Veritas propter investigationem [Truth through research]
TitleChanging Sources of Income Among the Aged Population (2012)
AuthorsBarry Bosworth
 Kathleen Burke
InstitutionCenter for Retirement Research
TopicsRetirement income data
 Labour force participation
CountryUnited States
Date Published2012
Date posted on PR15 Jul 2014
Bosworth, B Burke, K, (2012). Changing Sources of Income Among the Aged Population (2012) Center for Retirement Research,

PensionReforms’ summary and comments

In the US, employment patterns amongst the old are changing.  This 2012 report looks at reported income sources amongst those age 65+.  Labour force participation rates are increasing, particularly amongst those “at the top of the earnings distribution and those with the most education.”


In particular, the largest increase in participation rates has been associated with those reporting full-time, rather than part-time employment.


“Job satisfaction has actually increased somewhat and the shift in the composition of the private pension system away from defined-benefit plans represents an important reduction in the disincentives to remaining in the work force.”


However, there has been a “sharp fall” in the availability of employer-subsidised health cover for those who want to ‘retire’ before age 65.


“That is a significant coercive factor boosting labor force participation.”


Lower interest rates and a “reduced propensity to annuitize income” seem to be the main causes of a fall in the share of income received from assets.  In fact, over the 20 years since 1990, the proportion of household income derived from saving has more than halved.


“However, those trends are misleading indicators of the trend in economic well-being because they are more than offset by higher wealth holdings among the aged.  The wealth data from the HRS suggest that the aged actually experienced a substantial rise in their own resources, presumably the result of the larger capital gains that have accrued to wealth holders in recent decades.”


There doesn’t seem to be much of a connection between changes in wealth (including annuities) and the decision whether to remain in the work force.


The report necessarily compared data from a number of different surveys and found a “reassuring” consistency in compared incomes, labour-force participation and wealth holdings.


PensionReforms suggests that older US employees are responding quite rationally to a range of influences.  As the average health of the older population improves (as improving mortality rates suggest it should) we should expect that people will want to work for longer.  GFC-induced worries about reduced asset-related retirement incomes seem to have been misplaced.


As ever, those at the bottom of the wealth and occupation curves have the lowest capacities to adapt and that probably implies increased attention to state-provided entitlements.  File size 227 KB; 37 pp) 687