higher among younger households in four of the six periods (Table&nbsp;5), and the prevalence and value of accounts among <abbr class="spell">PEU</abbr>s with heads aged&nbsp;65 or older was higher for those with at least some college education than for those without (Tables&nbsp;5 and 6).</p>
<div class="chartCenter">
<div class="chart700" id="chart2">
<div class="title">Chart&nbsp;2.<br>Percentage of households headed by persons aged&nbsp;65 or older that have financial assets in retirement savings accounts, selected years <span class="nobr">1992&ndash;2007</span></div>
<div class="scrollChart"><img src="v72n3p59-chart02.gif" alt="Line chart with tabular version below." width="344" height="326" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;2. </span>Percentage of households headed by persons aged&nbsp;65 or older that have financial assets in retirement savings accounts, selected years <span class="nobr">1992&ndash;2007</span></caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">Percent</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">1992</th>
<td>22.8</td>
</tr>
<tr>
<th class="stub0" scope="row">1995</th>
<td>27.3</td>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>32.1</td>
</tr>
<tr>
<th class="stub0" scope="row">2001</th>
<td>36.5</td>
</tr>
<tr>
<th class="stub0" scope="row">2004</th>
<td>36.1</td>
</tr>
<tr>
<th class="stub0" scope="row">2007</th>
<td>40.8</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="2">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: <abbr class="spell">SCF</abbr>.</div>
</div>
</div>
<div class="table" id="table5">
<table>
<caption><span class="tableNumber">Table&nbsp;5. </span>Percentage of primary economic units with holdings in all tax-qualified retirement savings accounts, by selected characteristics of unit head, selected years <span class="nobr">1992&ndash;2007</span></caption>
<colgroup span="1" style="width:14em"></colgroup>
<colgroup span="6" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col"><abbr class="spell">PEU</abbr> head characteristic</th>
<th scope="col">1992</th>
<th scope="col">1995</th>
<th scope="col">1998</th>
<th scope="col">2001</th>
<th scope="col">2004</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="rowgroup">Age</th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">45&ndash;54</span></th>
<td>51.9</td>
<td>57.4</td>
<td>59.3</td>
<td>63.7</td>
<td>58.2</td>
<td>65.4</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;64</span></th>
<td>53.1</td>
<td>51.0</td>
<td>58.3</td>
<td>59.8</td>
<td>63.5</td>
<td>61.2</td>
</tr>
<tr>
<th class="stub1" scope="row">65 or older</th>
<td>22.8</td>
<td>27.3</td>
<td>32.1</td>
<td>36.5</td>
<td>36.1</td>
<td>40.8</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Education <sup>a</sup></th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row">High school diploma or less</th>
<td>16.4</td>
<td>19.9</td>
<td>22.0</td>
<td>23.0</td>
<td>26.3</td>
<td>29.1</td>
</tr>
<tr>
<th class="stub1" scope="row">Some college or more</th>
<td>37.0</td>
<td>40.4</td>
<td>49.0</td>
<td>57.5</td>
<td>50.2</td>
<td>59.1</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: <abbr class="spell">SCF</abbr>. </td>
</tr>
<tr>
<td class="note" colspan="7">NOTE: Tax-qualified retirement savings plans include <abbr class="spell">IRA</abbr>s, Keoghs, and <span class="nobr">401(k)</span>-type accounts. All observations are weighted for analysis. </td>
</tr>
<tr>
<td class="lastNote" colspan="7">a. Restricted to <abbr class="spell">PEU</abbr> heads aged&nbsp;65 or older.</td>
</tr>
</tfoot>
</table>
</div>
<div class="table" id="table6">
<table>
<caption><span class="tableNumber">Table&nbsp;6. </span>Median assets in all tax-qualified retirement savings accounts held by heads of primary economic units, by selected characteristics of unit head, selected years <span class="nobr">1992&ndash;2007</span> (2007&nbsp;dollars)</caption>
<colgroup span="1" style="width:14em"></colgroup>
<colgroup span="6" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col"><abbr class="spell">PEU</abbr> head characteristic <sup>a</sup></th>
<th scope="col">1992</th>
<th scope="col">1995</th>
<th scope="col">1998</th>
<th scope="col">2001</th>
<th scope="col">2004</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="rowgroup">Age</th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">45&ndash;54</span></th>
<td>40,500</td>
<td>37,900</td>
<td>44,600</td>
<td>56,100</td>
<td>61,000</td>
<td>63,000</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;64</span></th>
<td>43,400</td>
<td>43,300</td>
<td>59,800</td>
<td>64,300</td>
<td>91,200</td>
<td>100,000</td>
</tr>
<tr>
<th class="stub1" scope="row">65 or older</th>
<td>28,900</td>
<td>36,500</td>
<td>44,600</td>
<td>66,700</td>
<td>60,400</td>
<td>60,800</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Education <sup>b</sup></th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row">High school diploma or less</th>
<td>23,200</td>
<td>24,500</td>
<td>31,800</td>
<td>32,700</td>
<td>32,900</td>
<td>35,000</td>
</tr>
<tr>
<th class="stub1" scope="row">Some college or more</th>
<td>36,200</td>
<td>54,100</td>
<td>59,800</td>
<td>114,600</td>
<td>93,400</td>
<td>116,000</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: <abbr class="spell">SCF</abbr>. </td>
</tr>
<tr>
<td class="note" colspan="7">NOTE: Tax-qualified retirement savings plans include <abbr class="spell">IRA</abbr>s, Keoghs, and <span class="nobr">401(k)</span>-type accounts. All observations are weighted for analysis. Values indexed to 2007 dollars with the <abbr class="spell">CPI</abbr>-U-<abbr class="spell">RS</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="7">a. Restricted to <abbr class="spell">PEU</abbr>s with positive asset holding values.</td>
</tr>
<tr>
<td class="lastNote" colspan="7">b. Restricted to <abbr class="spell">PEU</abbr> heads aged&nbsp;65 or older.</td>
</tr>
</tfoot>
</table>
</div>
<p>Among <abbr class="spell">PEU</abbr>s headed by persons aged&nbsp;65 or older, the median real value of retirement accounts more than doubled, from $28,900 to $60,800, over the period from 1992 to 2007 (Table&nbsp;6 and Chart&nbsp;3). Table&nbsp;6 also shows that the <span class="nobr">55&ndash;64</span> age group generally has the highest median account balances. </p>
<div class="chartCenter">
<div class="chart700" id="chart3">
<div class="title">Chart&nbsp;3.<br>Median value of assets held in retirement savings accounts among households headed by people aged&nbsp;65 or&nbsp;older</div>
<div class="scrollChart"><img src="v72n3p59-chart03.gif" alt="Line chart with tabular version below." width="344" height="327" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;3. </span>Median value of assets held in retirement savings accounts among households headed by people aged&nbsp;65 or&nbsp;older</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">Assets (thousands of dollars)</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">1992</th>
<td>28.9</td>
</tr>
<tr>
<th class="stub0" scope="row">1995</th>
<td>36.5</td>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>44.6</td>
</tr>
<tr>
<th class="stub0" scope="row">2001</th>
<td>66.7</td>
</tr>
<tr>
<th class="stub0" scope="row">2004</th>
<td>60.4</td>
</tr>
<tr>
<th class="stub0" scope="row">2007</th>
<td>60.8</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="2">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: <abbr class="spell">SCF</abbr>.</div>
</div>
</div>
<p>Table&nbsp;7 shows the proportion of total <abbr class="spell">PEU</abbr> financial assets that are attributable to tax-qualified retirement account holdings. It reveals that in 2007, larger proportions of financial assets were held in tax-qualified retirement accounts than were held in 1992. The proportion increased more rapidly for <abbr class="spell">PEU</abbr>s headed by persons aged&nbsp;65 or older than for those headed by persons aged&nbsp;<span class="nobr">45&ndash;64.</span> The increases also were strong among <abbr class="spell">PEU</abbr>s headed by persons with at least some college&nbsp;education.</p>
<div class="table" id="table7">
<table>
<caption><span class="tableNumber">Table&nbsp;7. </span>Median ratio of assets held in all tax-qualified retirement savings accounts to overall financial assets of primary economic unit, by selected characteristics of unit head, selected years <span class="nobr">1992&ndash;2007</span></caption>
<colgroup span="1" style="width:14em"></colgroup>
<colgroup span="6" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col"><abbr class="spell">PEU</abbr> head characteristic </th>
<th scope="col">1992</th>
<th scope="col">1995</th>
<th scope="col">1998</th>
<th scope="col">2001</th>
<th scope="col">2004</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="rowgroup">Age </th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">45&ndash;54</span></th>
<td>57.8</td>
<td>55.1</td>
<td>55.2</td>
<td>58.7</td>
<td>67.2</td>
<td>72.4</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;64</span></th>
<td>46.4</td>
<td>44.4</td>
<td>52.7</td>
<td>45.8</td>
<td>64.0</td>
<td>66.3</td>
</tr>
<tr>
<th class="stub1" scope="row">65 or older</th>
<td>27.2</td>
<td>33.3</td>
<td>31.0</td>
<td>35.2</td>
<td>34.1</td>
<td>40.5</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Education <sup>a</sup></th>
<td colspan="6"></td>
</tr>
<tr>
<th class="stub1" scope="row">High school diploma or less</th>
<td>29.6</td>
<td>32.3</td>
<td>33.1</td>
<td>39.2</td>
<td>35.3</td>
<td>41.6</td>
</tr>
<tr>
<th class="stub1" scope="row">Some college or more</th>
<td>21.6</td>
<td>33.8</td>
<td>29.4</td>
<td>30.0</td>
<td>33.7</td>
<td>40.1</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: <abbr class="spell">SCF</abbr>. </td>
</tr>
<tr>
<td class="note" colspan="7">NOTE: Tax-qualified retirement savings plans include <abbr class="spell">IRA</abbr>s, Keoghs, and <span class="nobr">401(k)</span>-type accounts. Financial assets include funds held in bank transaction accounts, certificates of deposits, directly held mutual funds, stocks, bonds, retirement plan investment accounts, savings bonds, cash value of whole life insurance, other managed assets, and other financial assets. All observations are weighted for analysis. </td>
</tr>
<tr>
<td class="lastNote" colspan="7">a. Restricted to <abbr class="spell">PEU</abbr> heads aged&nbsp;65 or older.</td>
</tr>
</tfoot>
</table>
</div>
<h2>Income from Pensions</h2>
<p>In addition to questions about income from traditional <abbr class="spell">DB</abbr> pension plans, the <abbr>SIPP</abbr> asks respondents whether they took distributions from <abbr class="spell">IRA</abbr>s or <span class="nobr">401(k)</span>-type retirement plans.<sup><a href="#mn7" id="mt7">7</a></sup> Looking at individual planholders aged&nbsp;65 or older, almost <span class="nobr">one-half</span> reported taking a distribution in 1998, and over <span class="nobr">one-half</span> did so in 2006 (Chart&nbsp;4). However, by about 10&nbsp;percentage points, fewer people reported taking a distribution in 2009 than did in 2006. People aged&nbsp;70 or older are much more likely to have reported distributions from retirement plans than are those aged&nbsp;<span class="nobr">65&ndash;69.</span> This is due in part to the federal law that requires withdrawals to be taken starting in the year after the account holder reaches age&nbsp;70&frac12;. That law was suspended for 1&nbsp;year in 2009 to allow retirement accounts to recover from the 2008 stock market crash.</p>
<div class="chartCenter">
<div class="chart700" id="chart4">
<div class="title">Chart&nbsp;4.<br>Shares of <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span> holders aged&nbsp;65 or older who take withdrawals: 1998, 2006, and 2009</div>
<div class="scrollChart"><img src="v72n3p59-chart04.gif" alt="Bar chart with tabular version below." width="345" height="329" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;4. </span>Shares of <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span> holders aged&nbsp;65 or older who take withdrawals: 1998, 2006, and 2009</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">65 to 69</th>
<th scope="col">70 or older</th>
<th scope="col">All persons 65 or older</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">1998</th>
<td>20.9</td>
<td>70.4</td>
<td>47.8</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>22.0</td>
<td>72.4</td>
<td>54.5</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>20.1</td>
<td>59.2</td>
<td>44.3</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="4">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: Authors' calculations based on <abbr>SIPP</abbr> 1996, 2004, and 2008 panels.</div>
</div>
</div>
<p>Based on the <abbr>SIPP</abbr> data, about <span class="nobr">one-half</span> of persons aged&nbsp;65 or older reported <abbr class="spell">DB</abbr> pension income in 2009 (Chart&nbsp;5). Younger retirees (aged&nbsp;<span class="nobr">65&ndash;69</span>) have higher <abbr class="spell">DB</abbr> pension income than older retirees as measured by means or medians (Chart&nbsp;6). The lower pension income of older retirees reflects both lower lifetime average earnings and the fact that most <abbr class="spell">DB</abbr> pensions do not provide cost-of-living adjustments.</p>
<div class="chartCenter">
<div class="chart700" id="chart5">
<div class="title">Chart&nbsp;5.<br>Percentage of individuals aged&nbsp;65 or older who have pension income, by plan type: 1998, 2006, and 2009</div>
<div class="scrollChart"><img src="v72n3p59-chart05.gif" alt="Bar chart with tabular version below." width="700" height="366" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;5. </span>Percentage of individuals aged&nbsp;65 or older who have pension income, by plan type: 1998, 2006, and 2009</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">65 to 69</th>
<th scope="col">70 or older</th>
<th scope="col">All persons 65 or older</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup"><abbr class="spell">DB</abbr></th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>48.1</td>
<td>51.4</td>
<td>50.4</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>42.8</td>
<td>51.4</td>
<td>48.9</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>44.0</td>
<td>51.9</td>
<td>49.4</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup"><abbr class="spell">DC</abbr></th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>8.0</td>
<td>13.5</td>
<td>11.8</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>10.0</td>
<td>23.4</td>
<td>19.5</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>9.8</td>
<td>20.9</td>
<td>17.4</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="4">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: Authors' calculations based on <abbr>SIPP</abbr> 1996, 2004, and 2008 panels.</div>
</div>
</div>
<div class="chartCenter">
<div class="chart700" id="chart6">
<div class="title">Chart&nbsp;6.<br>Mean and median annual <abbr class="spell">DB</abbr> pension income among people aged&nbsp;65 or older with a <abbr class="spell">DB</abbr> pension: 1998, 2006, and 2009</div>
<div class="scrollChart"><img src="v72n3p59-chart06.gif" alt="Bar chart with tabular version below." width="700" height="367" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;6. </span>Mean and median annual <abbr class="spell">DB</abbr> pension income among people aged&nbsp;65 or older with a <abbr class="spell">DB</abbr> pension: 1998, 2006, and 2009</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">65 to 69</th>
<th scope="col">70 or older</th>
<th scope="col">All persons 65 or older</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup">Mean</th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>12.8</td>
<td>9.0</td>
<td>11.3</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>16.0</td>
<td>13.0</td>
<td>13.8</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>16.7</td>
<td>12.0</td>
<td>14.8</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup">Median</th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>10.7</td>
<td>6.9</td>
<td>7.4</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>12.0</td>
<td>8.7</td>
<td>9.2</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>14.0</td>
<td>9.6</td>
<td>10.2</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="4">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: Authors' calculations based on <abbr>SIPP</abbr> 1996, 2004, and 2008 panels.</div>
</div>
</div>
<p>Despite the shift from traditional <abbr class="spell">DB</abbr> pensions to <abbr class="spell">DC</abbr> plans over the past 30&nbsp;years, income among the aged from traditional <abbr class="spell">DB</abbr> pensions is still much more prevalent and much higher than income from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s. The proportion of people aged&nbsp;65 or older with distributions from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s increased from about <span class="nobr">one-tenth</span> in 1998 to almost <span class="nobr">one-fifth</span> in 2006 (Chart&nbsp;5). The proportion then declined slightly, to about 17&nbsp;percent in 2009. Distributions were more prevalent among those aged&nbsp;70 or older, and the prevalence declined slightly from 2006 to 2009. At both the mean and median levels, income from <abbr class="spell">DB</abbr> plans (Chart&nbsp;6) exceeds distributions from <abbr class="spell">DC</abbr> retirement savings plans (Chart&nbsp;7). Future retirees can have higher income from <abbr class="spell">DC</abbr> plans than current retirees because they will have participated in <abbr class="spell">DC</abbr> plans for more years than current retirees.</p>
<div class="chartCenter">
<div class="chart700" id="chart7">
<div class="title">Chart&nbsp;7.<br>Mean and median annual <abbr class="spell">DC</abbr> pension income of people aged&nbsp;65 or older with an <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span>: 1998, 2006, and 2009</div>
<div class="scrollChart"><img src="v72n3p59-chart07.gif" alt="Bar chart with tabular version below." width="700" height="367" /></div>
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
<table>
<caption><span class="tableNumber">Table equivalent for Chart&nbsp;7. </span>Mean and median annual <abbr class="spell">DC</abbr> pension income of people aged&nbsp;65 or older with an <abbr class="spell">IRA</abbr> or <span class="nobr">401(k)</span>: 1998, 2006, and 2009</caption>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="3" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Year</th>
<th scope="col">65 to 69</th>
<th scope="col">70 or older</th>
<th scope="col">All persons 65 or older</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup">Mean</th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>12.8</td>
<td>6.4</td>
<td>7.7</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>9.6</td>
<td>7.1</td>
<td>7.5</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>10.0</td>
<td>6.4</td>
<td>7.1</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="3" class="panel" scope="rowgroup">Median</th>
</tr>
<tr>
<th class="stub0" scope="row">1998</th>
<td>4.6</td>
<td>2.3</td>
<td>2.6</td>
</tr>
<tr>
<th class="stub0" scope="row">2006</th>
<td>5.3</td>
<td>2.7</td>
<td>3.0</td>
</tr>
<tr>
<th class="stub0" scope="row">2009</th>
<td>4.8</td>
<td>2.4</td>
<td>2.8</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="noNotes" colspan="4">&nbsp;</td>
</tr>
</tfoot>
</table>
</div>
<div class="onlyNote">SOURCE: Authors' calculations based on <abbr>SIPP</abbr> 1996, 2004, and 2008 panels.</div>
</div>
</div>
<p>The data suggest that retirement savings plans such as <span class="nobr">401(k)</span>-type <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s have increased in importance among the aged over the past two decades as an asset holding and as an income source. The pattern among current <span class="nobr">full-time</span> workers in 2009 indicates that retirement accounts will have increasing importance among future retirees, and likely will be the predominant retirement income source within a couple of decades.</p>
<h2>Conclusion</h2>
<p>The data presented in this article show that the tax-qualified retirement savings plan is the predominant plan among workers in the early 21<sup>st</sup> century. Both the prevalence and value of these accounts have risen dramatically in the past 20&nbsp;years. The shift toward greater distributions from <abbr class="spell">DC</abbr> plans and <abbr class="spell">IRA</abbr>s raises important questions about the accuracy of the <abbr class="spell">CPS</abbr> measures of the number of households that take such distributions and the proportion of household income derived from such accounts. As Sabelhaus and Schrass (2009, 19) wrote of the <abbr class="spell">CPS</abbr>: &quot;while <abbr class="spell">IRA</abbr> withdrawals have risen in importance as a source of retirement income, the most widely cited income measure has failed to capture that growth. Looking ahead, that trend is likely to continue.&quot; That measurement gap applies to money withdrawn from all tax-qualified retirement savings plans, not just <abbr class="spell">IRA</abbr>s. The major nationally representative surveys of household income must accurately measure annual distributions from retirement accounts in order to provide a complete picture of the economic well-being of the aged and the general US population. That may require the survey questions to be revised to inquire more directly about distributions from retirement accounts, whether taken as lump sums, regular distributions, or irregular periodic withdrawals.</p>
<div id="notes">
<h2>Notes</h2>
<p>&ensp;<a href="#mt1" id="mn1">1</a> See Holzmann and Hinz (2005) for a discussion of a multipillar approach to <span class="nobr">old-age</span> income security.</p>
<p>&ensp;<a href="#mt2" id="mn2">2</a> Qualified distributions from Roth <abbr class="spell">IRA</abbr>s are not taxable because the contributions were taxed in the year they were made. About 40&nbsp;percent of households with an <abbr class="spell">IRA</abbr> have a Roth <abbr class="spell">IRA</abbr>, but Roth <abbr class="spell">IRA</abbr>s hold only about 5&nbsp;percent of all <abbr class="spell">IRA</abbr> assets (Holden and Schrass&nbsp;2011).</p>
<p>&ensp;<a href="#mt3" id="mn3">3</a> However, the <abbr class="spell">CPS</abbr> underreported pension income even when most pensioners participated in traditional <abbr class="spell">DB</abbr> plans.</p>
<p>&ensp;<a href="#mt4" id="mn4">4</a> The <abbr>SIPP</abbr> data on type of pension are from the Retirement and Pension Plan topical module (the third wave) in the 2008 panel. We adjust the <abbr>SIPP</abbr> survey results with data on deferred contributions in <abbr class="spell">SSA</abbr> earnings records. <abbr class="spell">SSA</abbr> and Census Bureau linked the earnings data derived from <span class="nobr">W-2</span> payroll tax records for about 90&nbsp;percent of the <abbr>SIPP</abbr> respondents. Prior research has found that <abbr>SIPP</abbr> respondents tend to underreport <abbr class="spell">DC</abbr> plan participation, as indicated by positive deferred contributions in their earnings records (Dushi and Iams&nbsp;2010).</p>
<p>&ensp;<a href="#mt5" id="mn5">5</a> Workers whose 2008 Form <span class="nobr">W-2</span> recorded earnings above $56,376 were in the top quartile. Workers with earnings less than or equal to $20,946 were in the lowest earnings quartile. Median earned income in 2008 was $35,705.</p>
<p>&ensp;<a href="#mt6" id="mn6">6</a> We index the values with the Consumer Price Index for All Urban Consumers (<abbr class="spell">CPI</abbr>-U-<abbr class="spell">RS</abbr>); see Bucks and others (2009, Table A.1). The <abbr class="spell">SCF</abbr> is conducted with the cooperation of the Statistics of Income Division of the Internal Revenue Service. It includes data on household assets and debts, use of financial services, income, demographics, and labor force participation.</p>
<p>&ensp;<a href="#mt7" id="mn7">7</a> The <abbr>SIPP</abbr> core asks about all sources of income in the previous <span class="nobr">4-month</span> reference period. Merging the core files for three consecutive waves of the survey provides a picture of income sources and amounts over a full year.</p>
</div>
<div id="references">
<h2>References</h2>
<p><abbr class="spell">BLS</abbr>. <i>See</i> Bureau of Labor Statistics.</p>
<p>Bosworth, Barry&nbsp;P., Gary Burtless, and Sarah&nbsp;E. Anders. 2007. &quot;Capital Income Flows and the Relative Well-Being of America's Aged Population.&quot; <abbr class="spell">CRRB</abbr> Working Paper <abbr title="Number">No.</abbr>&nbsp;2007-21. Cambridge, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College.</p>
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<p>Federal Interagency Forum on Aging Related Statistics. 2012. <i>Older Americans 2012: Key Indicators of Well-Being 2012. </i>Washington, <abbr class="spell">DC</abbr>: Government Printing Office. <a href="https://agingstats.gov/">http://www.agingstats.gov/agingstatsdotnet/Main_Site/Data/Data_2012.aspx</a>.</p>
<p>Federal Retirement Thrift Investment Board. 2012. &quot;Thrift Savings Fund Statistics.&quot; Fairfax, <abbr title="Virginia">VA</abbr>: <abbr class="spell">FRTIB</abbr>. http://www.frtib.gov/pdf/minutes/MM-2012Jan-Att1.pdf.</p>
<p>Holden, Sarah, and Daniel Schrass. 2010. &quot;The Role of <abbr class="spell">IRA</abbr>s in <abbr>U.S.</abbr> Households' Saving for Retirement, 2010.&quot; <i>Research Fundamentals</i> 19(8). <a href="https://www.ici.org/system/files/attachments/pdf/fm-v19n8.pdf">http://www.ici.org/pdf/fm-v19n8.pdf</a>.</p>
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<p>Holzmann, Robert, and Richard Hinz. 2005. <i><span class="nobr">Old-Age</span> Income Support in the 21<sup>st</sup> Century: An International Perspective on Pension Systems and Reform.</i> Washington, <abbr class="spell">DC</abbr>: The World Bank.</p>
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<p>[<abbr class="spell">SSA</abbr>] Social Security Administration. 2012. <i>Income of the Population 55 or Older, 2010.</i> Washington, <abbr class="spell">DC</abbr>: <abbr class="spell">SSA</abbr>. <a href="/policy/docs/statcomps/income_pop55/index.html">http://www.socialsecurity.gov/policy/docs/statcomps/income_pop55/index.html</a>.</p>
<p>Woods, John&nbsp;R. 1996. &quot;Pension Benefits Among the Aged: Conflicting Measures, Unequal Distributions.&quot; <i>Social Security Bulletin</i> 59(3): <span class="nobr">3&ndash;30.</span> <a href="/policy/docs/ssb/v59n3/v59n3p3.pdf">http://www.socialsecurity.gov/policy/docs/ssb/v59n3/v59n3p3.pdf</a>.</p>
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