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Here’s where most Americans are really getting their retirement income

By Al_Sharpton_for_President follow Al_Sharpton_for_President   2020 Jan 17, 9:50am 514 views   9 comments   watch   nsfw   quote   share    

The so-called three-legged stool of retirement income — Social Security, pensions and savings — is becoming less accessible for many Americans.

Instead, many individuals ages 60 and up are increasingly relying on just one source — Social Security — for money in retirement.

That limited income has big implications for retirees, depending on their gender and race. It also shows why proposals to protect Social Security benefits could make a big difference, according to researchers.

Retirement income is often thought to come from three sources: Social Security, pensions and savings.

That combination is often called a three-legged stool, a metaphor for the money retirees use to support themselves once they are no longer working full time.

However, a new report finds that very few retirees actually have income from all three sources.

Just 6.8% of older Americans ages 60 and up who work less than 30 hours per week get money from Social Security, pensions (also called defined benefit plans) and workplace retirement savings like a 401(k) (also known as defined contribution plans), according to the National Institute on Retirement Security.

Meanwhile, many individuals in that age category – 40.2% – receive income through Social Security only.

Even more troubling, 14.9% have no income from a pension, savings or Social Security.

The research is based on 2014 data, and only reflects where retirees currently get their income, the researchers said. Those sources are expected to change, particularly as traditional pensions get phased out.

Haves vs. have-nots

Households with all three income sources – Social Security, pensions and savings – had the highest total annual income, with a median $37,440.

Meanwhile, those with no support from those three sources had the lowest total household income, with a median $8,904. Those in the no-income category likely either have not yet started collecting retirement payments or may be economically challenged and receiving government assistance, according to the study.

Gender and race play a role

Retirement income also varies by gender and race, according to the research.

Couples generally had a higher median total at $52,116, versus $23,064 for unmarried men and $19,764 for unmarried women.

Unmarried men and women were more likely to rely on Social Security for their sole source of retirement income, with 39.2% and 42.3%, respectively. That’s in comparison to 23.8% for couples.

Older white individuals also had higher retirement incomes compared to blacks or Hispanics, the two minorities measured by the data.

Median total retirement income for white individuals was $23,292, versus $16,863 for blacks and $13,560 for Hispanics.

While 39.2% of white individuals rely on just Social Security checks, that was higher for blacks, at 44.8%, and Hispanics, with 45.9%.

Implications for Social Security

With almost 90% of older Americans receiving Social Security benefits, it is the dominant source of retirement income, according to the research.

Yet for many elder Americans, those Social Security checks still fall short of what they need.

That’s because Social Security replaces just 40% of pre-retirement income, on average. Meanwhile, most financial experts recommend a 70% income replacement rate, the study said.

Those findings are in line with recent research from the University of Massachusetts Boston, which found that retirees generally face a shortfall between their Social Security benefits and the cost-of-living, no matter where they live.

Generally, older Americans rely on Social Security benefits more as they age, according to the National Institute study.

While 52.9% of individuals 60 to 65 years old are receiving some Social Security income, that goes up to 85% for those ages 66 to 75 and is 84% for those ages 76 and older.

Not everyone receives Social Security benefits, such as some state and local government employees who do not pay into the system.

Still, proposals to increase benefits, such as the Social Security 2100 Act or those from certain Democratic presidential candidates, could have a meaningful impact on retirees’ lives.

“We found that Social Security expansion would be a potent poverty reducing tool, should policy makers choose to pursue it,” said Tyler Bond, manager of research at the National Institute on Retirement Security.

The research is based on data from the 2014 Survey of Income and Program Participation and the 2014 Social Security Administration Supplement on Retirement, Pensions and Related Content.


1   Tenpoundbass   ignore (14)   2020 Jan 17, 10:05am     ↓ dislike (0)   quote   flag      

Bring back S&L banking. Peg the earnings to the Fed rate.
2   HeadSet   ignore (3)   2020 Jan 17, 11:15am     ↓ dislike (0)   quote   flag      

You know when you start working you will need to save for retirement. IRAs have been around for a long time. Also, one should have a house paid off long before retirement.
3   zzyzzx   ignore (2)   2020 Jan 17, 11:39am     ↓ dislike (0)   quote   flag      

willywonka says
Even more troubling, 14.9% have no income from a pension, savings or Social Security.

Are they living in cardboard boxes in California?
4   WookieMan   ignore (5)   2020 Jan 17, 12:43pm     ↓ dislike (0)   quote   flag      

HeadSet says
You know when you start working you will need to save for retirement. IRAs have been around for a long time. Also, one should have a house paid off long before retirement.

Yup. Your only obligation at retirement age (whatever that may be) should be insurance, utilities and rent/property taxes. Any toys, houses, etc. should all be paid off by retirement. Otherwise you shouldn't retire. If you do that, even with inflation, you should have no problem living off $3-4k/mo and still having a little fun here and there before you need knee and back replacements. After that, it's just medical care, hence insurance or medicare/cade whatever it's called. It's really not that complicated. People need to get over the Jones' and realize they're going to die a miserable and poor death.
5   Ceffer   ignore (5)   2020 Jan 17, 1:36pm     ↓ dislike (0)   quote   flag      

Lose your teeth, gain suction. Figure out the income strategies for yourself.
6   clambo   ignore (5)   2020 Jan 17, 1:42pm     ↓ dislike (0)   quote   flag      

I know several types of guys with regards to retirement.
1. Got government jobs and don’t need to worry about it. County, state, federal, type of job doesn’t matter.
2. Have small pension from a private sector job plus social security and are still doing side small business.
3. Professional, e.g. doctor, lawyer; bought annuity and investments.
4. Don’t really have any dough so rent out a room.
5. Self-employed , will keep working until he drops dead.

Most people I know don’t like to save and invest any of their precious money.
They also hate taxes so much that they don’t invest income because they never declared it so they spend it on shit or one guy has coins in his safe.

You can’t take it with you so maybe I am too conservative. I saved and invested money over decades.
Lately I’ve been shocked at the rapid rise in my net worth, it is playing games with my head.
7   NDrLoR   ignore (0)   2020 Jan 17, 2:46pm     ↓ dislike (0)   quote   flag      

willywonka says
three-legged stool
Virtually no one has a defined benefit pension anymore except top management on top of all their other benefits. When interest rates were a common 5% or 6%, if you only had $100K put away, a risk free 5% CD would give you an extra $500 per month which would be spent or taxed.
8   Ceffer   ignore (5)   2020 Jan 17, 3:46pm     ↓ dislike (0)   quote   flag      

Social Security is why God invented third world countries for retirement.
9   TrumpingTits   ignore (3)   2020 Jan 17, 8:21pm     ↓ dislike (0)   quote   flag      

Ceffer says
Social Security is why God invented third world countries for retirement.

Very true. Subscribe to International Living to see how vibrant the entire American Expat thing is -- mostly because the US dollar goes a long way in many countries...even for health care (You can't file Medicare claims from healthcare performed outside the US).

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