The Committee for a Responsible Federal Budget has a nice write-up of a recent AEI event on retirement incomes, which showed that retirees of all income levels are substantially better off and have lower poverty rates than you’d guess by reading official U.S. government statistics.
An event last Wednesday at the American Enterprise Institute showcased two new studies that use actual tax data from the IRS—rather than flawed survey data—to get a better idea of how retirees are doing financially.
The first paper, authored by economists at the Investment Company Institute and the IRS, used data from a large sample of taxpayers to examine what happened to individuals’ inflation-adjusted disposable income up to three years after they claim Social Security retirement benefits. On average, individuals’ work-related income (wages, Social Security benefits, and retirement income from pensions, annuities and savings accounts) net of federal taxes stays roughly constant in three years after they claim Social Security; gross work-related income drops about 10 percent, but lower federal income and payroll taxes offset about 80 percent of this decline.
In fact, mean net incomes actually rise slightly for the lowest income groups, and are basically maintained for all but the highest-earners (who still enjoy sizeable incomes). This is true even among individuals who are no longer working.
Click here to read the whole article – it’s a great summary of what’s going on with retirement incomes.
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