Topics in Aging: Income of Americans Age 65 and Older, 1969 to 2004







Prepared for Members and Committees of Congress



The aging of the American population and the retirement of the baby boom generation will place
financial strains on Social Security, public and private pensions, and on retirees’ personal savings.
Since the 1960s, birth rates have fallen and average life expectancy has increased. Consequently,
the number of workers relative to the number of retirees is projected to decline, and retirees will
have to stretch their savings and other assets over longer periods of retirement than their parents
and grandparents experienced. This CRS report presents data collected by the Census Bureau
from 1969 through 2005 that describe how the demographic traits, employment patterns, and the
sources and amounts of income of people 65 and older have changed over a period of nearly 40
years.
America’s elderly today are older, more racially and ethnically diverse, better educated, and less
likely to be widowed than the elderly population of the late 1960s. The increasing number of
Americans living to age 80 and older is of particular significance because it is the very old who
are most likely to need medical, social, and long-term care services, and who are at the greatest
risk of depleting their financial resources and slipping into poverty.
Rates of employment among older persons have been rising in recent years. Employment rates
fell among men 55 and older from the late 1960s to the early 1990s. Since then, employment rates
have risen for older men, but they remain below the employment rates of the 1970s. Among older
women, employment rates have steadily increased, but older women’s employment rates today
remain lower than those of men the same age. Earnings, Social Security, pensions, and income
from assets comprise the majority of income among people 65 and older today, just as they did 35
years ago. Wages and salaries today constitute a greater proportion of the aggregate income of the
elderly than at any time since the late 1970s. Since the early 1990s, both the share of aggregate
income received from assets and the percentage of older persons with asset income have fallen.
Social Security has remained a fairly stable share (about 40%) of the total income of people 65
and older. The percentage of men receiving pension income rose until the early 1990s and then
fell. More women today have pension income, but their average pension is half the amount that
men receive.
Median household income rose faster among elderly households than among nonelderly
households from 1969 through 2004, but in 2004 the median annual income of households in
which the householder or spouse was 65 or older ($25,210) was just half of the median income of
younger households ($50,466). The rise in the income of elderly households coincided with a
decline in the poverty rate among people 65 and older from 25% in 1969 to just 10% in 2004.
Also since the 1960s, the rate of decline in median personal and household income that occurs as
people pass age 60 and begin to retire has slowed. Growth in real wages—and in the Social
Security and pensions based on these wages—has contributed greatly to the economic well-being
of today’s retirees.






Background: America’s Aging Population......................................................................................1
Americans Are Living Longer than Ever Before......................................................................1
The Income of Older Americans and the Federal Budget.........................................................2
Trends in the Income of Older Americans................................................................................3
The Data....................................................................................................................................4
Demographic Profile of the CPS Population Age 65 and Older......................................................5
Age ............................................................................................................................ ................ 5
Sex ............................................................................................................................................. 6
Race and Ethnicity....................................................................................................................6
Marital Status............................................................................................................................7
Education .................................................................................................................................. 8
Employment Among People Age 65 and Older...............................................................................8
Rates of Employment, by Age..................................................................................................9
Employment Rates among Men and Women..........................................................................10
Full-Time vs. Part-Time Employment among Older Workers................................................14
Sources and Amounts of Income Among People 65 and Older.....................................................14
Earnings ....................................................................................................................... ........... 15
Social Security........................................................................................................................16
Asset Income...........................................................................................................................16
Pension Income.......................................................................................................................18
Welfare Income.......................................................................................................................19
Other Income...........................................................................................................................20
Sources of Income, by Quartile...............................................................................................20
Sources of Income Differ Between Men and Women.............................................................23
Household Income of People 65 and Older...................................................................................25
Median Household Income, by Age........................................................................................26 thth
Household Income at the 75 and 25 Percentiles..................................................................28
Poverty Status of the Elderly.........................................................................................................29
Decline in Poverty Among the Elderly...................................................................................29
Poverty among Demographic Groups.....................................................................................31
Changes in Income as People Age.................................................................................................32
Changes in Individual and Household Income.......................................................................33
Conclusion ..................................................................................................................................... 36
Figure 1. Number of Older Americans, 1969-2005, by Age Group................................................2
Figure 2. Employment Rates of Men by Age, 1969-2005.............................................................12
Figure 3. Employment Rates of Women by Age, 1969-2005........................................................13
Figure 4. Share of Income by Source among People 65+, 1969-2004..........................................18
Figure 5. Sources of Income by Quartile, 1975.............................................................................21
Figure 6. Sources of Income by Quartile, 2004.............................................................................22





Figure 7. Percentage of Men and Women Age 65+ with Income from Each Source, by
Year ........................................................................................................................... ................. 24
Table 1. Projections of the Resident U.S. Population, by Age........................................................2
Table 2. Age Distribution of People Age 65 and Older, 1970-2005................................................6
Table 3. Race and Sex of Individuals Age 65 and Older, 1970-2005..............................................7
Table 4. Marital Status of Men and Women Age 65 and Older, 1970-2005....................................7
Table 5. Educational Attainment of Individuals Age 65 and Older, 1970-2005..............................8
Table 6. Employment Rates, by Age, 1969 to 2004......................................................................10
Table 7. Employment Rates Among Men and Women, by Age.....................................................11
Table 8. Full-Time and Part-Time Employment, by Age of Worker.............................................14
Table 9. Percentage of People Age 65 and Older with Income from Each Source.......................17
Table 10. Income from Each Source as a Percentage of Total Income Among People 65
and Older....................................................................................................................................17
Table 11. Mean Annual Income of People 65 and Older from Each Source.................................17
Table 12. Median Annual Income of Individuals 65 and Older from Each Source.......................18
Table 13. Median Income of Men and Women Age 65 and Older from Each Source..................25
Table 14. Average Household Size by Year and Age of Householder...........................................26
Table 15. Mean and Median Household Income, by Age of Householder....................................26
Table 16. Percentage Change in Median Household Income, 1969 to 2004, by Age of
Househol der ............................................................................................................................... 27
Table 17. Household Income at 75th and 25th Percentiles, by Age of Householder.......................28
Table 18. Cumulative Percentage Change in Household Income at 75th and 25th
Percentiles, by Age of Householder...........................................................................................29
Table 19. Poverty Status of Individuals Age 18 and Older, by Year..............................................30
Table 20. Poverty Status of Individuals Age 18 and Older in 2004, by Demographic
Characteristics ............................................................................................................................ 31
Table 21. Median Individual Income at Five-Year Intervals.........................................................35
Table 22. Median Household Income at Five-Year Intervals........................................................36
Table A-1. Percentage of People Age 65 and Older with Income from Each Source, by
Year ........................................................................................................................... ................. 39
Table A-2. Median Annual Income of Individuals Age 65 and Older, by Income Source............40
Table A-3. Mean and Median Annual Household Income in 2004 Dollars...................................41
Appendix. Historical Tables of Individual and Household Income...............................................38





Author Contact Information..........................................................................................................44






The average life expectancy of Americans born in 1969 was 70.5 years. It has been estimated that 1
those who were born in 2003 will live for an average of 77.5 years. Women continue to have a
longer average life expectancy than men, but both men and women have experienced gains in
average life expectancy since the 1960s. A man who reached age 65 in 1969 could expect to live
another 13.0 years, whereas a woman who turned 65 in 1969 had a remaining life expectancy of
16.5 years. A man who reached age 65 in 2003 could expect to live another 16.8 years, whereas a
woman who turned 65 in 2003 had a remaining life expectancy of 19.8 years. As more people live
into old age, the age-profile of the population will shift. In 1969, 18.6 million people in the
United States—9.4% of the population—were age 65 or older. In 2005, there were 36.7 million
Americans age 65 or older, representing 12.4% of the population. (See Figure 1.) By 2025,
according to projections made by the Bureau of the Census, there will be 63.5 million people age

65 or older, comprising 18.2% of the U.S. population. (See Table 1.)


These demographic trends will strain the components of the traditional “three-legged stool” of
retirement income: Social Security, pensions, and personal saving. The Social Security Board of
Trustees has estimated that the Social Security trust fund will be exhausted by 2041 unless actions 2
are taken to preserve it. Pensions are the second largest source of income among the elderly, after
Social Security, but only about half of all workers in the United States have pension coverage
through their jobs. Moreover, the traditional pension that provides a lifelong annuity is becoming
less common. Today, more workers participate in savings and thrift plans than in traditional
pension plans. A key characteristic of these savings plans is that the worker must actively
participate, deciding whether to contribute to the plan, how much to contribute, and how to invest
the funds. Workers who do not choose to save, or who save too little, may face difficult financial
circumstances in retirement.

1 U.S. National Center for Health Statistics, Vital Statistics of the United States.
2 Social Security and Medicare Boards of Trustees, Status of the Social Security and Medicare Programs: A Summary
of the 2005 Annual Reports, March 2005.





Figure 1. Number of Older Americans, 1969-2005, by Age Group
(in thousands)
Source: CRS analysis of the March income supplements to Current Population Survey.
Table 1. Projections of the Resident U.S. Population, by Age
(in thousands, as of July 1 each year)
Age 2005 2015 2025 2035 2045 2050
Under 20 81,972 85,208 92,026 98,192 105,344 109,147
20 to 64 176,839 190,368 193,888 203,052 217,559 224,001
65 to 69 10,123 15,621 19,647 18,683 18,829 20,444
70 to 79 15,876 18,748 28,309 34,114 32,183 32,566
80 and up 10,696 12,422 15,568 23,844 31,947 33,696
Total 295,506 322,367 349,438 377,885 405,862 419,854
65 and older 36,695 46,791 63,524 76,641 82,959 86,706
% of Total 12.4% 14.5% 18.2% 20.3% 20.4% 20.7%
Source: U.S. Census Bureau http://www.census.gov/ipc/www/usinterimproj/.
Congress has an interest in the sources and amounts of income among older Americans, not only
because they represent a large and growing proportion of the U.S. population, but also because
much of the income of older Americans is provided through government-sponsored income





transfers, or is subsidized through income tax deductions and exemptions. In FY2006, for
example, federal expenditures for Social Security will exceed $550 billion, representing more 3
than 20% of total federal spending and nearly 38% of federal spending on entitlement programs.
The federal government also provides income directly to low-income older Americans through
the Supplemental Security Income (SSI) program and to retired federal employees through the
Civil Service Retirement System and the Federal Employees’ Retirement System. Of the
estimated $35.3 billion federal expenditure for SSI benefits in FY2006, approximately one-sixth, 4
or $5.9 billion, will be paid to recipients who are 65 or older. Federal outlays for retirement and
disability pensions for former federal employees will exceed $58 billion in FY2006, with most of
this amount being paid to individuals age 55 and older.
The public also subsidizes the income of older Americans through several exemptions and
deductions that Congress has included in the Internal Revenue Code. These tax incentives
promote sponsorship of pension plans by employers and encourage workers to save for
retirement. The tax deductions and deferrals granted to qualified retirement plans are the second
largest tax expenditure in the federal budget, and will reduce federal tax revenues by an estimated 5
$103.3 billion in FY2006. Congress also allows taxpayers who are 65 or older to claim an
additional standard deduction on their income tax returns, which will reduce federal tax revenues
by an estimated $1.7 billion in FY2006.
Developing public policies that will promote income security among older Americans while also
meeting other important fiscal priorities will pose many challenges for Congress. Congress has
already begun to consider policy options to meet these challenges. Social Security, pensions, and
retirement savings will continue to occupy the attention of Congress as the baby boom generation
retires, and more households begin to rely on Social Security, pensions, and savings to provide
the majority of their income.
As policymakers consider proposals that would affect the main income sources of older
Americans, it may be helpful for them to know how the amounts and sources of income of people
who have reached retirement age have changed over time. This CRS report presents data
collected by the Census Bureau from 1969 through 2005 that describe how the demographic
traits, employment patterns, and the sources, amounts, and distribution of income among people
65 and older have changed over a period of nearly 40 years. The report begins with a
demographic profile of older Americans, which describes the population 65 and older in terms of
age, race, sex, educational attainment, and marital status and how these demographic traits have
changed since the late 1960s. This is followed by a section that focuses on trends in employment
among people 65 and older, including differences in rates of employment among men and
women. The third section of the report provides detailed information on the sources and amounts
of income received by people 65 and older, and how the proportion of total income from each

3 Budget of the United States Government, Fiscal Year 2007: Analytical Perspectives, p. 360. Not all Social Security
spending is for persons 65 and older. Data collected by the Census Bureau indicate that about 76% of Social Security
recipients in 2004 were 65 or older and these individuals received 78% of Social Security benefits paid that year.
4 Budget of the United States Government, Fiscal Year 2007, and Census Bureau data.
5 Budget of the United States Government, Fiscal Year 2007: Analytical Perspectives, p. 289. The largest tax
expenditure is the exclusion for employer contributions for employee health insurance, which will reduce federal tax
revenues by an estimated $118.4 billion in FY2006.





source has changed over time. The fourth section examines trends in the distribution of income
among households, and compares the distribution of income among the households of older
Americans with the income distribution of income among the households of people under 65
years old. This is followed by a section that describes the decline in the proportion of older
Americans living in poverty since the 1960s. The final section of the paper explains how
individual and household incomes fall as people age and gradually reduce their attachment to the
paid labor force.
All of the data presented in this report were collected by the Census Bureau through the Current
Population Survey (CPS), a survey of the civilian, noninstitutional population of the United
States. The CPS was begun in the 1940s as a way to measure unemployment each month on the
basis of a random sample of U.S. households. It is still the source of the official rate of
unemployment reported each month by the Bureau of Labor Statistics. The CPS also is used to
collect annual income data. Each year, in March, the survey includes a detailed set of questions
on the amounts and sources of income people received during the previous calendar year. Over
the years, the number of income questions has expanded, and today information is gathered on
more than 50 different sources of income, and noncash benefits such as food stamps, employer-
provided pension plans, employer-sponsored health insurance plans, Medicaid, Medicare, and
home energy assistance. The survey also collects detailed information on the employment status,
work experience, occupation, and industry of employment of people 15 years old and over. The
number of households surveyed has increased over the years. In March 1969, the earliest survey
CRS analyzed for this report, the CPS sample included 47,000 households and contained records
for 152,000 individuals. In March 2005, the most recent survey studied for this report, the CPS
sample included 100,000 households and contained records for 216,000 individuals.





People 65 and Older in Nursing Homes and Long-term Care Facilities
The data presented in this report were collected by the Census Bureau through the Current Population Survey
(CPS). The CPS is conducted among the civilian, noninstitutionalized population of the United States. It does not
include residents of prisons, nursing homes, or military personnel living on base. In 2000, an estimated 1.72 million
persons resided in nursing homes. Of this number, 1.56 million (91%) were age 65 or older, comprising 4.5% of the
total number of persons age 65 or older. Elderly residents of nursing homes differ demographically from older
persons who live in the community. Nursing home residents are older, more likely to be female, and are less likely to
be married than community residents. In 2005, among people 65 and older living in the community, 52% were 65 to
74 years old, 37% were 75 to 84 years old and 11% were 85 or older. The age distribution among nursing home
residents age 65 and older in 2005 was a mirror image of the community population: 15% were 65 to 74 years old,
37% were 75 to 84 years old, and 48% were 85 or older. Among people 65 and older living in the community in 2005,
57% were women. Among nursing home residents age 65 and older, 74% were women. Among community residents
age 65 and older in 2005, 55% were married. Among nursing home residents, just 20% were married. The remainder
were widowed, divorced, or never married.6


The demographic traits of people 65 and older have changed over the past 35 years.
Demographically, America’s elderly today are older, more racially and ethnically diverse, better
educated, and less likely to be widowed than the elderly population of the late 1960s and early
1970s. The increasing number of Americans living to age 80 and older is of particular importance
to policymakers, because it is the very old who are most likely to need medical, social, and long-
term care services, and who are at the greatest risk of depleting their financial resources and
slipping into poverty.
The American population is not only growing larger, it is getting older. During the past 35 years,
the total U.S. population increased by 47%, rising from 198 million in 1970 to 291 million in

2005. Also during that period, the number of Americans age 65 and older has nearly doubled,


growing from slightly less than 19 million to more than 35 million. (See Table 2.) The proportion
of the population who are 65 or older is projected to continue rising. In 1970, 9% of the
population were age 65 and older, and by 2005 the share had risen to 12%. The Census Bureau 7
projects that by 2035, 20% of the U.S. population will be age 65 and older.
As the proportion of the total population age 65 and older has increased, the age distribution
among older persons also has changed. Compared to 35 years ago, a greater share of the elderly
today are age 80 or older. In 1970, 36% of Americans age 65 or older were 65 to 69 years old,
47% were 70 to 79 years old, and just 17% were 80 or older. In contrast, by 2005, the proportion

6 The demographic characteristics of nursing home residents presented here were taken from the Minimum Data Set
Resident Reports prepared by the Centers for Medicare and Medicaid Services, U.S. Department of Health and Human
Services. These data are a representative sample of 1.4 million residents of Medicare- and Medicaid-certified long-tem
care facilities.
7 U.S. Census Bureau, “U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin, 2004 at
http://www.census.gov/ipc/www/usinterimproj.





of people age 65 or older who were 65 to 69 years of age had declined to 29% and the proportion
who were age 80 or older had risen to 26%. (See Table 2.)
Table 2. Age Distribution of People Age 65 and Older, 1970-2005
Percentage
Number (thousands) 65-69 70-79 80 and older Total of U.S. a
population
1970 18,899 35.7% 47.3% 17.0% 100% 9.4%
1980 23,743 36.1 46.3 17.6 100 10.9
1990 29,566 34.3 46.1 19.6 100 12.0
2000 32,621 28.7 47.9 23.4 100 11.9
Source: CRS analysis of the March income supplements to Current Population Survey.
a. People age 65 and older as a percentage of total U.S. population.
The proportion of Americans age 65 and older who are male or female has remained relatively
constant over the past 35 years. (See Table 3.) Roughly 43% of older Americans are men,
whereas women comprise roughly 57%. The difference in the share of elderly by sex is primarily 8
due to females having a longer life expectancy than their male counterparts. On average, a
woman age 65 in 2002 could expect to live an additional 19.5 years (to age 84 and 6 months) and 9
a man age 65 could expect to live an additional 16.6 years (to age 81 and 7 months). Although
the population age 65-69 is roughly equally divided between men and women—with men
comprising 48% and women comprising 52% in 2005—women’s greater longevity results in a
dramatic difference for older age groups. Nearly two-thirds (63% in 2005) of Americans age 80
and older are women.
Reflecting changes in the general population, Americas’s older population has become more 10
racially and ethnically diverse over the past 35 years. Although they remain a majority, the share
of Americans age 65 and older who report their race as white has declined. (See Table 3.) In

1970, 92% of those age 65 and older were white, whereas in 2005, the share had fallen to 87%.


The share of older Americans who are black has risen slightly during the same period from 7% to
8%. The share of older individuals who the Census Bureau categorizes as other races—primarily
persons of Asian and Native American heritage—has risen over the last 35 years from less than
1% to more than 4% of the population. Persons of Hispanic ethnicity may report themselves to be

8 For an explanation of the differences in life expectancy by sex, see CRS Report RL32792, Life Expectancy in the
United States, by Laura B. Shrestha.
9 U.S. National Center for Health Statistics, Vital Statistics of the United States.
10 In 1970, 88% of the total U.S. population of all ages reported their race as white, 11% as black, and 1% as other. By
2005, the share reporting their race as white had fallen to 81% and the share reporting their race as black had risen to
13%; other rose to 7%.





of any race.11 Between 1971 and 2001, the proportion of Americans age 65 and older who
identified themselves as being of Hispanic ethnicity increased from 1.6% to 5.3%.
Table 3. Race and Sex of Individuals Age 65 and Older, 1970-2005
Male Female White Black Othera
1970 42.7% 57.3% 91.9% 7.3% 0.8%
1980 41.2 58.8 90.3 8.5 1.2
1990 41.7 58.3 89.6 8.4 2.0
2000 42.6 57.4 88.5 8.4 3.0
2005 43.0 57.0 87.2 8.4 4.4
Source: CRS analysis of the March income supplements to Current Population Survey.
a. Mainly Asian and Native American. Persons of Hispanic ethnicity may be of any race.
In 2005, women age 65 and older were almost equally likely to be widowed as they were to be
married. (See Table 4.) This a consequence of both women’s longevity and the fact that many
women marry older men. In 2005, roughly one-half of married women age 65 and older had
husbands who were at least two years older. These factors help to explain how less than one-half
(42%) of older women, but nearly three-quarters (72%) of older men were married in 2005. The
marital composition of the elderly has changed over the last 35 years. The proportion of men and
women who are divorced has more than tripled, and the share of men and women who are
widowed has fallen. For both older men and women, the share who have never been married has
fallen. In 1970, roughly 7% of persons age 65 and older had never been married; by 2005 it was
roughly 4%.
Table 4. Marital Status of Men and Women Age 65 and Older, 1970-2005
Married Separated Divorced Widowed Single
Men
1970 71.0% 2.3% 2.3% 17.6% 6.8%
1980 75.5 2.0 3.7 13.6 5.1
1990 74.3 2.3 5.0 14.2 4.2
2000 72.6 2.7 6.1 14.4 4.3
2005 71.7 3.2 7.1 13.7 4.4
Women
1970 35.3% 1.3% 2.1% 54.1% 7.2%
1980 38.1 1.7 3.4 51.0 5.9

11 For a discussion of the federal standards for presenting data on race and Hispanic origin, see CRS Report RL3270,
The Changing Demographic Profile of the United States, by Laura Shrestha.





Married Separated Divorced Widowed Single
1990 39.7 1.7 5.1 48.6 4.9
2000 41.3 2.6 7.2 45.3 3.6
Source: CRS analysis of the March income supplements to Current Population Survey.
America’s older population is an increasingly well-educated group. In 1970, the vast majority
(71%) of Americans age 65 and older had not graduated from high school and only 13% had
either some college or were college graduates. (See Table 5.) By 2005, only a quarter of older
Americans had not graduated from high school and 38% had either some college or were college
graduates. The rise in the education level of the elderly reflects the increasing educational
attainment in the total population as well as the positive correlation between education and life 12,13
expectancy.
Table 5. Educational Attainment of Individuals Age 65 and Older, 1970-2005
Less than High School Some College
High School Graduate College Graduate
1970 71.4% 16.0% 6.2% 6.3%
1980 59.4 24.0 8.1 8.5
1990 42.9 33.1 12.1 11.9
2000 29.0 37.3 18.0 15.6
2005 26.1 36.4 18.7 18.8
Source: CRS analysis of the March income supplements to Current Population Survey.

Patterns of employment among older Americans have changed since the 1960s, and the trends in
employment among older workers have differed between men and women. From the late 1960s to
the early 1990s, employment rates fell steadily among men 55 and older. Since then, employment
rates have risen for older men, but they remain below the employment rates that prevailed among
men 55 and older as recently as the late 1970s. Among older women, the trend in employment
since the late 1960s has been one of steady increase, as the larger numbers of women who entered
the labor force in the 1960s and 1970s have begun to pass age 55. Despite this steady increase,
however, older women’s employment rates today remain lower than those of men the same age.
Moreover, among both men and women employment rates continue to drop significantly after age
70. Consequently, earnings are likely to remain a fairly small contributor to the total income of
people older than age 70.

12 Nicole Stoops, Educational Attainment in the United States, 2003, Population Characteristics, U.S. Census Bureau,
Current Population Reports, P20-550.
13 CRS Report RL32792, Life Expectancy in the United States, by Laura B. Shrestha.





Although the reasons for the increased employment among older individuals—particularly the
upturn in employment among older men—cannot be determined with complete certainty, two
factors often cited by economists are long-term developments in the design of employer-
sponsored pensions and the decline in the proportion of retirees with access to employer-
sponsored group health insurance. With respect to pensions, the trend for the past 25 years has
been away from traditional defined-benefit pensions that pay a guaranteed annuity for life—and
which often pay early-retirement subsidies to encourage workers to retire at 55—toward defined
contribution plans, such as the 401(k). The typical 401(k) plan does not include any type of
subsidy for early retirement, and some workers may have begun to delay retirement in order to
retire with a larger account balance. In the area of health insurance, rapidly rising health care
costs have discouraged employers from beginning or continuing to offer health insurance to 14
retirees. In the absence of this coverage, more workers may choose to continue working until
age 65, when they become eligible to enroll in Medicare.
As people grow older, both the proportion of those who work and of those who work full-time
decline. In 2004, 90% of men between the ages of 25 and 54 worked for pay at some time during 15
the year. Among men age 55 to 64, 73% worked in 2004, and of men 65 and older only 23%
were employed at some time during the year. Similarly, 77% of women between the ages of 25
and 54 were employed at some time in 2004; the employment rate among women 55 to 64 years
old was 60%. Among women 65 or older, just 14% were employed at some time in 2004.
Older workers also tend to work fewer hours than younger workers. Among all workers between
the ages of 25 and 54, 87% worked full-time in calendar year 2004 and 13% worked part-time.
Even among workers aged 55 to 59, 86% worked full-time in 2004. However, among those 60 to

64 years old, only 78% who worked in 2004 were employed full-time. Beginning at age 62,


individuals are eligible for Social Security retired worker benefits, and this appears to have some
effect on rates of full-time employment. Among people who were 60 or 61 years old and who
worked in 2004, 82% were employed full-time. Among those who were 62 to 64 years old and
who worked in 2004, just 74% worked full time. Rates of full time employment fall further after 16
age 65. Of those 65 and older who were employed in 2004, only 51% worked full-time.
The trend in employment rates among all persons 55 and older since the late 1960s is described
by a slightly “U-shaped” curve. The employment rate among people 55 and older at first
declined, reaching a low point in the mid- to late 1980s. During the past 10 to 15 years,
employment rates among older persons have risen, and the rate of increase appears to have
accelerated recently. In 1969, 70% of people 55 to 59 years old were employed at some time
during the year, as were 60% of people 60 to 64 years of age, 35% of those aged 65 to 69, and

14 For more information, see CRS Report RL33361, Employer-Sponsored Retiree Health Insurance: An Endangered
Benefit?, by Neela K. Ranade.
15 The statistics in this paragraph were derived from the March 2005 Current Population Survey. For more on labor
force participation among people 55 and older see, CRS Report RL30629, Older Workers: Employment and Retirement
Trends, by Patrick Purcell.
16 Although Social Security retired worked benefits are first available at age 62, beneficiaries who are under the full
retirement age (65 years and 8 months for those who reach age 65 in 2006) are subject to an earnings test that reduces
the monthly benefit if their earnings exceed a threshold amount. In 2006, Social Security beneficiaries who are under
the full retirement age have their benefit reduced by $1 for every $2 of annual earnings over $12,480.





13% of those age 70 and older. (See Table 6.) By the late 1980s, employment rates for all four of
these age groups had fallen, and for those age 60 or older employment rates had fallen
substantially. In 1989, the employment rate among people 55 to 59 years old was 67%, just 3
percentage points lower than in 1969. Among those 60 to 64 years old, however, the employment
rate in 1989 was 49%, or 11 percentage points lower than 20 years earlier. Likewise, among
people ages 65 to 69, the employment rate of 25% in 1989 was 10 percentage points lower than it
had been in 1969. Among people age 70 and older, the 1989 employment rate was more than four
percentage points lower than it had been in 1969.
Since the late 1980s, employment rates among older persons have risen, although among people
60 and older they remain lower than they were in the late 1960s. Among people 55 to 59 years
old, 74% were employed at some time in 2004, an increase of 7 percentage points since 1989.
The employment rate among individuals age 60 to 64 was 57% in 2004, an increase of 8
percentage points since 1989. The employment rate among those 65 to 69 years old also rose by 8
percentage points between 1989 and 2004, rising from 25% to 33%, whereas the employment rate
among those age 70 and older rose from 9% to 12% during this time.
Table 6. Employment Rates, by Age, 1969 to 2004
(persons employed full-time or part-time in any month of the year)
Age Age Age Age 70
55-59 60-64 65-69 and Older
1969 70.4% 59.5% 34.9% 13.3%
1974 66.4 55.2 27.7 11.7
1979 68.5 54.2 28.4 11.2
1984 68.3 51.1 24.8 10.0
1989 67.4 48.5 24.8 8.5
1994 69.1 48.6 24.4 8.2
1999 70.3 52.7 27.0 10.0
2004 73.9 57.0 32.7 12.2
Source: CRS analysis of the March income supplements to Current Population Survey.
Employment rates differ between men and women at every age, and the recent trends in
employment rates among older Americans also differ between men and women. Although women
have lower labor force participation rates than men, most of the increase in employment among
older Americans since the mid-1980s has been the result of the increased labor force participation
of women. Employment rates among older men have begun to rise over the past 15 years, but
they remain substantially lower than the employment rates that prevailed among men up until
about 1980. Employment rates among older women, in contrast, were higher in 2004 than at any
point in the previous 35 years.
In 1969, 91% of men between the ages of 55 and 59 were employed at some time during the year.
(See Table 7.) The employment rate among men in this age group declined steadily over the next
30 years, falling to 78% by 1999. By 2004, the employment rate among 55 to 59 year-old men
had risen to 80%, but this was still lower than the employment rate among men in this age group





had been 20 years earlier in 1984. Similar patterns can be seen in the employment rates of men in
the 60-64, 65-69, and 70 and older age categories. In each of these groups, employment rates
among men fell from the late 1960s through the mid-1990s, and then rose a few percentage
points. Employment rates among men in these age groups, while higher in 2004 than in 1999 or

1994 were still lower than they were 25 years earlier in 1979.


Table 7. Employment Rates Among Men and Women, by Age
(persons employed full-time or part-time in any month of the year)
Age Age Age Age 70
55-59 60-64 65-69 and older
Men Women Men Women Men Women Men Women
1969 90.7% 52.0% 80.3% 41.4% 50.2% 22.3% 21.3% 7.7%
1974 83.8 50.5 73.8 39.0 39.2 18.5 19.7 6.5
1979 84.6 53.9 70.5 39.9 38.4 20.3 17.9 6.8
1984 81.8 55.8 64.2 40.0 32.9 18.3 15.1 6.7
1989 79.6 56.3 59.9 38.5 30.6 20.0 12.9 5.7
1994 78.4 60.7 56.0 41.8 30.1 19.6 12.4 5.4
1999 77.7 63.7 61.6 44.6 33.2 21.4 14.4 6.9
2004 80.1 68.2 64.5 50.3 37.1 28.7 16.7 9.0
Source: CRS analysis of the March income supplements to Current Population Survey.
Employment rates among older women did not follow the U-shaped pattern of men’s employment
rates over the period from 1969 to 2004. From 1969 through the mid-1980s, employment rates
among women age 55 to 59 generally rose, whereas employment rates among women 60 and
older fell slightly. Since the late 1980s, employment rates among women 55 to 69 years old have
continued to rise as the large numbers of women who entered the labor force in the 1960s and

1970s began to pass age 55. In 2004, for example, 68% of women aged 55 to 59 were employed,


up from 56% in 1984. Employment rates also have risen among women 60 and older. Fifty
percent of women 60 to 64 years old were working in 2004, compared with 40% in 1984, and

29% of women aged 65 to 69 were employed at some time in 2004, up from 18% 20 years earlier.


Figures 2 and 3 show the percentage of men and women, respectively, who were employed in
March each year from 1969 to 2005.




Figure 2. Employment Rates of Men by Age, 1969-2005

90.0%


80.0%


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6 9 9 7 1 9 73 9 7 5 9 77 9 79 98 1 9 8 3 98 5 9 87 98 9 9 9 1 9 93 9 9 5 9 9 7 9 9 9 00 1 0 0 3 0 0 5
1 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
Year
Source: CRS analysis of the March income supplements to Current Population Survey.




Figure 3. Employment Rates of Women by Age, 1969-2005

90.0%


80.0%


d
70.0%ye
lo
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69 9 71 9 73 9 75 9 77 97 9 9 81 983 98 5 98 7 98 9 9 91 99 3 9 95 99 7 9 99 00 1 00 3 0 05
19 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
Year
Source: CRS analysis of the March income supplements to Current Population Survey.





As noted above, individuals who continue to work past age 55 remain almost as likely to work
full-time as their younger counterparts until about age 62, the first age of eligibility for Social
Security retired worker benefits. For workers 55 to 59 years old, the distribution between full-
time and part-time employment changed relatively little between 1969 and 2004, whereas for
those age 60 to 64, the proportion of workers employed full-time fell from 86% in 1969 to 78% in
1989 and has remained near that level since then. Among workers 65 to 69 years old and those 70
and older, the percentage who work full-time fell between 1969 and 1979, but has since
increased. (See Table 8.)
Table 8. Full-Time and Part-Time Employment, by Age of Worker
Age Age Age Age 70
55-59 60-64 65-69 and older
Full-time Part-time Full-time Part-time Full-time Part-time Full-time Part-time
1969 89.1% 10.9% 85.7% 14.3% 65.2% 34.8% 45.2% 54.8%
1974 88.6 11.4 85.9 14.1 57.4 42.6 43.2 56.8
1979 86.2 13.8 81.9 18.1 51.1 48.9 37.8 62.2
1984 84.1 15.9 79.0 21.0 51.5 48.5 34.2 65.8
1989 85.1 14.9 77.7 22.3 53.5 46.5 38.9 61.1
1994 84.5 15.5 76.2 23.8 53.6 46.4 40.2 59.8
1999 86.9 13.1 78.8 21.2 54.9 45.1 46.0 54.0
2004 86.2 13.8 78.2 21.8 59.0 41.0 42.2 57.8
Source: CRS analysis of the March income supplements to Current Population Survey.


Older Americans receive income from a variety of sources such as earnings, Social Security, 17
assets, pensions, and welfare. Four sources of income—earnings, Social Security, pensions, and
income from assets—comprise the majority of income among people 65 and older today, just as
they did 35 years ago. In 2004, these four income sources provided 97% of all income received
by people 65 and older. This was a slight increase from 1975 (the first year for which separate
data on pension income are available from the CPS) when these four sources provided 95% of
income received by people 65 and older.
Wages and salaries today constitute a greater proportion of the aggregate income of the elderly
than at any time since the late 1970s, and while this is due in part to increasing rates of
employment, it is also partly the result of a decline over the past 15 years in the proportion of

17 The CPS does not collect information on income received from capital gains.





income received as interest and dividends. Since the early 1990s, interest rates and dividend
yields have fallen, and both the share of aggregate income received from these sources and the
percentage of older individuals with income from assets have fallen since that time. Social
Security has for most of the past 35 years remained a fairly stable share (about 40%) of the
income of people 65 and older. Trends in pension income have been more complex.
Trends in the percentage of people receiving pension income have differed between men and
women. The proportion of men 65 and older with pension income rose between 1980 and the
early 1990s. By that time, almost half of men 65 and older received some pension income. Since
about 1992, however, the proportion of men receiving pension income has fallen to about 44%.
Although the percentage of women 65 and older with pension income has continued to rise—
although very slowly—women 65 and older are only half as likely as men to receive income from
this source. Moreover, women’s pension income is, on average, only half that of male pension
recipients. The share of income the elderly receive from pensions has fallen since the early 1990s
because the proportion of men with pension income has fallen and the rise in the proportion of
women with pension income has been offset by the smaller amounts they typically receive.
Because the proportion of the total workforce who participate in employer-sponsored pensions
has remained stable at about half the workforce since the 1970s, it is unlikely that the share of
total income of the elderly received from pensions will rise substantially in the next 10 to 20
years.
Few individuals age 65 and older do not receive any income. Between 1969 and 2004, the
percentage of people 65 and older receiving income from at least one source increased from 90% 18
to 97%. Among people who had income from any source, the mean annual amount (in constant

2004 dollars) rose from $13,414 in 1969 to $23,762 in 2004, an increase of 77% or 1.6% per year.


Median total income, also in constant 2004 dollars, rose from $8,196 in 1969 to $15,189 in 2004, 19
an increase of 85% or 1.7% per year. (See Tables 9 through 12.)
In 1969, a quarter of all people 65 and older worked, and earnings provided a third of the total
income of the elderly. Both of these percentages declined sharply over the next decade, and by
1980, the proportion of people 65 and older with earned income had fallen to 17%, and earnings
had fallen to 16% of the aggregate income of the elderly. The proportion of Americans age 65 and
older with earnings has increased slightly in recent years, rising from 16% in the early 1990s to

18% in 2004. As a share of aggregate income, however, earnings have risen more substantially,


growing from 15% of the total income of the elderly in the mid-1990s to 23% in 2004. (See
Figure 4.) The increase in the proportion of income from earnings is the result mainly of four
factors: (1) growth in real wages; (2) increased employment among people 65 and older; (3) an
increase in the percentage of working elderly who are employed full-time; and (4) a drop in
interest and dividend income that resulted from falling interest rates, falling dividend yields, and a

18 The majority of individuals without income were women. In 1969, 16% of women and 1% of men received no
income. By 2004, the share of men who received no income had risen slightly (to 2%) and the share of women who
received no income had fallen to 4%.
19 The median lies at the middle of the income distribution. Half of the population have higher incomes, and half have
lower incomes. Mean income is generally higher than median income because a relatively small percentage of people
have very high incomes. The median is therefore widely considered to be a more accurate measure of average income.





decline in the percentage of people receiving interest and dividend income.20 Among people who
had earned income, the mean total amount (in constant 2004 dollars) rose from $14,497 in 1969
to $29,459 in 2004, an increase of 103% or 2.0% per year. Median earned income, also in
constant 2004 dollars, rose from $6,856 in 1969 to $15,000 in 2004, an increase of 119% or 2.2%
per year.
In 1969, 75% of people 65 and older received Social Security income, either as retired workers,
as spouses, or as survivors of deceased workers. By 1991, the proportion of elderly receiving
Social Security benefits had risen to 91%, and it has remained within two percentage points of
90% since that time. Social Security provided almost one-third of all income received by people
65 and older in 1969. By 1975, Social Security benefits accounted for 42% of the total income of
people 65 and older. During the past 30 years, Social Security has consistently comprised
between 38% and 43% of the aggregate income of the elderly population. Among people 65 and
older who received Social Security income, the mean annual amount rose from $5,171 in 1969 to
$10,681 in 2004, an increase of 107% or 2.0% per year. Median Social Security income rose from
$4,866 in 1969 to $10,399 in 2004, an increase of 114% or 2.1% per year. (All amounts are in
constant 2004 dollars.)
Income from assets—primarily interest and dividends, but also including rents and royalties—
was received by 39% of people 65 and older in 1969. The proportion of older persons receiving
asset income rose steadily over the next decade, and by 1980 two-thirds of the elderly received
income from assets. This proportion remained relatively stable until the late 1990s when it began
to decline. By 2004, the proportion of people 65 and older who received asset income had fallen
to 56%. The decline in the proportion of people receiving income from assets coincided with a
long period of falling interest rates and dividend yields. As the rate of return on these assets fell,
fewer people chose to hold such assets.
In 1969, interest, dividends, rent, and royalties provided 20% of the aggregate income of people
65 and older. This proportion steadily increased over the next two decades and peaked at 26% of
total income in 1986. The share of the income of the elderly composed of income from assets has
progressively fallen since 1986, and in 2004 only 12% of the income of people 65 and older came
from this source. Among people 65 and older who received income from assets, the mean and
median annual amounts received fluctuated from year to year. Mean annual income ranged from a
low of about $5,000 per year to a high of about $7,500 per year, in 2004 dollars. Median income
from assets was substantially lower than mean asset income because a relatively small proportion
of individuals had very large amounts of asset income. Expressed in 2004 dollars, median income
from assets was highest in 1984, reaching $2,637 that year. Since the mid-1980s, median asset
income has steadily fallen. Among those who received income from interest, dividends, rent, and
royalties in 2004, the median annual amount was just $817.

20 Between 1984 and 1994, the yield on 10-year Treasury notes fell from 12.4% to 7.1% and by 2004 had fallen to
4.3%. Dividend yields declined from 4.6% in 1984 to 2.8% in 1994 and 1.7% in 2004. (Source: Economic Report of the
President, 2006.)





Table 9. Percentage of People Age 65 and Older with Income from Each Source
Source of Income 1969 1970 1980 1990 2000 2004
Any income 90.1% 90.4% 98.7% 98.8% 97.8% 97.1%
Earnings 24.9 23.4 16.6 16.3 16.9 18.0
Social Security 74.7 75.9 90.5 91.0 89.8 88.2
Asset income 39.4 39.5 67.1 69.9 59.2 55.5
Pension income n/a n/a 26.6 37.0 34.9 35.5
Welfare 9.2 9.2 8.5 5.5 3.8 3.5
Other income 24.6 24.2 6.9 7.7 6.0 5.5
Source: CRS analysis of the March income supplements to Current Population Survey.
n/a = not available
Table 10. Income from Each Source as a Percentage of Total Income Among People
65 and Older
Source of Income 1969 1970 1980 1990 2000 2004
Earnings 29.9% 27.1% 15.9% 15.3% 20.0% 23.0%
Social Security 32.0 35.3 42.8 37.9 40.3 40.8
Asset income 20.4 19.5 22.4 24.0 17.2 12.3
Pension income n/a n/a 15.3 19.8 19.7 21.2
Welfare 2.7 2.6 1.6 0.8 0.7 0.6
Other income 15.1 15.5 2.0 2.2 2.1 2.0
Source: CRS analysis of the March income supplements to Current Population Survey.
n/a = not available
Table 11. Mean Annual Income of People 65 and Older from Each Source
(in 2004 dollars)
Source of Income 1969 1970 1980 1990 2000 2004
Income from all sources $13,414 $13,429 $15,662 $20,072 $23,257 $23,762
Earnings 14,497 14,039 14,789 18,602 27,001 29,459
Social Security 5,171 5,656 7,305 8,253 10,213 10,681
Asset income 6,256 5,986 5,161 6,803 6,622 5,122
Pension income n/a n/a 8,924 10,617 12,810 13,953
Welfare 3,556 3,408 2,818 3,035 4,149 4,245
Other income 7,405 7,788 4,445 5,743 7,911 8,161
Source: CRS analysis of the March income supplements to Current Population Survey.
n/a = not available





Table 12. Median Annual Income of Individuals 65 and Older from Each Source
(in 2004 dollars )
Source of Income 1969 1970 1980 1990 2000 2004
Income from all sources $8,196 $8,271 $10,723 $13,523 $14,727 $15,189
Earnings 6,856 6,644 8,281 8,705 12,937 15,000
Social Security 4,866 5,267 7,212 8,036 9,903 10,399
Asset income 2,134 2,038 1,656 2,385 1,477 817
Pension income n/a n/a 5,995 6,991 8,625 9,600
Welfare 3,125 3,180 2,374 2,314 3,247 3,600
Other income 5,123 5,189 2,459 2,893 3,880 4,799
Source: CRS analysis of the March income supplements to Current Population Survey.
n/a = not available
Figure 4. Share of Income by Source among People 65+, 1969-2004
Source: CRS analysis of the March income supplements to Current Population Survey.
The CPS has collected data on pension income as a separate category only since the March 1976
survey, which collected information on income received in 1975. Before that, income from





pensions was included in a broad category of “other income.” In 1975, 22% of people 65 and
older received income from pensions earned through a job or jobs in either the public or private
sectors or as the survivor of a worker who was receiving a pension. The percentage of people 65
and older receiving income from pensions rose until the early 1990s, peaking at 38% in 1992. The
proportion of the elderly population receiving pension income has since fallen slightly. In 2004, 21

36% of people 65 and older received pension income.


In 1975, income from pensions made up 14% of the total income of people 65 and older. This
proportion increased over the next 15 years, along with the percentage of older persons receiving
income from pensions, reaching a peak of 22% in 1993. Since then, pension income has
comprised roughly 20% of the total income of people 65 and older each year. Among people 65
and older who received pension income, the mean annual amount (in 2004 dollars) rose from
$8,848 in 1975 to $13,953 in 2004, an increase of 58% or 1.5% per year. Median pension income
rose from $6,081 in 1975 to $9,600 in 2004, also increasing by 58% or 1.5% per year.
In the late 1960s and early 1970s, about 10% of the elderly population in the United States
received some form of cash welfare assistance from the federal or state governments. The largest
source of cash welfare assistance for people 65 and older is the Supplemental Security Income
(SSI) program, which was authorized by Congress in 1972 and began making payments to 22, 23
eligible low-income aged and disabled persons in 1974. The proportion of the elderly
population receiving cash welfare payments has steadily fallen since the mid-1970s, mainly
because the proportion of people 65 and older who receive Social Security benefits has increased
and the real value of Social Security benefits has risen due to the growth in real wages. The
maximum eligible income limit for SSI benefits, in contrast, grows at the annual rate of price 24
inflation. As a share of the aggregate income of people 65 and older, cash welfare payments fell
from 3% in 1969 to 1% in 1986. Welfare income has been less than 1% of the total income of
older Americans for each of the past 20 years. During the period from 1969 to 2004, the mean and
median amounts of welfare income received by older individuals fluctuated within relatively
narrow ranges, measured in constant 2004 dollars. Mean welfare income ranged from a low of
$2,818 in 1980 to a high of $4,426 in 2002. Median welfare income reached a low of $2,261 in

1992 and a high of $3,629 in 2003.



21 This category includes pensions from previous employers or unions, and other retirement income, excluding Social
Security and Veterans Administration payments. It includes company or union pensions and profit sharing plans;
annuities; military retirement; federal government pensions; state or local government pensions; Railroad Retirement;
payments from annuities or paid-up insurance policies; and payments from IRA or Keogh accounts.
22 For more information on SSI, see CRS Report 94-486, Supplemental Security Income (SSI): A Fact Sheet, by Scott
Szymendera.
23 This category includes only cash welfare payments. It does not include the value of food stamps, medical assistance,
rental subsidies, heating assistance, or other in-kind transfers.
24 In any given year the rate of price inflation may exceed the rate of growth of average wages, but over long periods of
time wages grow faster than prices because average wages grow at the average rate of inflation plus the rate of growth
of labor productivity. Prices can grow faster than wages in the long run only if labor productivity fails to increase.





Other sources of income recorded on the CPS include workers’ compensation, unemployment
compensation, alimony, child support, and financial assistance from friends or relatives not living
in the same household. During the past 30 years, the proportion of people 65 and older receiving
any income from these sources has consistently remained in a narrow range of 6% to 8% of the
elderly population. As a share of the aggregate income of the elderly, all of these sources
combined have in each of the past 30 years accounted for just 2% to 3% of total income. Among
people 65 and older who received income from one or more of these sources in 2004, the mean
amount received was $8,161 and the median amount was $4,799. This compares to mean and
median amounts received from these sources in 1975 of $4,191 and $3,118, respectively. (All
amounts are in 2004 dollars.)
The sources of income received by people 65 and older whose incomes are at the lower end of the
income distribution differ from the sources of income of people at the upper end of the income
distribution. This was true of income throughout the period from 1969 to 2004. In 1975,
individuals 65 and older whose incomes (in 2004 dollars) exceeded $17,784 were in the top 25%
(the top quartile) among people in this age group. On average, they received 30% of their income
from earnings, 22% from Social Security, 19% from pensions, 27% from assets, less than 1%
from welfare, and 2% from other sources. That same year, individuals whose incomes were less
than $6,424 (in 2004 dollars) were in the bottom quartile among individuals age 65 and older.
Older individuals in the bottom income quartile received less than 1% of their income from
earnings, 80% from Social Security, 1% from pensions, 3% from assets, 13% from welfare, and

2% from other sources. (See Figure 5 and Figure 6.)


By 2004, the sources of income in the top and bottom quartiles of the income distribution had
changed relatively little. In the top quartile—people 65 and older with 2004 income of $26,600 or
more—earnings and pension income each had increased as shares of total income, while asset
income had declined somewhat as a percentage of total income. In both 1975 and 2004, Social
Security accounted for about $1 out of every $5 of income among people 65 and older with
incomes in the top 25% of the income distribution. In the bottom quartile—people with 2004
income of less than $9,260—Social Security accounted for about $4 out of every $5 of income.
Earnings accounted for only 1% of income in both 1975 and 2004. Although pensions and asset
income increased slightly in relative significance among people 65 and older in the bottom
income quartile, in 2004 both of these sources of income combined accounted for just 7% of their
income. Cash welfare declined from 13% of the income received by persons in the bottom
income quartile in 1975 to 5% in 2004. This was due both to the increase in the proportion of
people 65 and older who received Social Security benefits and to growth in the real value of
Social Security benefits. In the bottom income quartile, Social Security increased from 80% of
total income in 1975 to 86% of total income in 2004.





Figure 5. Sources of Income by Quartile, 1975
Source: CRS analysis of the Current Population Survey.





Figure 6. Sources of Income by Quartile, 2004
Source: CRS analysis of the Current Population Survey.





Men and women are not equally likely to receive income from each of the four main income
sources among individuals age 65 and older, and the importance of each source of income has
changed for both men and women over the past 35 years. (See Figure 7.) Throughout this period,
men 65 and older were more likely than women to have income from wages and salaries, income
from assets, and income from pensions. In 1970, 25% of men 65 and older had wage and salary
income, compared with 12% of women. By 2004, just 18% of older men had wage and salary
income, whereas the proportion of women with wage and salary income had increased to 13%.
Up until about 1980, men 65 and older also were more likely than women to receive income from
Social Security. Since then, however, the percentage of both men and women 65 and older
receiving Social Security has ranged between 88% and 92%. The percentage of both men and
women 65 and older receiving income from assets increased sharply through the 1970s and
1980s. By 1990, 72% of men and 68% of women had asset income. By 2004, these figures had
fallen to 59% of men and 53% of women. Although the percentage of both men and women
receiving pension income (including survivor benefits) increased substantially between 1975 and
1990, the upward trend ceased in the early 1990s. Moreover, throughout the 20 years from 1975
to 1995, men 65 and older were more than twice as likely as older women to have received
retired-worker or survivor benefits from a pension. Since 1995, the gap between the proportion of
men and women receiving pension income has narrowed slightly, but this has been due more to a
decline in the percentage of men receiving pension income rather than to an increase in the
proportion of women with income from pensions.
Older men and women also differ with respect to the amount of income that they receive from
each source, with men typically receiving larger amounts. Among men age 65 and older who had
wage and salary income in 1970, the median amount, in 2004 dollars, was $8,560. (See Table
13.) Among women age 65 and older who had wage and salary income in 1970, the median
amount was $6,163. By 2004, the median wage and salary income of men 65 and older had
increased to $20,800, a 143% increase. That same year, the median wage and salary income of
women 65 and older was $12,000, or 95% higher than in 1970. Men also had higher median
income from Social Security through the period from 1970 to 2004, but the rate of growth in the
median benefit was slightly higher for women, as more women became eligible for retired worker
benefits that were larger than the spousal benefit they would have received had they not worked
or had worked less. Men had higher pension income than women, and the rate of growth of
pension income was faster among men than women. Among men 65 and older who had pension 25
income, the median amount rose from $7,096 in 1980 to $12,000 in 2004, an increase of 69%.
Median pension income among women 65 and older rose from $4,347 in 1980 to $6,141 in 2004,
an increase of 41%. Men also had higher median income from assets, although for both men and
women the median income from this source was relatively small compared to income from
earnings, pensions, and Social Security.

25 The CPS began to collect data on pension income as a separate category in 1976.




Figure 7. Percentage of Men and Women Age 65+ with Income from Each Source, by Year

100.0%


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http0000000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 000000000000000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000000000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 00000000000000000000000000000000000000000000 0000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000n
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0000000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 000000000000000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 0000000000000000000000 00000000000000000000000000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 000000000000000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 000000000000000000000000000000000000000000 00000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 0000000000000000000010.0%P
0000000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 000000000000000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 0000000000000000000000 00000000000000000000000000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 000000000000000000000000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000 000000000000000000000000000000000000000000 00000000000000000000 0000000000000000000000 0000000000000000000000 0000000000000000000000 00000000000000000000 0000000000000000000000 00000000000000000000
00000000000 00000000000 00000000000 00000000000 00000000000 000000000000000000000 00000000000 0000000000 00000000000 0000000000 00000000000 00000000000 0000000000000000000000 0000000000 00000000000 0000000000 00000000000 0000000000 00000000000 000000000000000000000 00000000000 0000000000 00000000000 0000000000 00000000000 0000000000 000000000000000000000 0000000000 00000000000 00000000000 00000000000 0000000000 00000000000 00000000000. 0%
Men W omen Men W omen Men W omen Men W omen
Wages & SalariesSocial SecurityAsset IncomePensions
Source: CRS analysis of the March income supplements to Current Population Survey.





Table 13. Median Income of Men and Women Age 65 and Older from Each Source
(amounts in 2004 dollars)
Wages & Salaries Social Security Income from Assets Pension Income
Men Women Men Women Men Women Men Women
1970 $8,560 $6,163 $6,848 $4,353 $2,242 $1,895 n/a n/a
1980 10,143 6,444 8,706 6,173 1,967 1,553 7,096 4,347
1990 11,783 7,713 9,889 6,726 2,410 2,345 8,886 4,820
2000 17,572 8,786 11,601 8,180 1,690 1,289 10,877 5,892
2004 20,800 12,000 12,583 8,799 964 750 12,000 6,141
Source: CRS analysis of the March income supplements to Current Population Survey.
n/a = not available

The previous section of this report described the sources and amounts of income received by
people 65 and older at the level of the individual recipient. Although a substantial—and
growing—proportion of Americans of all ages live in single-person households, a majority live 26
with a spouse, other relatives, a roommate, or others with whom they share household expenses.
Consequently, gaining a complete picture of the income of older Americans, how it has changed
over time, and how it compares with the income of the non-elderly population, requires an
examination of household income as well as individual income. This section of the report
describes income among all U.S. households and also among elderly households—defined here as 27
those in which either the householder or householder’s spouse is 65 or older—and nonelderly
households, defined here as those in which neither the householder nor spouse is 65 or older.
Median household income rose faster among households in which the householder or spouse was
65 or older than among households headed by younger persons during the period from 1969
through 2004. Nevertheless, in 2004, the median income of households in which the householder
or spouse was 65 or older ($25,210) was just half of the median income of households in which
neither the householder nor spouse had reached age 65 ($50,466). Elderly households, however,
tend to be smaller (averaging 1.7 residents) than nonelderly households (with an average of 2.8
residents) and they do not have all of the work-related and child-rearing expenses that many
nonelderly households must pay.
When comparing the income of elderly households with the household income of the nonelderly
population, it is important to keep in mind that the households in which people 65 and older live
tend to be smaller than the households of younger adults. During the past 35 years, average
household size has shrunk among both elderly and nonelderly households, and while the decline

26 In 1969, 16.6% of all U.S. households were one-person households, as were 38.9% of households in which the
householder was 65 or older. In 2005, 26.4% of all households were one-person households, as were 45.8% in which
the householder was 65 or older.
27 The Census Bureau defines the householder as the person in whose name the housing unit is owned or rented. In a
married couple, the householder may be either the husband or wife.





has been greater among nonelderly households, they remain larger, on average, than elderly
households. In 1970, there were 3.5 persons in the average nonelderly household: 2.1 adults and
1.4 children. (See Table 14.) The average elderly household had 1.9 people in 1970. By 2005, the
average number of people in nonelderly households had fallen to 2.8 people: 1.9 adults and 0.9
children. The average size of an elderly household had fallen to 1.7 people. Because the average
elderly household has 1.1 fewer people than the average nonelderly household, it requires less
income to maintain a comparable standard of living.
Table 14. Average Household Size by Year and Age of Householder
Householder under 65 Householder Age 65+
Year Mean Mean Mean Mean
household number of household number of
size adults size adults
1970 3.5 2.1 1.9 1.8
1980 3.0 2.0 1.7 1.7
1990 2.9 2.0 1.7 1.7
2000 2.8 1.9 1.7 1.7
2005 2.8 1.9 1.7 1.7
Source: CRS analysis of the March income supplements to Current Population Survey.
Adjusted for inflation, median household income in the United States rose from $35,539 in 1969
to $44,214 in 2004, an increase of 24% or 0.6% per year in real terms. (See Tables 15 and 16.)
Real median household income reached a peak of $45,302 in 2000 and fell by $1,100 or 2.4%
between 2000 and 2004. Among households in which neither the householder nor the
householder’s spouse was 65 or older, median income rose from $40,278 in 1969 to $50,466 in
2004, an increase of 25% or 0.6% annually, on average. Among households in which either the
householder or the householder’s spouse was 65 or older, real median income rose from $14,498
in 1969 to $25,210 in 2004, an increase of 74%, or 1.6% annually, on average.
Table 15. Mean and Median Household Income, by Age of Householder
(in 2004 dollars)
All Householder and Householder or Spouse
Households Spouse Under Age 65 65 or Older Income Year
Mean Median Mean Median Mean Median
1969 $40,378 $35,539 $44,886 $40,278 $22,393 $14,498
1970 40,423 35,461 44,986 40,295 22,303 14,641
1980 42,847 36,639 47,239 41,853 26,424 18,425
1990 49,053 40,036 53,619 45,476 33,173 22,910





All Householder and Householder or Spouse
Households Spouse Under Age 65 65 or Older Income Year
Mean Median Mean Median Mean Median
2000 61,460 45,302 67,742 52,680 38,466 25,570
2004 60,530 44,214 66,433 50,466 38,963 25,210
Source: CRS analysis of the March income supplements to Current Population Survey.
For most of the period from 1969 to 2004, the real household income of elderly households—
those in which either the householder or the householder’s spouse was 65 or older—grew faster
than the real income of younger households. For example, over the period from 1969 to 2004, the
real median income of elderly households grew by 74%, compared to 25% for nonelderly
households. Since 1990, however, the rates of income growth in elderly and nonelderly
households have been much closer together, each increasing by 10% to 11% over that period.
Since 2000, however, although the real income of nonelderly households has fallen by 4.2%, the
income of elderly households has fallen by just 1.4%.
In constant dollars, the total increases in median household income among elderly and nonelderly
households since 1969 have not differed greatly. Between 1969 and 2004, the real income of
households in which neither the householder nor spouse was 65 or older grew by $10,188, in
2004 dollars. During the same period, the real median income of elderly households grew by
$10,712. One reason the percentage change in household income has been greater in elderly
households is simply that the income of these households was growing from a much smaller base.
In 1969, the median income of elderly households, expressed in 2004 dollars was just $14,498.
An increase of $1,000 from this amount would represent a percentage change of 7%, whereas a
$1,000 increase in the 1969 median income of nonelderly households ($40,278, in 2004 dollars)
would represent an increase of just 2.5%. In percentage terms, the increase in median income
among elderly households since the late 1960s looks relatively large because their median
household income was—and is—much lower than the median household income of the
nonelderly population.
Table 16. Percentage Change in Median Household Income, 1969 to 2004, by Age of
Householder
(in 2004 dollars)
All Householder and Householder or
Households Spouse Under Age 65 Spouse 65 or Older Income
Years Total Change Annual Total Change Annual Total Change Annual
Average Average Average
1969-2004 24.4% 0.6% 25.3% 0.6% 73.9% 1.6%
1970-2004 24.7 0.6 25.2 0.7 72.2 1.6
1980-2004 20.7 0.8 20.6 0.8 36.8 1.3
1990-2004 10.4 0.7 11.0 0.7 10.0 0.6
2000-2004 -2.4 -0.5 -4.2 -0.9 -1.4 -0.3
Source: CRS analysis of the March income supplements to Current Population Survey.






Household incomes have changed not only at the median—the middle of the distribution—but th
also at the upper and lower ends of the income distribution. At the 75 percentile—marking the
point that separates the highest quarter of household incomes from the lowest three-quarters—
incomes grew by 47% among nonelderly households from 1969 to 2004 and by 64% among
households in which the householder or spouse was 65 or older. In constant 2004 dollars, this th
represented an increase in household income of $27,234 for nonelderly households at the 75 th
percentile and an increase of $18,186 for elderly households at the 75 percentile. (See Tables 17
and 18.)
Table 17. Household Income at 75th and 25th Percentiles, by Age of Householder
(in 2004 dollars)
All Householder and Householder or Spouse
Households Spouse Under Age 65 65 or Older Income
Year 75th 25th 75th 25th 75th 25th
percentile percentile percentile percentile percentile percentile
1969 $53,789 $18,886 $57,632 $25,614 $28,414 $7,718
1970 53,909 18,648 57,940 24,864 28,124 7,830
1980 58,962 18,839 63,446 24,153 32,930 10,265
1990 66,319 20,301 71,570 25,441 41,214 12,463
2000 78,694 23,192 85,298 28,163 45,846 13,913
2004 78,050 22,200 84,866 26,880 46,600 14,199
Source: CRS analysis of the March income supplements to Current Population Survey.
At the lower end of the income distribution, rates of growth in household income differed
dramatically between elderly and nonelderly households over the period from 1969 to 2004. th
Among nonelderly households, income at the 25 percentile grew by just 5% in real terms from th

1969 to 2004. During the four years from 2000 to 2004, household incomes at the 25 percentile th


fell by 5%. Among elderly households, however, incomes at the 25 percentile grew by 84%
from 1969 through 2004, and by 2% from 2000 through 2004. The steady growth in income
among elderly households in the lowest quartile of the income distribution since the late 1960s is
largely due to the fact that the great preponderance of their income comes from Social Security.
Initial Social Security benefits are based on the real value of average lifetime wages, and the
benefit formula is designed to replace a higher percentage of average lifetime earnings for low-
wage workers. During the period from 1969 through 2004, the Social Security national average 28
wage index grew from $5,894 to $35,649, an average rate of increase of 5.0% per year. During
the same period, real wages grew by about 1% per year, which was reflected in higher real Social 29
Security benefits for new retirees each year. Once Social Security benefits begin, they are

28 See http://www.ssa.gov/OACT/COLA/AWI.html.
29 From 1969 to 2004, the price level as measured by the Personal Consumption Expenditure Index of the National
Income and Product Accounts rose from 25.3 to 108.2, an average annual rate of increase of 4.1%.(Source: Economic
Report of the President, February 2006, Table B-7, page 290.)





adjusted each year by the rate of change in the Consumer Price Index, thus preventing the real
value of the benefit from being eroded by inflation.
Table 18. Cumulative Percentage Change in Household Income at 75th and 25th
Percentiles, by Age of Householder
(in 2004 dollars)
All Householder and Householder or
Households Spouse under Age 65 Spouse 65 or Older Income
Years 75th 25th 75th 25th 75th 25th
percentile percentile percentile percentile percentile percentile
1969-2004 45.1% 17.5% 47.3% 4.9% 64.0% 84.0%
1970-2004 44.8 19.0 46.5 8.1 65.7 81.3
1980-2004 32.4 17.8 33.8 11.3 41.5 38.3
1990-2004 17.7 9.4 18.6 5.7 13.1 13.9
2000-2004 -0.8 -4.3 -0.5 -4.6 1.6 2.1
Source: CRS analysis of the March income supplements to Current Population Survey.

The steady rise in the median income of elderly households over the past 35 years coincided with
a dramatic decline in the proportion of older Americans living in poverty. In 1969, nearly a
quarter of Americans 65 and older had family incomes below the federal poverty threshold, and
the poverty rate among the population 65 and older was more than double the poverty rate among
adults 18 to 64 years old. By the early 1990s, the poverty rate among people 65 and older had
fallen below the poverty rate among adults age 18 to 64 and it has remained lower since that time.
During the same period of time, the ratio of the poverty threshold to the median income of the
population has fallen as wage growth has outpaced the rate of inflation, by which the poverty
threshold is adjusted each year. As a consequence, those who are officially poor have become
progressively less well-off than households with income at the median. Nevertheless, the
substantial reduction in the proportion of older Americans living in poverty must be regarded as
one of the most important economic developments of the past 35 years. Without the decline in
elderly poverty, the economic burden of supporting those who can no longer work in old age
would weigh that much more heavily on their adult children, and many millions of older
Americans would likely have to give up their own households to live with other relatives.
The percentage of older Americans in poverty has fallen dramatically over the past 35 years, from
one-in-four people age 65 and older in 1969 to just one-in-ten in 2004. As the result of the
dramatic decline in elderly poverty and a relatively constant poverty rate among working-age
Americans, by the early 1990s the poverty rate for people 65 and older fell below that of adults
age 18 to 64. By 2004, the poverty rate among Americans age 65 and older had fallen to 9.8%, or
1.5 percentage points lower than the poverty rate among adults age 18 to 64. However, while the
share of people age 65 and older in poverty has fallen, the number of poor elderly has remained





relatively constant since the mid-1970s due to the growth in the total number of elderly. (See
Table 19.)
Table 19. Poverty Status of Individuals Age 18 and Older, by Year
People 18 to 64 Years Old People 65 and Older Year
Number Number in Percent in Number Number in Percent in
(000s) poverty poverty (000s) poverty poverty
1970 113,554 10,187 9.0 19,470 4,793 24.6
1975 124,122 11,456 9.2 21,662 3,317 15.3
1980 137,428 13,858 10.1 24,686 3,871 15.7
1985 146,396 16,598 11.3 27,322 3,456 12.6
1990 153,502 16,496 10.7 30,093 3,658 12.2
1995 161,508 18,442 11.4 31,658 3,318 10.5
2000 173,638 16,671 9.6 33,566 3,323 9.9
2004 182,121 20,514 11.3 35,213 3,457 9.8
Source: See http://www.census.gov/hhes/www/poverty/histpov/hstpov3.html.
The decline in the elderly poverty rate was due both to the growth of older Americans’ incomes
and also to the constant real value of the poverty threshold. The growth in wages from year to
year reflects both the rising general level of prices and gains in labor productivity. Because labor
becomes more productive over time—as a result of better education and training, improved
methods of production and distribution, and new technologies—wages rise faster than prices over
the long run. As noted above, from 1969 through 2004 average wages in the United States grew
by about 1% more per year than prices. Because both initial Social Security benefits and most
pension benefits are based on measures of career-average wages, higher real wages have caused
the average Social Security and pension benefits of each successive cohort of retirees to exceed
those of earlier cohorts. The rising real values of these sources of income have led to an
increasing standard of living among older Americans. Further, retirees’ Social Security benefits
are increased each year by a cost-of-living adjustment that is equal to the rate of inflation. This 30
has kept the real value of Social Security benefits from eroding over time.
The increase in average real income of the elderly population, which is due mainly to the higher
career-average earnings of each successive generation of retirees, is not reflected in the federal
poverty thresholds. The poverty thresholds are intended to measure the income necessary to
maintain a minimally adequate standard of living, and thus they are increased each year by the
rate of inflation. In other words, the poverty thresholds measure the amount of income necessary
to maintain a constant standard of living, not the amount of income needed to keep up with the
rising average standard of living of the working population.
The federal poverty thresholds were developed by government economists in the 1960s to serve 31
as a standard for measuring income adequacy. The thresholds are adjusted annually by the rate

30 Many public-sector pension plans make regular cost-of-living adjustments (COLAs) to retirees pensions. Most
private-sector pensions do not pay annual COLAs.
31 The poverty threshold has changed slightly over time. For a comprehensive history of the poverty threshold see
(continued...)





of inflation as measured by the consumer price index (CPI-U) so that the real (inflation-adjusted)
value remains constant over time. Because the real value of the poverty threshold has remained
constant over time while the real income of the elderly has been rising, the poverty threshold has
fallen as a percentage of median income. For example, in 1970 the poverty threshold ($1,861) for
an individual 65 or older was equal to 89% of the median income ($1,959) of single people age
65 and older. Over the next 34 years, the median income grew 666% while the poverty threshold
only rose 387%. Thus, the 2004 poverty threshold for a single person age 65 and older ($9,060)
was only 60% of the median income for an individual in that age group ($15,000). In the future,
other things being equal, the disparity between rising real incomes and a fixed real poverty 32
threshold will lead to a decreasing proportion of the elderly being in poverty.
In 2004, poverty among the elderly was highest among women, minorities, single persons, those
with less education, and the very old. (See Table 20.) Twelve percent of women over age 65 were
in poverty compared with 7% of men. While only 8% of non-Hispanic whites age 65 and older
were in poverty, 24% of non-Hispanic black seniors and 14% of Hispanic seniors were in poverty.
Married couples had significantly lower levels of poverty (5%) than singles (16%). Poverty rates
are higher than average among the less-educated elderly. In 2004, older individuals with less than
a high school education had a poverty rate (19%) that was more than three times as high as the
poverty rate among college graduates. Finally, poverty rates are higher among individuals age 80
and older than among those 65 to 79 years old. Just 9% of people between age 65 and 79 were
poor in 2004, compared with 11% of individuals age 80 and older.
Table 20. Poverty Status of Individuals Age 18 and Older in 2004, by Demographic
Characteristics
Percent in Poverty, Percent in Poverty, Number in Poverty,
Age 18-64 Age 65+ 65+
(000s)
All 11.3% 9.8% 3,457
Gender
Male 9.6 7.0 1,058
Female 12.8 12.0 2,398
Race and Ethnicity
White, Not Hispanic 8.3 7.5 2,150
Black, Not Hispanic 20.3 23.7 687
Othera 11.1 18.7 410
Hispanic 18.3 14.1 210

(...continued)
Gordon M. FisherThe Development and History of the Poverty Threshold” Social Security Bulletin, vo. 55 no. 4,
1992 at http://www.ssa.gov/history/fisheronpoverty.html.
32 Barbara Butrica and Cori Uccello, “How Will Boomers Fare at Retirement?” The Urban Institute Retirement Project,
no. 2, November 2005 at http://www.urban.org/UploadedPDF/900892_boomers.pdf





Percent in Poverty, Percent in Poverty, Number in Poverty,
Age 18-64 Age 65+ 65+
(000s)
Marital Status
Married 5.8 4.5 871
Single, divorced, widowed 17.9 16.2 2,585
Education
Less than High School 26.6 18.7 1,719
High School Graduate 12.8 7.9 1,008
Some College 8.9 5.6 369
College Graduate 4.1 5.4 360
Source: CRS analysis of the 2005 March income supplements to Current Population Survey.
a. “Other” includes mainly individuals of Asian and Native American heritage.

As workers pass age 60, they begin—gradually, in many cases—to withdraw from the paid labor
force and to rely on pensions, Social Security, and personal savings to supply more of their
income. A positive development since the 1960s has been that the rate of decline in median
personal and household income (measured in constant dollars) that occurs as individuals reach
their mid- to late 60s appears to have slowed. This has occurred despite the fact that a smaller
proportion of people over age 60 work today than was the case 35 years ago. The long-term
growth in real wages—and in the real value of Social Security and pension benefits that are based
on these wages—has contributed greatly to the economic well-being of today’s retirees. In
addition, the growth—recently stalled—in the proportion of older Americans with income from
pensions has helped more people maintain a standard of living in retirement that is comparable to
that which they enjoyed while working. More Americans 65 and older also receive asset income
than did in the 1960s and 1970s, but the amounts received as income from this source (with a
median value of $817 in 2004) pale in comparison to the amounts that most people 65 and older
receive from earnings, pensions, and Social Security.
As was noted earlier in Table 6, employment rates are lower among people 60 to 64 years old
than among those under age 60, and they fall even further after age 65. Among people 65 to 69
years old in 2004, for example, just 33% were employed at any time during the year. Rates of
full-time employment also decline as workers age, and among older Americans who remain in the
workforce after age 60, many work part-time. In 2004, while 86% of people 55 to 59 years old
worked full-time, this proportion fell to 78% among workers 60 to 64 years old and to 59%
among those 65 to 69 years old. As older workers reduce their hours of work and gradually
withdraw from the labor force, their earnings fall and they begin to rely to a greater extent on 33
income from pensions, savings, and after age 62, Social Security. Earnings, often from part-time

33 Social Security retired worker benefits are first available at age 62. Workers who become disabled may be eligible
for Social Security Disability Insurance at any age. Rates of disability are higher among people 55 and older than
among younger individuals.





employment, remain an important source of income for many older people, but both their average
hours worked and average earnings per hour are lower than in their peak earning years.
The income data collected in the CPS allow us to see how the median incomes differ between
people of different ages, and how the median incomes of people in different age groups change as
they age. For example, the top row of Table 21 shows that individuals 55 to 59 years old had a
median income in 1969 of $23,437, measured in 2004 dollars. People who were 55 to 59 years
old in1969 all were born between 1910 and 1914. Demographers refer to people born in the same
year or group of years as a “birth cohort.”
Following this same birth cohort forward five years to 1974, Table 21 shows that individuals who
were 60 to 64 years old that year had a median income of $18,562, or $4,875 lower than the
median income of this same birth cohort five years earlier. Five years later in 1979, people in the
1910-1914 birth cohort were 65 to 69 years old and these individuals had a median income of
$12,039, or $11,398 less than the median income of individuals in this birth cohort 10 years
earlier. Following each of the pairs of diagonal arrows in this table allows one to see how median
individual incomes of successive cohorts changed as they aged. The most recent birth cohort for
which income data are available over a 10-year period comprises people who were 55 to 59 in
1994. In constant dollars, the median income of individuals in this birth cohort declined from
$24,068 in 1994 to $22,321 in 1999 (at age 60-64) and to $18,199 in 2004 (at age 65 to 69).
The third column of Table 21 shows median incomes at age 60 to 64 and age 65 to 69 as a
percentage of the median income of the same birth cohort at age 55 to 59. For example, the
median income of individuals who were 60 to 64 years old in 1974 was 79.2% of the median
income of this same cohort in 1969, when they were 55 to 59 years old. Their median income in
1979, at age 65 to 69, was 51.4% of their income in 1969 at age 55 to 59. Looking at the most
recent cohort for which income data are available for a 10-year period, the reader can see that the
median individual income of people who were 60 to 64 years old in 1999 was 92.7% of the
median income of the same cohort in 1994 at age 55 to 59. In 2004, when the people in this
cohort had reached age 65 to 69, their median income was 75.6% of the median income of people
who were age 55 to 59 ten years earlier in 1994.
Table 22 shows the median household income in selected years of people in these same three age
cohorts as Table 21: 55 to 59, 60 to 64, and 65 to 69. Here a similar pattern is apparent, with
median household income falling as people age. Among those who were 55 to 59 in 1969, median
household income was $39,151, measured in 2004 dollars. Five years later in 1974, the median
household income of this age group, who were then 60 to 64 years old, was $33,789, or $5,362
lower than the household income of this cohort in 1969. By 1979, at age 65 to 69, the median
household income of this cohort was $25,357, or $13,794 lower than the median household
income of this cohort 10 years earlier. For the most recent 10-year period, median household
income among those who were 55 to 59 in 1994 was $50,400 in that year. Five years later in 1999
when they were 60 to 64 years old, the median household income of this cohort was $48,211. By 34

2004, at age 65 to 69, the median household income of this cohort was $37,989.



34 Average household size declines as people age, but the decline in the median household incomes shown in Table 22
appears to be due mainly to the declining income of the people in households rather than to a decline in the number of
people in the household. When we looked at households of fixed sizes, we still found that median household incomes
(continued...)





The third column of Table 22 shows median household incomes at age 60 to 64 and age 65 to 69
as a percentage of the median income of the same birth cohort at age 55 to 59. The median
household income of people age 60 to 64 in 1974 was 86.3% of the median household income of
this same cohort five years earlier when they were 55 to 59 years old. By 1979, the median
household income of people age 65 to 69 was 64.8% of the median household income of this
same age cohort 10 years earlier when they were 55 to 59 years old. For the most recent cohort
for which ten years of income data are available, the median household income of people who
were 60 to 64 in 1994 was 95.7% of the median income of the same cohort five years earlier at
age 55 to 59. By 2004, when they had reached age 65 to 69, the median household income of this
cohort was 75.4% of the median income of the same cohort ten years earlier when they were 55
to 59 years old.
The data displayed in Tables 21 and 22 show that real median incomes have risen at both the
individual and household level among all three age groups since 1969. Real median individual
income was more variable than median household income, but the trend was upward for both.
Some of the increase in real median incomes in the three age categories was due to increased
employment among older persons, particularly women. Since the mid-1990s, employment among
men 60 and older also has risen. Over time, the ratio of median individual and household incomes
at ages 65 to 69 to income at age 55 to 59 also has risen, although the changes in the household
income ratios were variable rather than increasing steadily.
Although, at the median, the trend in incomes shown in Tables 21 and 22 is positive, it is
important to keep in mind that, by definition, half of all individuals and households have incomes
less than their respective medians. For some people, their income in old age may be less than the
amount needed to maintain their desired standard of living. Many financial analysts recommend
that workers aim for an income replacement rate of 70% or more in their first year of retirement if 35
they want to maintain the standard of living they enjoyed while working. The median household
income of people who were 65 to 69 years old in 2004 was 75% of the household income of
people in this age cohort 10 years earlier when they were 55 to 59 years old. Thus, a household
that was at exactly the median income for its birth cohort in both 1994 and 2004, and that had
retired in the interim, would probably find itself able to maintain a standard of living in retirement
that was comparable to the lifestyle they had enjoyed while working. Those whose income from
pensions, savings, and Social Security do not reach this threshold—whose income in retirement
falls below 70% of their pre-retirement income—may have to make difficult adjustments in order
to keep their spending in retirement within their more limited incomes. For most individuals, the
most direct way to boost the income they will have in retirement, both in absolute terms and
relative to pre-retirement income, would be to increase the percentage of earnings that they save
in employer-sponsored retirement plans, individual retirement accounts, or other savings plans.

(...continued)
fell between ages 55 to 59 and 65 to 69. For example, the median household income in 1979 of persons 65 to 69 years
old who lived in two-person households was 73% of the median household income in 1969 of persons 55 to 59 years
old who lived in two-person households. The equivalent ratio for one-person households was 67%. Likewise, the
median household income in 2004 of persons 65 to 69 years old in two-person households was 81% of the median
household income in 1994 of persons 55 to 59 years old in two-person households. The equivalent ratio for one-person
households was 76%.
35 The ratios in Table 22 are not true “replacement rates,which measure income in the first year or (or n years) of
retirement to income in the last year (or n years) of employment. The ratios in the tables are based on the median
income of everyone in each age cohort, whether working full-time, part-time, or fully retired. Nevertheless, they
demonstrate the effect on the median income of each cohort of the gradual retirement of the members of the cohort.





Table 21. Median Individual Income at Five-Year Intervals
(in 2004 dollars)
Source: CRS analysis of the March income supplements to Current Population Survey. Incomes have been
adjusted to 2004 dollars based on the NIPA PCE Index.





Table 22. Median Household Income at Five-Year Intervals
Source: CRS analysis of the March income supplements to Current Population Survey. Incomes have been
adjusted to 2004 dollars based on the NIPA PCE Index.

The past 35 years have seen a substantial increase in the real incomes of older Americans and a
dramatic decline in the percentage of people 65 and older living in poverty. These developments





can be attributed both to long-term economic growth and increases in real wages and also to
public policies that have contributed to improving pension security and encouraged retirement
saving. Perhaps the single greatest contributor to the improved economic situation of the elderly
in the United States has been the growth in real wages that they experienced during their working
lives. In real terms, measured in 2004 dollars, the median annual earnings of workers between the
ages of 18 and 64 rose from $21,777 in 1969 to $28,251 in 2004. Among households in which
neither the householder nor spouse was 65 or older, real median income rose from $40,278 in
1969 to $50,446 in 2004. Growth in real wages—and in the Social Security and pensions based
on these wages—has contributed greatly to the economic well-being of today’s retirees.
Actions taken by Congress over the past 35 years also have affected the incomes of older
Americans. In 1974, Congress passed the Employee Retirement Income Security Act (ERISA),
which set funding standards and vesting requirements for pension plans sponsored by employers
in the private sector. This law also authorized individual retirement accounts (IRAs) which
encourage workers to save for retirement by deferring income taxes on some contributions and on
investment earnings. In the Revenue Act of 1978, Congress added section 401(k) to the Internal
Revenue Code, which authorized employers to establish retirement savings plans for employees
in which contributions and investment earnings grow on a tax-deferred basis until retirement.
Legislation affecting Social Security has also contributed to increasing the income of older
Americans. The Social Security Amendments of 1972 provided for automatic cost-of-living
adjustments (COLAs), which prevent the real value of Social Security benefits from being eroded
by inflation. The 1977 Social Security amendments established the current benefit formula, in
which initial benefits are based on each worker’s career-average wages, indexed to current values
based on a national average wage index. This assures that each successive cohort of workers
receives a Social Security benefit that reflects the growth in real wages that occurred during their
working lives. In 2000, Congress repealed the “earnings test” for workers who have reached the
Social Security full retirement age. This test reduces benefits for Social Security beneficiaries
whose earnings exceed a threshold set in law. The earnings test now applies only to beneficiaries
under the full retirement age.
As the 78 million members of the “baby boom”—people born between 1946 and 1964—approach
retirement, Congress is likely to continue to debate changes to the federal laws affecting pensions,
retirement savings, and Social Security. Future retirees are likely to live longer and will need to
accumulate relatively greater retirement assets than past retirees if they are to maintain their
standard of living through these longer periods of retirement. With Social Security facing a
financial shortfall and the number of private-sector pensions continuing to decline, it is likely that
a relatively greater share of current workers’ future retirement income will have to be financed
from their own personal savings.









Table A-1. Percentage of People Age 65 and Older with Income from Each Source, by Year
Percentage Percentage Percentage Percentage Percentage
Income Number of People 65+ Number with Any Income Percentage with Any Percentage With Receiving Receiving Receiving Receiving Receiving
Year (thousands) (thousands) Income Earnings Social Asset Income Pension Welfare Other a
Security Income Income
1969 18,899 17,026 90.1% 24.9% 74.7% 39.4% a 9.2% 24.6%
1970 19,231 17,393 90.4 23.4 75.9 39.5 a 9.2 24.2
1975 21,662 20,311 93.8 19.5 83.5 45.4 22.3% 10.0 8.2
1980 24,686 24,353 98.7 16.6 90.5 67.1 26.6 8.5 6.9
1981 25,231 24,947 98.9 16.1 91.2 67.3 27.2 7.5 6.1
1982 25,738 25,432 98.8 15.9 90.9 68.5 27.5 6.8 6.3
1983 26,291 25,938 98.7 15.1 91.2 69.7 29.2 7.0 6.3
iki/CRS-RL333871984 26,818 26,522 98.9 15.1 91.6 68.6 29.8 7.0 6.7
g/w
s.or1985 27,322 26,976 98.7 15.0 92.0 67.6 30.3 6.6 6.2
leak1986 27,975 27,617 98.7 14.7 91.7 67.9 31.3 6.0 6.6
://wiki1987 28,487 28,196 99.0 15.6 91.1 69.6 34.5 5.5 7.9
http1988 29,022 28,747 99.1 16.3 90.9 68.4 35.2 5.6 7.4
1989 29,566 29,320 99.2 16.3 90.8 69.6 35.8 6.0 8.1
1990 30,093 29,734 98.8 16.3 91.0 69.9 37.0 5.5 7.7
1991 30,590 30,256 98.9 15.5 90.2 69.2 37.7 5.9 7.9
1992 30,870 30,538 98.9 14.7 91.7 68.0 38.0 5.9 7.5
1993 30,779 30,223 98.2 15.8 90.5 67.8 37.5 5.0 8.1
1994 31,267 30,676 98.1 15.4 90.8 68.0 36.2 4.9 7.4
1995 31,658 31,081 98.2 15.7 90.8 67.2 35.4 4.3 7.1
1996 31,877 31,199 97.9 15.6 90.1 64.1 35.2 4.7 6.9
1997 32,082 31,401 97.9 15.3 89.9 62.9 35.5 4.4 6.8
1998 32,394 31,694 97.8 15.9 89.4 63.8 35.9 3.9 6.7




Percentage Percentage Percentage Percentage Percentage
Income Number of People 65+ Number with Any Income Percentage with Any Percentage With Receiving Receiving Receiving Receiving Receiving
Year (thousands) (thousands) Income Earnings Social Asset Income Pension Welfare Other a
Security Income Income
1999 32,621 31,978 98.0 16.9 89.5 62.7 36.3 4.1 6.2
2000 32,979 32,258 97.8 16.9 89.8 59.2 34.9 3.8 6.0
2001 33,770 32,911 97.5 16.2 90.1 58.4 34.5 3.7 6.3
2002 34,234 33,334 97.4 16.6 88.8 55.8 34.4 3.6 6.1
2003 34,659 33,779 97.5 17.5 89.1 56.4 35.3 3.7 5.6
2004 35,213 34,187 97.1 18.0 88.2 55.5 35.1 3.5 5.5
Source: CRS analysis of the March income supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
a. Prior to the March 1976 survey, the CPS included income from pensions with “other income.”
iki/CRS-RL33387
g/wTable A-2. Median Annual Income of Individuals Age 65 and Older, by Income Source
s.or(in 2004 dollars)
leakIncome Number Median Median Median Median Median Median Median All
://wikiYear With Income Total Income Earnings Social Security Asset Income Pension Income Welfare Income Other Incomea
http1969 17,026 $8,196 $6,856 $4,866 $2,134 a $3,125 $5,123
1970 17,393 8,271 6,644 5,267 2,038 a 3,180 5,189
1975 20,311 10,147 6,896 7,166 2,159 6,081 2,549 3,118
1980 24,353 10,723 8,281 7,212 1,656 5,995 2,374 2,459
1981 24,947 11,161 7,698 7,367 1,901 5,603 2,395 2,441
1982 25,432 11,788 8,321 7,817 2,071 5,641 2,338 2,318
1983 25,938 12,008 8,288 7,874 2,072 6,050 2,504 2,590
1984 26,522 12,394 7,487 7,987 2,637 5,990 2,453 2,496
1985 26,976 12,626 7,979 8,002 2,553 5,889 2,513 2,416
1986 27,617 12,725 9,394 8,094 2,431 6,289 2,608 2,377
1987 28,196 13,125 9,118 7,861 2,369 6,838 2,486 2,443




Income Number Median Median Median Median Median Median Median All
Year With Income Total Income Earnings Social Security Asset Income Pension Income Welfare Income Other Incomea
1988 28,747 13,027 8,887 7,964 2,462 6,771 2,508 2,456
1989 29,320 13,306 9,309 8,026 2,349 6,723 2,381 2,656
1990 29,734 13,523 8,705 8,036 2,385 6,991 2,314 2,893
1991 30,256 13,242 9,008 8,187 1,939 6,963 2,683 3,102
1992 30,538 12,936 9,400 8,032 1,507 6,783 2,261 3,166
1993 30,223 13,124 9,577 8,472 1,228 7,352 2,824 2,728
1994 30,676 13,420 9,620 8,962 1,203 7,215 2,872 2,525
1995 31,081 13,902 10,713 9,123 1,510 7,177 2,684 3,644
1996 31,199 14,014 10,430 9,217 1,465 7,697 2,849 3,678
1997 31,401 14,294 11,012 9,518 1,700 8,024 2,897 4,012
1998 31,694 14,743 11,233 9,661 1,685 8,088 3,087 4,044
iki/CRS-RL333871999 31,978 15,178 11,491 9,884 1,657 8,309 3,354 3,804
g/w
s.or2000 32,258 14,727 12,937 9,903 1,477 8,625 3,247 3,880
leak2001 32,911 14,715 13,091 10,137 1,584 8,794 3,168 3,800
://wiki2002 33,334 14,668 15,617 10,270 1,070 8,746 3,536 3,997
http2003 33,779 14,796 16,349 10,529 896 9,196 3,629 4,793
2004 34,187 15,189 15,000 10,399 817 9,600 3,600 4,799
Source: CRS analysis of the March income supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
a. Prior to the March 1976 survey, the CPS included income from pensions with “other income.” Incomes have been adjusted to 2004 dollars based in the Personal
Consumption Expenditure Index of the National Income and Product Accounts.
Table A-3. Mean and Median Annual Household Income in 2004 Dollars
All Households Householder and Spouse Under Age 65a Householder or Spouse 65 or Olderb
Income Number of Households Mean Household Median Household Number of Households Mean Household Median Household Number of Households Mean Household Median Household
Year (thousands) Income Income (thousands) Income Income (thousands) Income Income




All Households Householder and Spouse Under Age 65a Householder or Spouse 65 or Olderb
Income Number of Households Mean Household Median Household Number of Households Mean Household Median Household Number of Households Mean Household Median Household
Year (thousands) Income Income (thousands) Income Income (thousands) Income Income
1969 63,365 $40,378 $35,539 50,667 $44,886 $40,278 12,698 $22,393 $14,498
1970 64,648 40,423 35,461 51,644 44,986 40,295 13,005 22,303 14,641
1975 72,867 40,945 35,200 57,715 45,288 40,317 15,152 24,406 16,963
1980 82,368 42,847 36,639 64,988 47,239 41,853 17,380 26,424 18,425
1981 83,527 43,058 36,119 65,737 47,268 41,442 17,790 27,501 19,115
1982 83,918 43,476 36,045 65,771 47,503 41,099 18,147 28,878 20,024
1983 85,407 43,540 35,887 67,008 47,605 41,172 18,399 28,733 20,455
1984 86,789 45,700 37,224 68,085 49,776 42,096 18,704 30,859 21,689
iki/CRS-RL333871985 88,458 46,407 38,020 69,319 50,742 43,175 19,138 30,707 21,539
g/w1986 89,479 47,767 39,064 69,903 52,320 44,488 19,576 31,509 22,134
s.or1987 91,124 48,567 39,520 71,102 53,375 45,600 20,022 31,490 22,265
leak
1988 92,830 48,918 39,664 72,515 53,726 45,427 20,315 31,760 22,222
://wiki1989 93,347 50,009 40,523 72,607 54,851 46,236 20,741 33,061 22,325
http1990 94,312 49,053 40,036 73,251 53,619 45,476 21,061 33,173 22,910
1991 95,669 48,156 38,760 74,268 52,861 45,065 21,401 31,827 22,197
1992 96,391 47,929 38,308 75,011 52,614 44,462 21,380 31,493 21,872
1993 97,262 48,250 38,068 75,823 52,856 43,913 21,439 31,961 22,104
1994 99,087 49,138 38,664 77,054 54,013 44,691 22,033 32,088 22,118
1995 99,683 52,870 40,018 77,546 58,228 46,027 22,137 34,101 22,780
1996 101,081 54,270 40,518 78,979 59,847 46,923 22,102 34,342 22,810
1997 102,584 56,289 41,839 80,234 61,763 47,953 22,350 36,635 23,918
1998 103,991 58,187 43,590 81,600 63,745 50,233 22,391 37,934 24,810
1999 104,780 59,446 44,813 82,201 65,064 51,825 22,579 38,994 25,592
2000 106,509 61,460 45,302 83,653 67,742 52,680 22,856 38,466 25,570




All Households Householder and Spouse Under Age 65a Householder or Spouse 65 or Olderb
Income Number of Households Mean Household Median Household Number of Households Mean Household Median Household Number of Households Mean Household Median Household
Year (thousands) Income Income (thousands) Income Income (thousands) Income Income
2001 109,387 61,433 44,484 85,839 67,812 52,004 23,548 38,178 25,013
2002 111,381 60,190 44,119 87,694 66,435 51,425 23,687 37,068 24,725
2003 112,015 60,381 44,150 87,860 66,378 51,100 24,154 38,568 25,031
Source: CRS analysis of the March income supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
a. Neither the householder nor the householder’s spouse were 65 or older.
b. Either the householder or householder’s spouse was 65 or older. Incomes have been adjusted to 2004 dollars based in the Personal Consumption Expenditure Index
of the National Income and Product Accounts.


iki/CRS-RL33387
g/w
s.or
leak
://wiki
http



Patrick Purcell Debra B. Whitman
Specialist in Income Security
ppurcell@crs.loc.gov, 7-7571 ,