Few Seniors Get Retirement Income Guarantees

Most retirees don’t have a reliable source of income in retirement other than Social Security. Less than a quarter (24 percent) of men and 18 percent of women received any type of regular pension or annuity income in 2008, according to a new Employee Benefit Research Institute analysis of Census Bureau data.

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“Future retirees may not have a steady income stream in retirement,” writes Ken McDonnell, program director of the Employee Benefit Research Institute. “Future retirees will likely be more reliant on assets they must manage themselves instead of receiving a stream of income for life.”

Interestingly, a greater proportion of individuals age 50 and over in the private sector received pension or annuity income (12 percent) than in the public sector (8 percent). However, the median payout received from a public sector plan ($24,147) was considerably larger than the amount received by private sector pension recipients ($13,222).

[See The 10 Biggest Sources of Retirement Income.]

Retirees with graduate degrees collected more than double the pension and annuity income ($30,696) than seniors with an associate’s degree or high school diploma ($14,553). Men generally received bigger pensions than women. But experts say the pension gender gap is likely to close because younger women have more consistent working records than current retirees. “Today's younger women will likely spend more time in the work force than did women who were age 50 and over in 2008,” writes McDonnell. “The aggregate pension and annuity recipiency for women and the amounts they receive are likely to increase over time as these younger generations retire.”

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The typical household headed by someone age 65 and older in 2008 had two main sources of income: Social Security payments (37 percent of income) and a paycheck from continuing to work (30 percent of income), according to a recent Government Accountability Office report. Income from pensions and regular retirement account withdrawals made up just 19 percent of the typical retiree’s budget. Assets including interest, dividends, rent, royalties, estates, and trusts made up another 13 percent of retiree income.

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