Income of the Aged Chartbook, 1996

Size of total income, 1996

The aged are an economically diverse group

Median income for all aged units is $16,099, but there are wide differences within the total group. About 19% have an income of under $8,000 (compared to the 1996 poverty threshold of $7,525 for one person aged 65 or older), and 10% have an income of $50,000 or more.

Median income, by marital status, race, and Hispanic origin, 1996

Demographic differences are associated with different levels of income

Income is highest for married couples, who have median income more than twice that of nonmarried men, and more than 2½ times that of nonmarried women. Whites have a median income more than 75% greater than blacks, and more than 90% greater than Hispanics.

Poverty status, by marital status, race, and Hispanic origin, 1996

Nonmarried and minority aged have high proportions who are poor or near poor

The variations in income by marital status and by race are reflected in the poverty rates (based on family income of aged persons to conform with official measures of poverty) for these subgroups of the aged. Nonmarried men, nonmarried women, and minorities have the highest poverty rates, ranging from 13% to 25%. When the near poor (defined as having income between the poverty line and 125% of the poverty line) are included, the rates for the nonmarried and nonwhites range from 23% to 37%.

Median income, by age, 1996

Income differences by age are due in part to marital status differences

In every successively older age group, median income is lower. The striking differences by age shown in the following chart are due in part to the disproportionate number of nonmarried women in older age groups. The table below shows that in every age group, nonmarried women have a lower median income than nonmarried men or married couples. It also shows that nonmarried women far outnumber the others in the older age groups

Poverty status, by age, 1996

The oldest age group has the highest poverty rate

In addition to the lower median income of older age groups, poverty rates are often higher for those who are older. As with income, the large proportion of nonmarried women in the older age groups contributes to the difference in poverty rates by age. The table below shows that nonmarried women are more likely than married persons to be poor or near poor in every age group.

Sources of income, 1996

Social Security is a source of income for nearly all the aged

More than 9 out of 10 aged units receive Social Security benefits. Asset income is the next most common source of income, received by nearly two-thirds of the aged. Less than half (41%) receive pensions other than Social Security, and only 21% have earnings. Public assistance is received by 6% and veterans' benefits by only 5%.

Percent of income from Social Security, 1996

Social Security provides at least half of total income for a majority of beneficiaries

Social Security pays benefits to more than 90% of those aged 65 or older. It is the major source of income (providing 50% or more of total income) for 66% of the beneficiaries. It contributes 90% or more of income for almost one-third of the beneficiaries, and is the only source of income for 18% of them.

Social Security's role in reducing poverty, by marital status and race, 1996

Social Security plays a pivotal role in reducing poverty

Although there are aged beneficiaries with family income below the poverty line (based on family income of aged persons to conform with official measures of poverty), the poverty rate would be much higher if they did not have Social Security benefits. Nine percent of aged beneficiaries are poor, and 41% are kept out of poverty by their Social Security benefits—so that the total poverty rate without Social Security would be 50%. Although poverty rates vary considerably by marital status and race, the proportion kept out of poverty by their Social Security benefits is about 40% for all groups.

Size of income, by receipt of asset income, 1996

Receipt of asset income is associated with relatively high median income

The median income of those with asset income is more than twice as large as that of those with no asset income ($22,097, compared to $9,375). Aged units with no asset income are concentrated in the lowest income categories—54% have a total income below $10,000 and only 6% have an income of $30,000 or more. Among aged units with asset income, 14% have a total income of less than $10,000 and one-third have an income of $30,000 or more.

Median income, by receipt of earnings and retirement benefits, 1996

Receipt of earnings and retirement benefits also affects income size

About 7% of aged units have no retirement benefits. Of these, 38% have earnings; their median income is $33,638. Sixty-two percent have no earnings, and their median income is only $490. In the absence of earnings, median income rises markedly with the number of retirement benefits received, from $10,054 with one retirement benefit to $23,164 with two or more. For units with both earnings and retirement benefits, median incomes are $26,982 for those with one retirement benefit and $37,996 for those with more than one.

Receipt of income from earnings and pensions, by age, 1996

Age groups differ in their likelihood of receiving earnings and pensions

Earnings are much more common in the youngest age group than in the oldest group—39%, compared to 4%. Private pensions and other pensions are also more common among the younger groups than the older ones. For the youngest group, earnings are a more common source of income than are either private or other pensions. Among the older cohorts, private pensions are a more common source of income than are earnings or other pensions.

Receipt of income, by source, race, and Hispanic origin, 1996

Receipt of income from major sources varies by race and Hispanic origin

Among the aged, whites and blacks are somewhat more likely than Hispanics to receive Social Security. Whites are much more likely than blacks or Hispanics to receive income from assets and from pensions. The groups are about equally likely to have earnings. Minority aged units are much more likely to receive Supplemental Security Income (SSI) than are whites.

Share of income, by source, 1996

Social Security provides the majority of income for the aged

Money income for the population 65 or older comes largely from four sources. Social Security provides the largest portion—40%. Earnings, asset income, and pensions other than Social Security account for 20%, 18%, and 19%, respectively. Only 3% comes from other sources.

Share of income, by source and income level, 1996

The share supplied by each income source differs greatly by income level

Aged units are ranked by total income and divided into five groups of equal size called quintiles. In the following chart, shares of income of the quintile with the lowest income are compared with those of the quintile with the highest. Social Security benefits provide 81% of the total income for those in the lowest income quintile, and public assistance provides the second largest share (11%). For those in the highest income quintile, earnings provide the highest share of income (31%) and income from assets is the next most important (25%). Social Security and pensions are 21% each. The table below details the shares in the intermediate income quintiles, as well as those in the lowest and highest.

Change in median income since 1962

Median real income has risen substantially over the years

Between 1962 and 1996, the income of the aged increased—even when adjusted for inflation. The increase was 88% for married couples and 93% for nonmarried persons. The table below and the following chart show that between 1967 and 1996, the income of married couples increased by 76%, and that of nonmarried persons increased by 84%. There were disproportionate increases by race—the income of whites increased by 90% between 1967 and 1996, that of blacks by 53%.

Change in income sources since 1962

Receipt of Social Security has become nearly universal since 1962

In 1962, 69% of the aged received Social Security benefits; by 1996, 91% of them did. As shown in the table below and the following chart, most of that increase occurred in the 1960's. Receipt of other pension income, which more than doubled from 1962 to 1992, has decreased slightly since then. The proportion of aged units with asset income, which had been about two-thirds since 1980, dropped slightly in 1996. The proportion with earnings has declined since 1962, and since 1982 has been about 21%. The proportion receiving public assistance has also declined, and in recent years has been about half of its 1962 level.

Change in shares from sources since 1962

Social Security continues to provide the largest share of total income for the aged

The share of income provided by Social Security increased by about one-fourth between 1962 and 1980, and since then has accounted for about 40% of the total. The share from asset income increased for about 20 years, but has been declining since the mid-80's. The share from pensions more than doubled, reaching 19% in 1996, while the share from earnings declined nearly 30% over the period.