Shifting Income Sources of the Aged 

By Christopher Anguelov, Howard Iams, and Patrick Purcell 

Social Security Administration* 

Abstract

This paper reviews the impact on the income measurement of the aged from the shift of retirement income sources 

from traditional defined benefit pensions to defined contribution (DC) plans and individual retirement accounts 

(IRAs). As retirement assets shift from traditional pensions to retirement investment accounts, the share of the 

income of the aged from pensions decreases in the Census Bureau’s Current Population Survey (CPS). The paper 

establishes the importance of defined contribution plans and other tax-qualified retirement savings in 2009 with 

several data sources including the Census Bureau’s Survey of Income and Program Participation (SIPP), the Bureau 

of Labor Statistics’ National Compensation Survey (NCS), and the Federal Reserve’s Survey of Consumer Finances 

(SCF). The analysis finds a rising prevalence of and participation in these accounts, and increasing payments from 

these accounts. People withdraw the majority of money from these accounts when mandated by tax laws to begin 

withdrawals in the year after turning age 701⁄2. A major source of retirement income, traditional pensions, is giving 

way to DC plans and IRAs. This trend is likely to increase among future retirees in the private sector. The paper 

discusses the implications of these trends for measurement of retirement income to support consumption in 

retirement. The conclusion is that the primary income data sources such as the CPS greatly underreport distributions 

from DC plans and IRAs, an increasing problem for the future. 

*Chris E. Anguelov is a social science research analyst and Patrick Purcell is an economist with the Division of 

Policy Evaluation, Office of Research, Evaluation, and Statistics (ORES), Office of Retirement and Disability 

Policy (ORDP), Social Security Administration (SSA). Howard Iams is a senior research advisor to ORES, ORDP, 

SSA. The findings and conclusions presented here are those of the authors and do not necessarily represent the 

views of the Social Security Administration. 
1. Introduction 

In the United States, retirement incomes largely come from three pillars: Social Security, 

employer pensions and personal saving (non-housing wealth and home equity).1 Some 

individuals continue working in retirement to supplement their retirement income, but most older 

Americans are retired from full-time work. In addition, a relatively small proportion of retirees 

receive income from welfare programs, such as Supplemental Security Income (SSI). 

Social Security was developed as a floor of protection for retired workers’ incomes, to be 

supplemented by other pension income, income from assets, and to some extent continued 

earnings (Forum on Aging Related Statistics 2012, Indicator 9 based on the U.S. Census 

Bureau’s Current Population Survey (CPS)). Over time, Social Security has taken on greater 

importance to many older Americans. From the early 1960s, Social Security provided the largest 

share of aggregate income for older Americans. The share of income from pensions rapidly 

increased in the 1960’s and 1970’s to peak at 20 percent in 1992 and again in 2004. Since 2004, 

the pension share of income gradually decreased to 18 percent in 2009 and 2010 (Forum on 

Aging Related Statistics forthcoming, Table 9a and Social Security Administration calculations). 

The decreasing share of pension income for the aged partly reflects the decreasing share 

of total retirement assets in traditional defined benefit pension plans. Based on data compiled 

by the Investment Company Institute (ICI 2011, Table 1), over half of the 17 trillion dollars in 

total retirement assets at the end of the third quarter of 2011 were in Individual Retirement 

Accounts (4.6 trillion dollars) and defined contribution (DC) retirement plans (4.3 trillion 

dollars), rather than in traditional pension plans and annuities. 2

 Based on these ICI data, the 

share of these assets in traditional pension plans and annuities decreased from 59 percent to 48 

percent between 1992 and 2010. The decreasing proportion of assets in traditional pensions and 

increasing share of total retirement assets in IRAs and DC retirement plans should partly account 

for the decreasing share of pension income in the income of the aged because of the way such 

income is measured in the CPS. 

The decreasing share of pension income in the income of the aged in tabulations of the 

Census Bureau’s CPS data partly reflects underreporting of pension income in the CPS, but 

another reason is an underestimate of retirement account distributions that is largely a 

definitional issue (Roemer 2000). Czajka and Denmead (2011) conclude that the CPS does not 

clearly ask about distributions from retirement accounts such as IRAs and DC retirement plans. 

The measurement issue also is discussed by Woods (1996) who observed that the Census Bureau 

did not consider IRAs to be income in the 1990 CPS. The CPS measures IRA distributions as 

money income if they are “regular” such as occur in annuities. Most IRA distributions are 

irregular, and thus would not be measured as income in the CPS. The exclusion on the CPS of 

irregular distributions from retirement savings plans misses much of the money distributed from 

IRAs and DC retirement plans to support retirement consumption. In addition, very few DC 

account holders take their retirement distributions as annuities (Brown et. al. 2008). Although 

much of the money distributed from retirement accounts is not captured on the CPS, the IRS 

 

1

 See Holzmann and Hinz (2005) for a discussion of multi-pillars of old age income. 

2

 Traditional pension plans include private sector Defined Benefit (DB) plans, State and Local government pension 

plans, Federal pension plans, and annuities. Most retirement plans in State and Local governments are traditional 

DB plans (U.S. Bureau of Labor Statistics 2010). Most Federal workers are also in traditional DB plans. 

1 
considers distributions from tax qualified retirement accounts to be taxable deferred income.3

 In 

the traditional employer-offered DB pension world of the past most pension income was 

received as annuities and was counted as income by the CPS and other household surveys. 

Because of the shift from DB pensions to tax qualified retirement savings plans that has occurred 

over the past 30 years, much retirement income is gradually disappearing from survey-based 

measures of the income of the aged because distributions from retirement accounts are not 

accurately measured by surveys that were designed in an era dominated by DB pensions. 

Analysts have documented that substantial distributions from IRAs are not measured in 

the CPS. Tax records indicate that hundreds of billions of dollars are withdrawn from 

retirement savings plans in a calendar year. Bryant, Holden, and Sabelhaus (2011) estimate from 

tax records that taxable distributions from retirement accounts (i.e. DC plans and IRAs) for 

persons above age 60 were $529 billion in 2007. These tax-recorded distributions are 

substantially more than those recorded in household surveys. Looking at withdrawals from IRAs 

in 2006, Sabelhaus and Schrass (2009, p. 20) estimated that the U.S. Census Bureau’s CPS 

recorded IRA withdrawals of only $6.4 billion, while the Federal Reserve Board’s Survey of 

Consumer Finance (SCF) recorded $95.2 billion, and an ICI survey recorded $71.6 billion. They 

estimated from 2006 tax records that all tax returns recorded $124.7 billion in distributions from 

IRAs, and tax returns for primary taxpayers aged 55 and older recorded $105.7 billion in 

distributions. Czajka and Denmead (2011) compared distributions from IRAs and DC accounts 

reported in the CPS to the Internal Revenue Service administrative data on payouts, the SCF’s 

distributions, and the Census Bureau’s Survey of Income and Program Participation’s (SIPP) 

withdrawals. The distributions and payouts from these data sources are substantial except for 

the CPS. The comparisons of Czajka and Denmead document the substantial underreporting of 

these distributions and payouts in the CPS. 

 Because of longstanding trends in employer-sponsored retirement plans, traditional 

pension income will shrink in the future and the share of income from traditional pensions will 

continue to diminish. Consequently, estimates of the income of the aged based on the CPS will 

show an increasing share of income from other income sources, such as Social Security. In 

addition, the income of the aged is likely to diminish among the upper half of the income 

distribution, where pension income has been concentrated historically (Forum on Aging Related 

Statistics 2012 Table 9b). 

The purpose of this analysis is to assess the importance of income from tax qualified 

retirement savings plans in 2009, reflecting the shift from defined benefit (DB) retirement plans 

to defined contribution (DC) retirement plans and individual retirement accounts (IRAs).4

 We 

present data showing that in the 2009 labor force the majority of individuals who participated in 

a retirement plan were enrolled in a DC plan, and that distributions from DC plans and IRAs will 

have increasing importance to retirement incomes of the future aged population. 

The social and economic changes that have occurred since World War II are likely to 

affect the retirement income security of baby-boomers in many ways. Major changes have 

occurred in the past few decades in employer-provided retirement plans, most significantly a 

 

3

 Qualified distributions from Roth IRAs are not taxable income. About 40 percent of households that own an IRA 

have a Roth IRA (ICI Research Perspectives, Nov. 2011, Figure 2), but Roth IRAs hold only about 5 percent of all 

IRA assets (Holden and Schrass, 2011). 

4

 Defined contribution plans, such as those authorized under section 401(k) of the Internal Revenue Code, are 

employer-sponsored retirement savings plans. Often, either at job change or retirement, money in the former 

employer’s plan is “rolled over” into an IRA. Therefore, when examining workers’ accumulation of retirement 

wealth and their conversion of retirement wealth into income later in life, IRAs are an integral part of the analysis. 

2 
shift from DB plans to DC plans (Munnell and Sunden 2004; Costo 2006).5

 Because of this 

shift, employees now bear greater risks in accumulating retirement wealth, managing the assets 

in their DC and IRA retirement accounts, and managing their withdrawals for retirement income 

(i.e., the “decumulation phase”). The employer typically funds DB plans and bears the risk of 

investment losses, which often must be made up through increased contributions.6 In addition, 

DB plans provide a guaranteed lifetime retirement income, which is usually based on the 

worker’s final salary, age, and years of service, and thus the employer bears the longevity risk 

for plan participants. 

 DC plans are more like savings accounts than traditional pensions. In many DC plans, 

both the employee and employer contribute to the account, and the employee’s retirement 

income will depend on their individual account balance. Investment losses are borne by the 

employee. At retirement, the employee decides how to convert the account balance into income, 

either through gradual withdrawals or by reducing (his or her) longevity risk such as by 

purchasing an annuity, or a combination of both. 

II. Current pension status

To assess the importance of DC pensions and IRAs in the current labor force and hence to future 

retirees, we use three different surveys: The National Compensation Survey (NCS), the SIPP 

and the SCF . Even though three different organizations conduct the surveys with different 

sample frames, different respondents, and different questions, they all indicate the rising 

importance of tax-qualified retirement savings accounts. 

 The NCS of the U.S. Bureau of Labor Statistics (2009, 2010) and the SIPP (SIPP) of the U.S. 

Census Bureau (www.Census.gov/SIPP) both collect data indicating the type of retirement plan 

for current workers, either DB or DC plan. The NCS is a nationally representative survey of 

employers in the private sector and State and Local governments, which asks employers to report 

on the retirement plan characteristics for their employees. The SIPP is a household survey that is 

nationally representative of workers in the labor force. The SIPP includes questions that ask 

respondents to report their retirement plan characteristics. We adjust the reported SIPP data on 

DC plans with matched W-2 tax records following Dushi and Iams (2010). Although they are 

conducted by different organizations with different respondents and questions, both surveys 

provide national estimates of the type of pension available to employees and of employee 

participation. The most recent SIPP data are from summer 2009 and we compare it to the NCS 

data from 2009.7

 

5

 A DC plan is like a savings account into which the employee contributes tax-deferred earnings. The employer may 

or may not contribute to the plan. DC plans typically are named after the authorizing section of the Tax Code, such 

as 401(k), 403(b) or 457(b). Using data from the Form 5500 that employers file annually with the IRS and the 

Department of Labor, Buessing and Soto (2006) provide evidence of a dramatic shift since 1981 in participation of 

private sector wage and salary workers from DB to DC pensions. In 1981, 27 percent of private sector workers

participated only in a DB plan, 9 percent participated only in a DC plan, and 11 percent had both a DB and a DC 

plan. Almost two decades later in 1999, about 7 percent participated only in a DB plan, 29 percent participated only 

in a DC plan, and 14 percent participated in both types of plans. 

6

 Some promoters of individual accounts disagree on the risk shift, emphasizing that the employee is at risk that the 

employer will stay in business and fulfill the DB obligations. Unlike DC plans, however, DB plans are insured, up to 

limits set in law, by the Pension Benefit Guaranty Corporation (PBGC), which was established by Congress in 1974. 

7

 The SIPP data on type of pension are from the Retirement and Pension Plan topical module (the third wave) in the 

2008 panel. We adjust the SIPP survey data with data on deferred contributions in the SSA Administrative earnings 

3 
The third survey is the SCF conducted by the National Opinion Research Center for the Federal 

Reserve Board. The SCF is considered the best survey for estimates of wealth, in part because it 

is conducted from a sample frame of a nationally representative sample of primary economic 

units, supplemented by additional high- income families selected from income tax records 

(Cagetti and De Nardi 2008; Meijer, Karoly, and Michaud 2010). The SCF data provide further 

evidence of the rising prevalence and value of tax qualified retirement savings accounts over the 

past two decades. 

Offer, Participation, and Take-up Rates 

The majority of full-time workers in the U.S. are offered a retirement plan by their employers 

(Table 1). About three-quarters of private sector workers and more than 90 percent of state and 

local government workers are offered a plan. The percentage of all employees who participate in 

a retirement plan is the participation rate. The denominator of the participation rate includes all 

workers, whether offered a plan or not. The percentage of employees with employer plan offers 

who are actually enrolled in the plan is called the “take-up rate” (Dushi and Iams 2010). 

Participation and take-up rates vary by private/public sector and work-hours (Table 1). They are 

higher among full-time workers than part-time workers and are higher among state and local 

government workers than among private-sector workers. The highest participation and take-up 

rates are found among full-time workers in the public sector. 

The DC plan was the most widely held plan among private-sector workers with about half to 

three-fifths participating (51 percent in NCS, 66 percent in SIPP, Table 2). Only about a quarter 

(24 percent) of private-sector workers participated in a DB plan. In contrast, the DB plan was 

the most widely held plan among full-time state and local government workers with the majority 

participating (73 percent in NCS, 87 percent in SIPP) in a DB plan, and one-fifth to two-fifths 

participating in a DC plan (20 percent in NCS, 41 percent in SIPP). 

 

records linked to SIPP respondents(Dushi and Iams 2010). SSA and Census linked about 90 percent of the 

respondents to their own earnings records derived from the W-2 payroll tax record. Prior research with SIPP survey 

data indicated that SIPP respondents under-report DC plan participation as indicated by positive deferred 

contributions in their earnings records (Dushi and Iams 2010). 

4 
5 

Table 1: Pension Plan Offer, Participation, and Take‐up rates by Sector of

Employment and Hours of work in 2009

   Offerc

Participation Take‐up rate

Private sector workers   

Full‐time workers   

NCSa

SIPPb

Part‐time workers   

NCSa

SIPPb

State and Local government   

Full‐time workers   

NCSa

SIPPb

Part‐time workers   

NCSa

SIPPb

76

75

39

50

  

99

93

41

74

61

66

22

32

95

88

37

52

80

88

55

65

96

95

89

70

a

U.S. Bureau of Labor Statistics 2009.

  

b

  Authors’ calculations of the wave 3 topical module of the 2008 panel of the SIPP and W‐2 tax records.

c

On the SIPP, respondents are asked whether a plan is offered to anyone at the firm at which they are employed.

  This offer may or may not apply to the respondent.
Table 2: Pension Plan  Participation rates by type of pension, Sector of Employment

and Hours of work in 2009

   DB           DC

Private sector workers   

Full‐time workers   

NCSa

SIPPb

Part‐time workers   

NCSa

SIPPb

State and Local government   

Full‐time workers   

NCSa

SIPPb

Part‐time workers   

NCSa

SIPPb

24

24

9

17

  

87

73

34

44

51

61

16

20

20

41

5

45

a

U.S. Bureau of Labor Statistics 2009.  

b

Authors’ calculations of the wave 3 topical module of the 2008 panel of the SIPP and W‐2 tax records.   

Participation in DC Plans 

In 2009, about 68 percent of all wage and salary workers under age 65 in the public and private 

sectors worked for employers that offered defined contribution plans, and 57 percent participated 

in DC plans (See Table 3.) This represents a take-up rate of about 83 percent.8 For some groups 

of employees, however, participation rates are lower than 57 percent. The participation rate 

varies by age, marital status, education, gender, race-ethnicity, and earnings level. Younger 

workers, unmarried workers, those with less education, black non-Hispanic and Hispanic 

minorities, and those with incomes in the lowest quarter of the income distribution all had belowaverage participation rates. Perhaps most strikingly, workers whose 2008 earnings were in the 

lowest quartile of the earnings distribution had a participation rate in 2009 of just 25 percent, 

while those whose earnings were in the top earnings quartile had a participation rate of 81 

percent.9 Take-up rates for workers in the lowest quartile also were lower than average. 

 

8

 Authors’ tabulations of data from the wave 3 topical module of the 2008 panel of the SIPP, matched to employees’ 

W-2 records. 

9

 Workers whose 2008 earnings as recorded on Form W-2 were above $56,376 were in the top earnings quartile. 

Workers with earnings less than or equal to $20,946 were in the lowest earnings quartile. Median earned income in 

2008 was $35,705. 

6 
Table 3. Participation in Tax Qualified Retirement Savings 

 Defined Contribution Plans in 2009 

All Wage and Salary Workers Under Age 65 

 Percent Offered a 

DC Plan at Work 

Percent Who 

Participated Take-up Rate 

Age 

55 to 64 

45 to 54 

35 to 44 

Under 35 

Marital Status 

Married 

Never married, widowed, or divorced 

Education 

College graduate 

Some college 

High school or less 

Gender

Men 

Women

Race and Ethnicity 

White, non-Hispanic 

Black, non-Hispanic 

Hispanic

Other non-Hispanic 

Individual Earnings in 2008 

Highest quartile 

Second quartile 

Third quartile 

Lowest quartile 

Total 

70.3

72.2

70.5

61.3

71.2

62.3

78.6

68.5

58.4

68.6

 67.2

70.7

63.5

 55.1

67.5

86.9

77.3

66.0

41.5

67.9

60.2

62.8

59.9

47.4

61.0

50.0

69.4

55.8

46.2

58.2

55.0

59.6

50.0

43.9

57.9

81.3

67.3

52.7

25.3

56.6 

 85.6

 87.0

 85.0

 77.3

 85.7

 80.3

 88.3

 81.5

 79.1

 84.8

 81.8

 84.3

 78.7

 79.7

 85.8

 93.6

 87.1

 79.8

 61.0

83.4

Source: Authors’ analysis of the wave 3 of the 2008 panel of the SIPP, matched to employees’ W-2 records. 

Contributions to DC Plans 

Both the DC plan participation and contribution rates are much higher among higher earners. 

Table 3 shows the relationship to earnings reported by SIPP respondents at a point in time, a 

cross section. Earnings are reported as of 2008 and divided into quartiles. We also show in 

Table 4 the relationship to earnings from employer-provided W-2 records ranked by ten-year 

average real annual earnings (indexed by the CPI-W) from 1997 through 2006 and divided into 

deciles. We believe the matched data to be more accurate than self-reports. The higher 

participation rates and contribution rates among workers with higher earnings is particularly 

noticeable using W-2 tax records by earnings level in the 2004 SIPP panel (Dushi, Iams, and 

Tamborini 2011, Table 4). The participation rate rises sharply from 5.5 percent in the first 

7 
(lowest) earnings decile to 50.6 percent in the sixth decile, and continues to rise to 77.7 percent 

in the 10th (highest) decile. The contribution rate (i.e., percentage of salary contributed to a DC 

account) increases from 3.4 percent in the lowest decile to about 7 percent in the highest two 

deciles. 

Table 4: Participation and Contribution Rates in DC plans, by decile level of  current

earnings trend in 10 years ending in  2006

Participation

   rate

Contribution

rate

10 year average annual earnings

deciles   

1

st (lowest)   

2

nd

3

rd

4

th

   

5

th

6

th

7

th

   

8

th

   

9

th

   

10th (highest)

Number of observations

5.5

        15.8

       26.6

35.6

42.7

50.6

53.2

62.0

69.6

77.7

21,235

  

3.4

4.0

4.0

4.3

4.6

5.1

5.3

6.1

7.4

7.1

9,350

Source:  Dushi,  Iams, and  Tamborini  2011.

Estimates are for workers aged 35‐61 with W‐2 tax record earnings in 2006, weighted using 2004 SIPP weights.  

Ten‐year average reflects W‐2 tax record real inflation indexed (CPI‐W) earnings from 1997 to 2006.  

All earnings are inflation‐ adjusted to 2006 dollars. The rates in each cell are calculated for that cell subsample.

Account Balances

The growing prevalence and value of tax-qualified retirement accounts provide additional 

evidence of the pension shift from DB pensions to DC accounts. As previously noted, most 

money in DC accounts at job termination at older ages is shifted to IRAs (termed rollovers), and 

most IRA money reflects rollovers rather than direct investments (Sabelhaus and Schrass 2009; 

Holden and Schrass 2010; Bryant, Holden and Sabelhaus 2011). Some DB plans also offer lump 

sum distributions (U.S. Bureau of Labor Statistics 2009, 2010b). Data on holdings of all taxqualified retirement savings plans (such as IRAs and 401(k)-type DC plans) for older persons 

show the increasing prevalence and value of these investment-style retirement accounts over 

time. Based on SIPP data from 1998, 2006, and 2009, the proportion of individuals holding 

either an IRA or a DC account increased from less than a quarter to over a third between 1998 

8 
and 2009 (see Chart 1). The prevalence was much higher at ages 65-69 than ages 70 or older in 

each year, although the difference between age groups has decreased in recent years. 

The SCF collects detailed financial data every three years, including different forms of taxqualified retirement accounts, such as employer-sponsored DC accounts, and IRAs. The SCF 

also indicates that tax-qualified retirement savings plans increased over time in both prevalence 

and in value.10 

Table 5. Percentage of primary economic units with holdings in all tax-qualified 

retirement savings accounts, by selected characteristics of unit head, 1992-2007 

Selected characteristics of Primary 

Economic Units (PEUs) 

Age of PEU head 

1992 1995 1998 2001 2004 2007 

 

65 and over 22.8% 27.3% 32.1% 36.5% 36.1% 40.8%

45-54 51.9% 57.4% 59.3% 63.7% 58.2% 65.4%

55-64 53.1% 51.0% 58.3% 59.8% 63.5% 61.2%

65-74 35.1% 36.6% 46.1% 45.1% 43.2% 51.7%

75 and over 6.3% 15.9% 16.7% 27.7% 29.2% 30.0%

a Marital status, PEU head 

Married 36.9% 40.3% 45.1% 46.9% 48.5% 54.4%

Unmarried 11.9% 15.9% 21.0% 25.4% 25.1% 28.9%

 

 

Education, PEU head b

 

High school diploma or less 16.4% 19.9% 22.0% 23.0% 26.3% 29.1%

 Some college or more 37.0% 40.4% 49.0% 57.5% 50.2% 59.1%

Note: Assets held in all tax qualified retirement savings plans include IRAs, Keoghs, and 401(k)-type accounts. All 

observations are weighted for analysis. 

a Married includes legally married couples only. Data for marital status are for primary economic units headed by a 

person aged 65 and older. 

b Data for education are for primary economic units 

headed by a person aged 65 and older.

Source: SCF.

 

10 We index the values with the CPI-U-RS series from BLS, available in Appendix Table 1 on pg. 53 of 

Bucks, Kennickell, Mach, and Moore (2009).The SCF is a triennial, cross-sectional, national survey of noninstitutionalized Americans conducted by the Federal Reserve Board with the cooperation of the Statistics of Income 

Division of the Internal Revenue Service. It includes data on household assets and debts, use of financial services, 

income, demographics, and labor force participation. The survey is considered one of the best sources for wealth 

measurement because of its detailed treatment of assets and debts and because it oversamples wealthy households 

(Cagetti and De Nardi 2008; Meijer, Karoly, and Michaud 2010). The data for the panels of SCF used in this study 

were collected by the National Opinion Research Center at the University of Chicago. The SCF uses a dual-frame 

sample consisting of both a standard random sample and a special over-sample of wealthier households in order to 

correct for the under-representation of high-income families in the survey. 

9 
Based on the SCF, the prevalence and value of retirement accounts increased dramatically in the 

last two decades among both younger and older households. The prevalence among primary 

economic units (PEUs) headed by a person aged 65 or older increased from about a fifth in 1992 

to about two-fifths in 2007 (see Chart 2). The prevalence appears higher among younger age 

groups within each period except 1992 (Table 5). The prevalence and value of tax-qualified 

retirement accounts among PEUs with heads aged 65 and older was greater among the married 

and college educated than their counterparts (Tables 5 and 6). 

Among PEUs headed by persons aged 65+, the median real value of retirement accounts more 

than doubled from $28,941 to $60,667 over the period from 1992 to 2007 (see Chart 3). Median 

account balances are highest in the 55 to 64 age group and lowest among PEUs headed by 

persons 75 or older, except in 1992. Most forms of tax-qualified retirement plans have become 

widely held only in the last three decades. Federal tax law requires a complete phased 

withdrawal from most tax qualified retirement accounts starting in the year after the account 

holder reaches age 701⁄2. Both of these factors may partly account for the limited value of 

accounts for households with heads aged 75 and older. 

Table 6. Median assets of head of primary economic units held in all Tax Qualified retirement 

savings accounts, by selected characteristics, in 2007 dollars, 1992-2007 

Selected characteristics of 

Primary Economic Units 

(PEUs) with positive values 

only 

Age of PEU head 

1992 1995 1998 2001 2004 2007 

 

65 and over $28,940 $36,500 $44,600 $66,700 $60,400 $60,800 

45-54 $40,500 $37,900 $44,600 $56,100 $61,000 $63,000 

55-64 $43,400 $43,300 $59,800 $64,300 $91,200 $100,000 

65-74 $28,900 $39,200 $48,400 $70,200 $87,900 $77,000 

75 and over 

Marital statusa

$40,500 

 

$31,800 $38,200 $56,100 $32,900 $35,000 

 

Married $37,600 $51,400 $47,100 $93,600 $85,700 $74,000 

Unmarried 

Education, PEU head b

High school diploma or 

$14,500 

 

 

$21,600 $38,200 $33,900 $32,900 $35,000 

 

 

less $23,200 $24,500 $31,800 $32,700 $32,900 $35,000 

 Some college or more $36,200 $54,100 $59,800 $114,600 $93,400 $116,000 

Note: Assets held in all retirement savings plans include IRAs, Keoghs, and 401(k)-type accounts. All observations are 

weighted for analysis. Data indexed to 2007 dollars with the CPI-U-RS. 

a Married includes legally married couples only. Data for marital status are for primary economic units headed by a person 

aged 65 and older. 

b Data for education are for primary economic units headed by a person aged 65 and older. 

Source: SCF.

10 
Table 7 shows the changes between 1992 and 2007 in the ratio of elderly (65 and older) PEUs’ 

funds in retirement savings plans to their overall level of financial assets. It reveals that in 2007 a 

larger proportion of elderly PEUs’ financial assets were held in tax-qualified retirement accounts 

than in 1992. Compared to PEUs headed by persons aged 45-64, the largest increases were 

among PEUs headed by persons aged 65 and older, especially those headed by persons aged 65-

74. The increases also were strong among PEUs headed by persons with some college or a 

college degree. Given that tax-qualified retirement accounts have become widespread only since 

the 1980s, it is not surprising that persons aged 75 and older had the smallest increase over time 

compared to those aged 45-54, 55-64, and 65-74. 

Table 7. Median ratio of assets held in all retirement Tax Qualified savings accounts to overall 

financial assets of primary economic unit, by selected characteristics, 1992-2007 

Selected characteristics of Primary 

Economic Units (PEUs) with positive 

values only 

Age of PEU head 

1992 1995 1998 2001 2004 2007 

 

65 and over 27.2% 33.3% 31.0% 35.2% 34.1% 40.5% 

45-54 57.8% 55.1% 55.2% 58.7% 67.2% 72.4% 

55-64 46.4% 44.4% 52.7% 45.8% 64.0% 66.3% 

65-74 27.4% 34.3% 35.1% 40.5% 43.8% 49.2% 

75 and over 25.6% 23.6% 20.1% 20.0% 22.2% 27.5% 

Marital statusa

 

Married 27.5% 33.3% 29.9% 34.8% 38.8% 42.1% 

Unmarried 25.0% 33.3% 33.9% 38.9% 21.5% 38.5% 

 

Education b

 

High school diploma or less 29.6% 32.3% 33.1% 39.2% 35.3% 41.6% 

 Some college or more 21.6% 33.8% 29.4% 30.0% 33.7% 40.1% 

Note: Assets held in all tax-qualified retirement savings accounts include IRAs, Keoghs, and 401(k)-type accounts. Financial

assets include funds held in bank transaction accounts, certificates of deposits, directly held mutual funds, stocks, bonds, 

retirement plan investment accounts, savings bonds, cash value of whole life insurance, other managed assets, other financial 

assets. All observations are weighted for analysis. 

a Married includes legally married couples only. Data for marital status are for primary economic units headed by a person aged 

65 and older. 

b Data for education are for primary economic units headed by a person aged 65 and older. 

Source: SCF.

11 
In addition to asking respondents about their income from traditional DB pension plans, the SIPP 

asks them whether they took distributions from IRAs or 401(k)-type retirement plans.11 Looking 

at individual plan holders aged 65 and older, almost half reported taking a distribution in 1998 

and over half did so in 2006. About 10 percentage points fewer people reported taking a 

distribution in 2009 than in 2006 (see Chart 4). People 70 and older are much more likely to 

have reported distributions from retirement plans than those aged 65 to 69. This is due in part to 

the federal law that requires withdrawals to be taken starting in the year after the account owner 

reaches age 701⁄2. This law was suspended for one year in 2009 to allow retirement accounts to 

recover from the 2008 stock market crash. 

Based on the SIPP data, about half of persons aged 65 and older reported DB pension income in 

2009 (Chart 5). Younger retirees (aged 65 to 69) have higher DB pension income than older 

retirees as measured by means or medians (Chart 7). The lower pension income of older retirees 

reflects both lower lifetime average earnings and the fact that most DB pensions do not provide 

cost-of-living adjustments (COLAs). 

Despite the shift from traditional DB pensions to DC plans over the past thirty years, income 

among the aged from traditional DB pensions is still much more prevalent and much higher than 

income from DC plans and IRAs. The proportion of people aged 65 and older with distributions 

from DC plans and IRAs increased from about a tenth in 1998 to almost a fifth in 2006 and 2009 

(Chart 5). Distributions were more prevalent among those aged 70 and older, and were slightly 

lower in 2009 than in 2006. At both the mean and median levels, income from defined benefit 

plans exceeds distributions from retirement savings plans (see Charts 6 and 7). Future retirees 

could have higher income from these plans than current retirees because they will have 

participated in them for more years than current retirees. 

The data suggest that retirement savings plans such as 401(k)-type plans and IRAs have 

increased in importance among the aged over the past two decades as an asset holding and as an 

income source. The pattern among current full-time workers in 2009 indicates that retirement 

accounts will have increasing importance among future retirees, and likely will be the 

predominant retirement income source within a couple of decades. 

Conclusion 

The data presented in this paper show that the tax-qualified retirement savings plan is the 

predominant retirement plan among workers in the early 21st Century. Both the prevalence and 

value of these accounts are generally rising over time . This form of retirement wealth has 

dramatically risen in the past 20 years, and the trend will probably continue. The shift toward 

distributions from DC plans and IRAs raises important questions about the accuracy of the CPS 

measures for the number of households that take such distributions and for the proportion of 

household income derived from retirement accounts. As Sabelhaus and Schrass (2009,p.19) 

wrote of IRAs and the Census Bureau’s CPS: “while IRA withdrawals have risen in importance 

as a source of retirement income, the most widely cited income measure has failed to capture that 

growth. Looking ahead, that trend is likely to continue”. This applies to money withdrawn from 

all tax-qualified retirement savings plans, not just IRAs. The major nationally representative 

 

11 The SIPP core asks about all sources of income in the previous four-month reference period. Merging the core 

files for three consecutive waves of the survey provides a picture of income sources and amounts over a full year. 

12 
surveys of household income must accurately measure annual distributions from retirement 

accounts in order to provide a complete picture of the economic well-being of the aged and the 

U.S. population. This may require the survey questions to be revised to inquire more directly 

about distributions from retirement accounts, whether taken as lump sums, regular distributions, 

or irregular, periodic withdrawals. 

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Chart 1: Percentage of Individuals Age 65+ with an IRA or 401(k)

2

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

1998 2006 2009

65 to 69 70+ All Persons 65+

Source: 1996, 2004, and 2008 SIPP panels 

15 
Chart 2: Prevalence of financial assets in retirement savings 

accounts held by households with head aged 65 and over, selected 

years 1992-2007 (Source: Survey of Consumer Finances) 

4

22.8%

27.3%

32.1%

36.5% 36.1%

40.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1992 1995 1998 2001 2004 2007

Chart 3: Median assets of households with head aged 65 and over 

held in retirement savings accounts, in 2007 dollars, selected years 

1992-2007 (Source: Survey of Consumer Finances)

3

$28,941

$36,501

$44,561

$66,667

$60,405 $60,800

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

1992 1995 1998 2001 2004 2007

16 
Chart 4: Percentage of IRA or 401(k) Owners Age 65+ Taking 

Withdrawals

5

20.9% 22.0%

20.1%

70.4%

72.4%

59.2%

47.8%

54.5%

44.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1998 2006 2009

Percentage of IRA or 401(k) Owners Age 65+ Taking  Withdrawals

65 to 69 70+ All Persons 65+

Source: 1996, 2004, and 2008 SIPP panels

17 
Chart 5: Percentage of Individuals Age 65+ with Pension Income

6

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1998 2006 2009 1998 2006 2009

DB Income DC Income

65 to 69 70+ All Persons 65+

Source: 1996, 2004, and 2008 SIPP panels 

Chart 6: Mean and Median Annual DC Pension Income of People 

65+ with an IRA or 401(k)

7

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

1998 2006 2009 1998 2006 2009

Mean Median

65 to 69 70+ All Persons 65+ In 2009 dollars.

Source: 1996, 2004, and 2008 SIPP panels 

18 
Chart 7: Mean and Median Annual DB Pension Income of People 

65+ with a DB Pension

8

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

1998 2006 2009 1998 2006 2009

Mean Median

In 2009 dollars. 65 to 69 70+ All Persons 65+

Source: 1996, 2004, and 2008 SIPP panels 

19