Wednesday, June 03, 2015

New Data Reveals Missing Income of Older Americans

Older Americans are the only segment of the population that did not lose ground during the Great Recession. The median income of households headed by people aged 65 or older climbed 12 percent between 2007 and 2013, after adjusting for inflation. Every other age group saw its median household income decline, according to the Census Bureau's Current Population Survey.

Now we find out that the 65-plus population has been faring even better than those numbers suggest—9.1 percent better, in fact. That's because the Current Population Survey income statistics do not include withdrawals from IRAs or 401(k)s unless they are taken as annuities. According to an analysis by the Employee Benefit Research Institute (EBRI), when all withdrawals from IRAs and 401(k)s are counted, the aggregate income of the 65-plus population rises by 9.1 percent. The IRA and 401(k) income received by the elderly rises by 250 percent.

The Census Bureau is well aware of this shortcoming in its income statistics and is doing something about it. For this analysis, EBRI used the results of a Census Bureau test of revised income questions included in the 2014 Current Population Survey. In years to come, we may see a rise in the incomes of the elderly because of this methodological change.

Source: Employee Benefit Research Institute, Examining the New Income Measure in the Current Population Survey

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