Income Composition, Income Trends, and Income Shortfalls of Older Households

February 2013
EBRI Issue Brief #383
Paperback, 20 pp.
PDF, 1,687 kb
Employee Benefit Research Institute, 2013

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Executive Summary

  • For all age groups above 65, Social Security remains the primary source of income. In 2009, households ages 65–74 and households with members age 85 or above received 54 percent and 66 percent of their total household incomes, respectively, from Social Security benefits.
  • The importance of Social Security income increases with age. For households that had members ages 65–69 in 2001, the share of household income derived from Social Security rose from 47 percent in 2001 to almost 60 percent in 2009.
  • Income from pensions and annuities is the second-largest source of income for older households. In 2009, households ages 65–74 received 17.1 percent and households above age 85 received 15.3 percent of their incomes from pensions and annuities.
  • In 2009, two-fifths of households with members age 65 and above had incomes less than their expenditures—meaning they had deficits.
  • In 2009, 14.3 percent of households with members age 65 and above had spending that exceeded 75 per-cent of their household incomes.
  • Households that face income shortfalls not only have much lower levels of assets, they spend down their liquid assets at a faster rate than households with no income shortfalls.
  • The probability of running into an income shortfall is much higher for those with lower incomes. In 2009, 66.4 percent of households age 65 or older in the bottom-income quartile faced income deficits, while only 6.8 percent in the top-income quartile faced such shortfalls.
  • Median home- and health-related expenses, as well as median total expenses, are much higher for households that face income shortfalls, even if they have lower levels of income.
  • Singles, households with no pensions, African-Americans, and Hispanics have larger shares of households with income deficits.