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401(k)-Type Plan and IRA Ownership; Income of the Elderly Population: 2003
January 2005, Vol. 26, No. 1
Paperback, 16 pp.
PDF, 728 kb
Employee Benefit Research Institute, 2005
401(k)-Type Plan and IRA Ownership
The share of workers ages 21–64 owning only a 401(k)-type plan increased from 18.2 percent at the end of 1996 to 21.7 percent at the end of 2002. At the same time, the percentage of these workers owning both an IRA and a 401(k)-type plan increased from 5.9 percent to 9.2 percent, while the percentage owning only an IRA remained basically unchanged at about 10 percent. Consequently, the percentage of these workers who owned at least one of these types of plans increased from less than 35 percent in 1996 to more than 40 percent in 2002.
The average 401(k)-type plan balance for workers ages 21–64 increased from $25,208 in 1996 to $33,647 in 2002, while the average IRA balance increased from $23,025 to $26,951 during the same time. The percentage of those who contributed the maximum dollar amount to their 401(k)-type plan allowed by the IRS rose from 3.2 percent in 1996 to 5.6 percent in 2001.
The driving force behind higher balances in individual accounts is the number of years a worker contributes to a plan: 13 or more years of contributing is the point at which the balances appear to reach a level significant enough to fund a number of years of retirement as a supplement to Social Security. However, less than 20 percent of the 401(k)-type participants have reached this threshold of contributing.
Income of the Elderly Population: 2003
The median income level of the elderly population increased from $11,376 (in constant 2003 dollars) in 1974 to $15,007 in 1999. By 2003, the median income of the elderly had declined to $14,400. The average income of the elderly followed a similar pattern over this period.
In 2003, Social Security was the largest source of income for those currently age 65 and older, accounting for 41.9 percent of their income on average. Pension and retirement plan income was 20.6 percent, income from assets 13.9 percent, and earnings 21.7 percent. Elderly women derived a greater share of their income from Social Security and assets than elderly men in 2003, 50.8 percent compared with 35.5 percent.
In 2003, the lowest income quintile of the elderly (age 65 or older) received 91.2 percent of its income from Social Security, and the highest income quintile received 19.5 percent of its income from Social Security.
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