Retirement Tools

Sources of Income for Americans Ages 65 & Over

October 2, 2017


      Source: SCEPA calculations using Current Population Survey Annual Social and Economic Supplement (CPS ASEC) 2015-2017 data.
      Notes: Sample includes households aged 65+. A married household's age is defined as the age of the husband if the husband is ages 55 and older, or the wife's age if the husband is age 54 or younger and the wife is ages 55 and older.

      A well-funded retirement system relies on income from both Social Security and private retirement savings. The breakdown in private savings caused by decreasing access to retirement coverage at work increases dependency on Social Security benefits.

      To stave off downward mobility in retirement, the average worker should target Social Security representing at most 50% of their income. Unfortunately, this is not the reality across the United States. In every state, Americans’ rely on Social Security to provide more than 40%, with most state averages between 50% and 65%. This signals a national crisis. Slight variations in state averages for older Americans’ sources of income reveal:

      • Income from Social Security. In most southern states, over 60% of average income comes from Social Security. Even though some of the wealthiest states (New York, California, Maryland, Massachusetts) depend on Social Security the least, these benefits still comprise more than 50% of retirement income.
      • Income from assets. To prevent downward mobility in retirement, assets should make up half of retirement income, less income from working. Unfortunately, every state falls short of this goal. The highest average in the country is only 33% in the District of Columbia, while nearly all southern states fall below 20% of income coming from assets.
      • Income from earnings. Even if Americans are able to work past age 65, these earnings on average make up a small amount of income. The highest share of income from earnings is in New Jersey, with those over 65 receiving an average of 20% of their income from working. However, this is not enough to make up the gap in income from retirement assets. After 65, income from earnings declines rapidly with age, so working longer cannot solve the problem of a failing retirement system.