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A Profile of Older Americans: 2007

Special Topic:  Retirement Resources of Near Retirees Aged 55-64

In many important respects, people nearing age 65 today are at least as prepared for retirement as the same age group was 10 or 20 years ago.  In 2004, more than half (53%) of people aged 55-64 had at least some college education compared to only slightly more than a quarter (27%) in 1984.  Only 14% of people aged 55-64 in 2004 had less than a high school education compared to 33% in 1984.  Higher levels of education are typically associated with higher incomes.  Between 1984 and 2004 the labor force participation rates for women aged 55-61 increased from 47% to 62% and for women aged 62-64 the rates have increased from 29% to 39% over the same period.  During these years, the percentage of men aged 55-61 in the labor force remained relatively stable (77% to 74%, respectively).

Median household income (in 2004 dollars) for all household headed by persons aged 55-64 increased from $44,397 in 1984 to $55,407 in 2004 ($50,454 to $61,274 for men and $39,623 to $50,393 for women).  However, a somewhat mixed situation is evident in analysis of sub-categories.  For example, while incomes of households of persons with a college education increased from $80,459 in 1984 to $86,982 in 2004, incomes of households with householders with less than a high school education decreased from $29,896 in 1984 to $28,403 in 2004.

Overall median net worth (assets minus debts) remained fairly stable, rising only slightly from $149,455 in 1994 to $153,910 in 2004.  This reflects a small increase in home equity (from $76,309 in 1994 to $79,743 in 2004) while the value of other financial holdings has declined (from $54,809 in 1994 to $43,586 in 2004).

Pension coverage for women aged 55-64 has increased during this period – the percentage of women without pensions has decreased from 48% in 1994 to 37% in 2004.  Pension coverage for men 55-64 has remained steady with 25% of men without pension coverage in 2004 (24% were without pension coverage in 1994).  See Figure 10.  During this time, the type of pension coverage held has shifted somewhat to a greater reliance on defined contribution plans and fewer defined benefit plans.

Figure 10:  Type of Pension Coverage by Sex and Year

Figure 10M shows the types of pensions which men aged 55 to 64 expect to receive.  Data is presented for 1994 and 2004.  Only 25% have no pensions but the percent of those with only defined benefit pensions decreased 20% (from 33% to 13%); those with only defined contribution pensions increased 4%, and those with both types of pensions increased from 30% to 44%. Figure 10W shows the types of pensions which women aged 55 to 64 expect to receive.  Data is presented for 1994 and 2004.  The percent with no pensions decreased from 48% to 37%.  Those with only defined benefit pensions decreased 10% (from 21% to 11%); those with only defined contribution pensions increased 4% (from 13% to 17%), and those with both types of pensions increased from 16% to 34%.

For example, the percentage of men with defined benefit only coverage decreased from 33% in 1994 to 13% in 2004.  During this time period, the percentage of women with defined benefit only coverage decreased from 21% to 11%.

The type of Social Security benefits received by women aged 62-64 markedly changed between 1984 and 2004. During these years, the percentage of current beneficiary women (aged 62-64) with earned worker benefits increased from 48% in 1984 to 56% in 2004.  Current beneficiary women receiving spouse benefits decreased from 23% to 12 % and those receiving survivor benefits decreased from 21% to 16%.

There has also been a modest decline in married persons 55-64 (a decrease for men from 85% in 1984 to 79% in 2004 and for women from 70% in 1984 to 67% in 2004) and an increase in those divorced (from 6% of men in 1984 to 13% and 9% of women in 1984 to 18% in 2004).  This change reduces the availability of spousal caregivers later in life.  Increasing longevity and life expectancy also increase the likelihood of needing long-term care and the risk of exhausting financial resources.   Although the number of Americans with long-term care insurance is rising, the percentage of people aged 55-64 who have coverage from these policies is still small (7% of men and 9% of women) and strongly related to educational attainment.

Overall, people nearing retirement in 2004 are better educated -- this proportion is increasing -- and have higher median household incomes than the same age group did 20 years ago.  However, people with lower levels of education and those in lower income categories have not seen the same gains as people with college educations and those in higher income categories.  The increased labor force participation rates of women over the past 20 years have allowed more women to earn their own Social Security benefits, health insurance, and pensions.  Nonetheless, some women continue to be disproportionately disadvantaged in preparing for retirement compared to men.

(This special topic section is based on a forthcoming report by the Federal Interagency Forum on Aging Related Statistics entitled, Selected Indicators of Retirement Resources among People Aged 55-64:  1984, 1994, and 2004. The report was developed by staff of the Social Security Administration.  See the full report for a more detailed presentation of this data.  It will be available of the Forum website, www.agingstats.gov, after it is issued during the first quarter of calendar year 2008.)

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AoA - Statistics - A Profile of Older Americans 2007 - Notes