Friday, February 7, 2014

Samuelson: Retirees are better off than we think

The Washington Post’s Robert Samuelson discusses the state of retirement income today, including a reference to my recent Wall Street Journal piece with Syl Schieber. We argued that common references to retirees’ well-being, including SSA’s Income of the Aged series, undercount retirement income because their datasource, the Current Population Survey, doesn’t count most withdrawals from IRAs or 401ks as income.

I thought this table, which Samuelson draws from CBO data, to be interesting:

Average Incomes of Older Americans, 2010

Poorest fifth: $19,900

Second fifth: $34,400

Middle fifth: $55,100

Fourth fifth: $82,100

Richest fifth:$219,500

There’s a lot more you need to know in order to judge the severity of any retirement crisis Americans are facing, but getting a better view of retirees’ incomes is a good start.

1 comment:

WilliamLarsen said...

I am glad that someone has finally included or noted that IRA withdrawls be included in meeting ones needs. Income is half the picture. The problem is that had this been done in 1983, the Big Social Security Fix may have gone another way entirely. Back in 1983, the fear of cutting social security benefits arose because of low income by seniors. Of course this was just BS and no one actually looked into the wealth of seniors at the time. So the big fix of 1983 perpetuated the myth that Social Security was truly needed.

Now we are in 2014, some 31 years after the big fix of raising payroll taxes and base while shifting ever more wealth from workers to beneficiaries creating a much larger problem; lower savings by workers and thus lower participation in the growth in the economy.

Are boomers better off on average than their parents? My gut, guess and analysis shows they are not. So what do we do about Social Security? Do we means test it, repeal it or continue with it until it implodes?