25. Multiple Imputation for Nonresponse in Surveys. By D. B. Rubin. ISBN 0 471 08705 X. Wiley, Chichester, 1987. 258 pp. £30.25.

Multiple Imputation for Nonresponse in Surveys

Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted responsibility for retirement security to individuals. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.

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Retirement Security in an Aging Population

The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) is the source of the nation’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. We demonstrate that large differences between survey and administrative record estimates are present within most demographic subgroups and are not easily explained by survey design features or processes such as imputation. Further, we show that the discrepancy is mainly attributable to underreporting of retirement income from defined benefit pensions and retirement account withdrawals. Using archived survey and administrative record data, we extend our analysis back to 1990 and provide evidence of underreporting from an earlier period. We also document a growing divergence over time between the two measures of median income which is in turn driven by the growth in retirement income underreporting. Turning to synthetic cohort analysis, we show that in recent years, most households do not experience substantial declines in total incomes upon retirement or any increases in poverty rates. Our results have important implications for assessing the relative value of different sources of income available to older Americans, including income from the nation’s largest retirement program, Social Security. We caution, however, that our findings apply to the population aged 65 and over in 2012 and cannot easily be extrapolated to future retirees.

Do Older Americans Have More Income Than We Think

Most American households carry debt, yet we have little understanding of how debt influences health behavior, especially health care seeking. We examined associations between foregone medical care and debt using a population-based sample of 914 southeastern Michigan residents surveyed in the wake of the late-2000s recession. Overall debt and ratios of debt to income and debt to assets were positively associated with foregoing medical or dental care in the past 12 months, even after adjusting for the poorer socioeconomic and health characteristics of those foregoing care and for respondents' household incomes and net worth. These overall associations were driven largely by credit card and medical debt, while housing debt and automobile and student loans were not associated with foregoing care. These results suggest that debt is an understudied aspect of health stratification.

/pdf/debt-and-foregone-medical-care-3a8jhv6t78.pdf

Debt and Foregone Medical Care.

The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted a greater share of the responsibility for retirement security to individuals, and made that security more dependent on choices they make. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.

/pdf/retirement-security-in-an-aging-society-2e8cllomdc.pdf

Retirement Security in an Aging Society

Traditional defined benefit pensions, once a major source of retirement income, are increasingly giving way to tax-qualified defined contribution (DC) plans and individual retirement accounts (IRAs). This trend is likely to continue among future retirees who have worked in the private sector. This article discusses the implications of those trends for the measurement of retirement income. We conclude that Census Bureau's Current Population Survey (CPS), one of the primary sources of income data, greatly underreports distributions from DC plans and IRAs, posing an increasing problem for measuring retirement income in the future. The CPS and other data sources need to revise their measures of retirement income to account for periodic (irregular) distributions from DC plans and IRAs.

Shifting Income Sources of the Aged

Traditional defined benefit pensions, once a major source of retirement income, are increasingly giving way to tax-qualified defined contribution (DC) plans and individual retirement accounts (IRAs). This trend is likely to continue among future retirees who have worked in the private sector. This article discusses the implications of those trends for the measurement of retirement income. We conclude that Census Bureau's Current Population Survey (CPS), one of the primary sources of income data, greatly underreports distributions from DC plans and IRAs, posing an increasing problem for measuring retirement income in the future. The CPS and other data sources need to revise their measures of retirement income to account for periodic (irregular) distributions from DC plans and IRAs. Introduction In the United States, retirement incomes are supported largely by three pillars: Social Security benefits, employer-provided pensions, and personal savings (including nonhousing wealth and home equity).1 Some individuals continue working in retirement to supplement their income, but most older Americans discontinue full-time work. A relatively small proportion of retirees also receive income from welfare programs, such as Supplemental Security Income. This article discusses the prevalence of personal retirement savings plans in 2009, the increase in personal retirement account assets among the older population in the past two decades, and the implications of these trends for the accurate measurement of the income of the aged in the Census Bureau's Current Population Survey (CPS). Since the early 1960s, the Social Security Administration (SSA) has published information on the income of the aged. Early reports were based on SSA surveys conducted in 1963, 1968, and 1972; since 1976, reports have been based on the CPS Annual Social and Economic Supplement. The share of aged people's income attributable to pensions rapidly increased in the 1960s and 1970s, peaking at 20 percent in 1992 and again in 2004. After 2004, the pension share of income gradually decreased to 18 percent in 2009 and 2010 (Federal Interagency Forum on Aging Related Statistics 2012, Table 9a; SSA 2012). Pension income's decreasing share of total income for the aged partly reflects the traditional defined benefit (DB) plan's decreasing share of total retirement assets. Over half of the $17.8 trillion in total retirement assets at the end of the fourth quarter of 2011 were held in individual retirement accounts (IRAs) and defined contribution (DC) retirement plans ($4.9 trillion and $4.5 trillion, respectively) (Investment Company Institute 2012; Federal Retirement ThriftInvestment Board 2012). Based on these data, the share of retirement assets held in traditional DB plans and annuities decreased from 59 percent in 1992 to 47 percent in 2011. The decreasing proportion of assets in traditional pensions and the increasing share of total retirement assets in IRAs and DC retirement plans could partly account for the decreasing share of pension income in the income of the aged because the CPS appears to undercount distributions from DC plans. Income has historically been underreported in household surveys, and several studies have concluded that pension income is underreported in the CPS (Bosworth, Burtless, and Anders 2007; Roemer 2000; Schieber 1995). Woods (1996) observes that the Census Bureau did not consider IRA distributions to be income in the 1990 CPS, and Czajka and Denmead (2011) conclude that the CPS does not clearly ask about distributions from retirement accounts such as IRAs and DC plans. The CPS measures IRA distributions as money income if they occur "regularly," like annuity payments. However, because most IRA distributions are irregular, they are not measured as income in the CPS. In addition, very few DC plan participants take their retirement distributions as annuities (Brown and others 2008). Excluding periodic (irregular) distributions misses much of the money distributed from IRAs and DC plans that supports retirement consumption. …

Shifting income sources of the aged.

This article uses the Federal Reserve Board’s Survey of Consumer Finances to examine the debt holdings of near-retirees (aged 50-61) in 1995 and 2004. Employing a variety of measures of household borrowing, we find that near-retirees in 2004 - the leading edge of the baby-boom cohort - had more consumer and housing debt than their counterparts in 1995. We observe a modest increase in the median debt service and debt-to-assets ratios between the two cohorts, but no statistical difference in the average ratios. Analysis of several demographic and socioeconomic subgroups reveals certain population segments, such as households headed by single women, with significantly higher debt service ratios in 2004. We discuss the implications of these trends for the retirement income security of older baby boomers and suggest further avenues of research.

Retiring in Debt? Differences between the 1995 and 2004 Near-Retiree Cohorts

This article uses the Federal Reserve Board's Survey of Consumer Finances to examine the debt holdings of near-retirees (aged 50-61) in 1995 and 2004. Employing a variety of measures of household borrowing, we find that near-retirees in 2004-the leading edge of the baby-boom cohort-had more consumer and housing debt than their counterparts in 1995. We observe a modest increase in the median debt service and debt-to-assets ratios between the two cohorts, but no statistical difference in the average ratios. Analysis of several demographic and socioeconomic subgroups reveals certain population segments, such as households headed by single women, with significantly higher debt service ratios in 2004. We discuss the implications of these trends for the retirement income security of older baby boomers and suggest further avenues of research. Introduction This article examines patterns of debt among households approaching retirement in 1995 and 2004.1 Household debt in the United States has received increased academic and public policy focus in recent years.2 Underlying this attention has been growth in aggregate household debt, as well as in personal bankruptcy claims since the end of the 1980s (Bucks, Kennickell, and Moore 2006; Kish 2006; Manning 2000; Masnick, Di, and Belsky 2006; Mishel, Bernstein, and Allegretto 2005, Tables? 4.13-4.17; Sullivan, Warren, and Westbrook 2000). At the end of the first quarter of 2007, the debt outstanding in the U.S. household sector, including mortgage debt, totaled over $13 trillion, up from $3.6 trillion in 1990, adjusting for inflation (Board of Governors 2007).3 Debt is an increasingly substantive concern for retirement analysts and policymakers for several reasons. Although carrying substantial debt later in life is not an indication of financial risk by itself, it can have repercussions for retirement income security. The financial planning literature has shown that the more economic resources a family uses to service its debt, the less it will save for retirement (Cavanagh and Sharpe 2002; Yuh, Montalto, and Hanna 1998). Debt may affect retirement timing, as individuals with high debt may need to work longer to service that debt. If carried into retirement, debt can decrease the longevity of accumulated financial assets and savings, and more generally, mean less financial cushion for the debt holder. For example, the ability of an aged person to respond to health shocks and other costly life events may be negatively impacted if he or she holds a high debt burden. A number of recent studies have examined various aspects of debt with a focus on retirement income security (for example, Lee, Lown, and Sharpe 2007; Munnell and Soto 2008; and Soto 2005). However, debt remains an understudied component of older Americans' financial circumstances. To advance our understanding of debt patterns among older workers, this article documents trends in debt among two recent cohorts approaching retirement. Specifically, data from the Federal Reserve Board's Survey of Consumer Finances (SCF) are used to compare debt among households headed by individuals aged? 50-61 in 1995 (comprising persons born between 1934 and 1945, largely the war-baby cohort) with debt among those headed by individuals aged? 50-61 in 2004 (comprising persons born between 1943 and 1954, largely the leading edge of the baby-boom cohort).4 To gain a deeper understanding of trends across different population segments, debt measures are broken out by various demographic and socioeconomic subgroups of near-retirees. The results document changes in household debt patterns among near-retirees in the leading edge of the baby-boom cohort, showing prominent increases in mortgage and home equity debt in particular. The level of debt, however, does not necessarily portend financial problems; more reliable indicators are debt's relation to household income and assets. Median debt service and debt-to-assets ratios of near-retirees in 2004 were modestly higher than those in 1995. …

Retiring in debt? Differences between the 1995 and 2004 near-retiree cohorts.

This research note uses 2007 Survey of Consumer Finances (SCF) data to update the authors’ work reported in a prior article, which used earlier data to assess debt levels among households approaching retirement in 1995 and 2004. The authors assess whether there have been changes in the debt holdings of near-retirees in 2007, a point in time reflecting the start of the recent financial and economic crisis. Results show that debt levels of near-retirees were modestly higher in 2007 than in 2004, overall and across several subgroups. The results reinforce a general finding of the original article that current near-retirees, primarily baby boomers, are approaching retirement with more debt compared with their counterparts in the mid-1990s. Because the 2007 SCF data captures only the beginning of the current recession, the authors expect future trends to differ from the results presented here.

RetiRing in Debt? An UpDAte on the 2007 neAR-RetiRee CohoRt

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