Benefits - Household Income After Retirement: Is It Enough To Live On?

This graph presents the average annual income and expenses of those U.S. households in which the householder is at least 65 years of age. In every year, expenses exceed income. The amount by which expenses exceed income appears above the income column for each year. That amount is, for example, $2 in 1990 and $1,186 in 1999.

The average household headed by someone 65 years or older spends more than it takes in per year. Households in this category spend money earned and accumulated earlier in life. They depend for at least a portion of their livelihood on savings.

Detail Listing of the Sources of Income for Households Headed by Someone 65 years or older

Source of Income	1985	1990	1995	1999
Self-employment Income	923	885	845	1,448
SS & Private Pensions	13,992	16,050	16,912	16,991
Interest, Dividends, etc…	3,889	3,496	2,113	2,996
Unemployment & Workers Comp.	163	201	202	75
Public Assistance	204	224	334	251
Other Income	202	212	196	290
Total Money Income Before Tax	25,481	25,970	25,824	28,170
All taxes Paid	-2,119	-1,568	-1,258	-1,330
Total Expenditures	-25,603	-24,404	-25,133	-28,026
Deficit Spending	2,241	2	568	1,186

These households derive income from four primary sources: (1) wages and salaries (often of someone other than the head-of-household), (2) self-employment income, (3) Social Security and private-pension payments, and (4) interest and dividend income. There is one additional source of income, not listed in the table above — household savings, those that are used to cover deficit spending.

This brings up a very simple question: Are we now saving at a rate that will provide us with the supplemental income necessary to live comfortably for many years after retiring? As the previous panel showed, the Social Security system would be unable, at current rates, to provide more than an ever-smaller portion of a person's expected retirement income. The resources with which we enter retirement will become an ever more important factor in determining whether or not we are able to retire "early."

Personal savings rates are, therefore, our next area of investigation. Are we saving enough now to provide for our retirement?

Source: U.S. Department of Labor. Consumer Expenditure Survey 1985-1999. Online. Available: ftp://ftp.bls.gov/pub/special.requests/ce/standard/1990/age.txt. All dollar amounts have been normalized to the year 2000 using the Bureau of Labor Statistic Consumer Price Index.