Tyler Cowen points me today to a new Census Bureau report that suggests the elderly are better off than we think. Why? Because when they respond to surveys, they don’t accurately report pension income:
The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) is the source of the nationâ€™s official household income and poverty statistics. In 2012, the CPS ASEC showed that median household income was $33,800 for householders aged 65 and over and the poverty rate was 9.1 percent for persons aged 65 and over. When we instead use an extensive array of administrative income records linked to the same CPS ASEC sample, we find that median household income was $44,400 (30 percent higher) and the poverty rate was just 6.9 percent….The discrepancy is mainly attributable to underreporting of retirement income from defined benefit pensions and retirement account withdrawals.
Here’s the key pair of charts for people 65 years and older:
It’s surprising how hard it is to get data on pension income in particular and the income of the elderly in general. For past years, the data often just doesn’t exist, and for more recent years the data is full of problems. However, this study doesn’t surprise me. After spending a lot of time diving into what data exists, I’ve come to the conclusion that, in general, the elderly are (a) better off than we think and (b) have seen their income rise considerably more than any other age group over the past couple of decades. More details here.
The poorest elderlyâ€”primarily folks who spent their working lives at low-income jobs and now rely solely on Social Securityâ€”are truly in need, and their Social Security payments ought to be increased by a third or so. We also ought to do something about long-term nursing care, which can quickly bankrupt even the well-off elderly.
Those two things are what progressives should focus on, not on the mythical “retirement crisis.”