I have a piece co-authored with Syl Schieber in today’s Wall Street Journal looking at how we measure retiree’s incomes. Probably the most widely cited publication on the subject is SSA’s Income of the Aged series, which is based on data from the Current Population Survey.
The CPS is great for a lot of things, but counting pension income isn’t one of them. The CPS counts as income only regular payments, such as from a DB pension plan or an annuity, but doesn’t count irregular or as-needed withdrawals from 401(k) or IRA accounts. Obviously this will understate the income retirees draw from these plans – using tax data, we show that the CPS misses at least 60% of DC pension income. And, because retirees are increasingly participating in DC plans, the error will grow over time, showing trends in retirement income that may not actually exist.
I think the Journal piece may be gated, but the full text should be available on my AEI web page in a few days.