Most American workers maintain or increase their spendable income after claiming Social Security, according to a new analysis of tax data by Investment Company Institute economists Peter Brady and Steven Bass.
Economists Jessica Holland and Kevin Pierce of the Statistics of Income (SOI) Division of the Internal Revenue Service (IRS) also contributed to the new analysis, ICI says. The effort involved researchers analyzing tax data from 1999 to 2010, finding that the median worker had replaced 103% of spendable income after claiming Social Security.
Findings show Social Security benefits and retirement income from employer-sponsored retirement plans, annuities, and individual retirement accounts (IRAs) together provide substantial income for U.S. retirees. As expected, the analysis contends Social Security is “relatively more important for lower-income individuals,” while private retirement income sources matter more to higher-income individuals.
“Those in the middle receive a similar amount of income from both sources,” ICI finds.
“The vast majority of workers we analyzed reported retirement resources other than Social Security,” Brady observes. “Indeed, 89% of individuals held or drew income from employer plans, annuities, and IRAs. These results suggest that a much higher share of retirees get income from these sources than reported in government surveys, and adds to the mounting evidence that household survey data understate retiree income.”
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