While income in retirement varies widely by source, Social Security
benefits are the foundation of income for nearly all retiree
households. In aggregate, Social Security is the largest source of
retirement income for households with someone aged 65 or older, but
other financial assets such as pension income from DB and DC plans,
private savings, and assets such as home equity are important sources
of retirement income for many.[Footnote 6] (See figure 1.) In 2008,
the most recent year for which data were available, among households
with someone aged 55 to 60, the median net wealth for the middle
quintile of net wealth was $339,000. The median household income for
the middle net wealth quintile was about $70,000 in the preceding
year, according to the Health and Retirement Study. (See appendix II.)
Earnings from work can be an important source of income for some
households with a member aged 65 or older because, for example, a
spouse younger than 65 may be working. Yet many people aged 65 or
older also work. In 2010, 29.1 percent of people aged 65 to 69 worked
at least part-time and 6.9 percent of people aged 75 or older were
employed.[Footnote 7] Annuity Definition
Figure 1: Sources of Aggregate Income for Households with Someone Aged
65 or Older, 2008:
[Refer to PDF for image: pie-chart]
Social Security: 36.5%;
Employment earnings: 29.7%;
Pension and annuities: 18.4%;
Income from assets: 12.7%;
Cash public assistance: 0.6%;
Other: 2.1%.
Source: SSA, Office of Retirement and Disability Policy, Income of the
Population 55 or Older, 2008.
Notes: "Household" here refers to what SSA identifies as aged units--
either a married couple living together or a nonmarried person. The
age of a married couple is the age of the husband if he is 55 or
older; if the husband is younger than 55, the age of the married
couple is the age of the wife. Thus a married couple is considered to
be 65 or older if the husband is 65 or older or if the husband is
younger than 55 and his wife is 65 or older. Data reported by the
Social Security Administration for pension income includes regular
payments from IRA, Keogh, or 401(k) plans. Nonregular (nonannuitized
or lump sum) withdrawals from IRA, Keogh, and 401(k) plans are not
included. Social Security income includes retirement, auxiliary (such
as spousal), survivors, and disability benefits. Data reported for
income from assets includes interest income, income from dividends,
rents or royalties, and estates or trusts. Other income includes
noncash benefits, veteran's benefits, unemployment compensation,
workers' compensation, and personal contributions. Income from others
is excluded. The 95 percent confidence intervals for the share of
aggregate income are 35.9 to 37.1 percent for Social Security, 29.1 to
30.3 for employment earnings, 17.9 to 18.9 for pension and annuity
income, 12.3 to 13.1 for income from assets, 1.9 to 2.3 for other, and
0.5 to 0.7 for cash public assistance.