Order Code RL30922
CRS Report for Congress
Received through the CRS Web
Retirement Savings and Household Wealth:
A Summary of Recent Data
Updated December 11, 2003
Patrick J. Purcell
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Retirement Savings and Household Wealth: A
Summary of Recent Data
Summary
Pension analysts refer to Social Security, employer-sponsored retirement plans,
and personal savings as the “three-legged stool” of retirement income, but for many
workers at least one of the legs is missing. Many workers fail to save adequately for
retirement. Data from the Federal Reserve Board’s Survey of Consumer Finances
indicate that in 2001 only 58% of families with an employed family head or spouse
between the ages of 21 and 64 included at least one worker who participated in an
employer-sponsored retirement plan. Most participated in savings and thrift plans,
in which the worker must decide whether to contribute to the plan, and how to invest
the funds. Only 25% of families included at least one worker who was covered by
a defined benefit plan that guarantees a fixed monthly payment for life.
The Federal Reserve Board collects data on household assets and liabilities
through its Survey of Consumer Finances (SCF). The most recent available data
from this survey were collected in 2001. According to the SCF, an estimated 47.8
million families with at least one worker between the ages of 21 and 64 — (63%) —
owned one or more retirement accounts in 2001. An estimated 27.8 million families
— (37%) — did not own a retirement savings account of any kind. Among the
families who owned a retirement savings account of any kind in 2001, the mean
value of all such accounts was $95,943. The median value of all accounts was
$27,000. The median value of the retirement accounts held by families headed by a
worker between the ages of 55 and 64 was $55,000 in 2001. For a 65-year-old
retiring in December 2003, $55,000 would be sufficient to purchase a level, single-
life annuity that would pay $408 per month, based on the federal Thrift Savings
Plan’s current annuity interest rate of 4.375%. A balance of $55,000 would be
sufficient to purchase a joint-and-survivor annuity of $394 per month at age 65 at an
interest rate of 4.375%.
The Bureau of the Census collects data on household assets and liabilities
through its Survey of Income and Program Participation (SIPP). The SIPP most
recently collected data on household assets and liabilities in late 1999 and early 2000.
According to the SIPP, an estimated 38.1 million families with at least one worker
between the ages of 21 and 64 — (49%) — owned one or more retirement accounts,
including IRAs, Keogh accounts, and 401(k)-type accounts in 2000. An estimated
39.9 million such families — (51%) — did not own a retirement savings account of
any kind. Among the 38.1 million families who owned a retirement savings account
of any kind in 2000, the mean value of all such accounts was $60,510. The median
value of all the families’ accounts was $24,000.
Both surveys show that rates of retirement plan ownership and average account
balances rise steadily with family income and with level of education. Homeowners
and married couples are more likely to have a retirement account than are renters or
single persons. Both surveys show that while the rate of IRA ownership among
employees of small businesses differs only a little from that of workers at large
businesses, workers at firms with more than 100 employees are much more likely to
participate in a 401(k)-type plan than are employees of smaller businesses.

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Contents
Background: America’s Aging Population . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Congress and Retirement Saving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employer-sponsored Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Trends in Retirement Plan Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Retirement Savings of American Families . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Survey of Consumer Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Defining the Terms of the Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of Retirement Plan Ownership . . . . . . . . . . . . . . . . . . . . . . . 6
Retirement Account Balances by Age of Family Head . . . . . . . . . . . . . 7
Retirement Plan Ownership and Demographic Traits . . . . . . . . . . . . . . 8
Family Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Survey of Income and Program Participation . . . . . . . . . . . . . . . . 12
SIPP Data on Retirement Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Appendix: Why Do the Survey Results Differ? . . . . . . . . . . . . . . . . . . . . . . . . . 20
Why Was the Survey Conducted? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
What Questions Were Asked? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Who Was Asked the Questions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
When were the questions asked? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Tables
Table 1. Participation in Retirement Plans at Current Main Job in 2001 . . . . . . . 4
Table 2. Retirement Account Balances in 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 3. Retirement Account Balances by Age in 2001 . . . . . . . . . . . . . . . . . . . . 8
Table 4. Ownership of Individual Retirement Accounts/Keogh Accounts
in 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 5. Ownership of 401(k)-type Plans from Current or Past Job in 2001 . . . . 11
Table 6. Median Family Net Worth in 2001, by Age of Family Head . . . . . . . . 12
Table 7. Retirement Account Balances in 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 8. Retirement Account Balances by Age in 2000 . . . . . . . . . . . . . . . . . . . 15
Table 9. Ownership of Individual Retirement Accounts/Keogh Accounts
in 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 10. Ownership of 401(k)-type Plans from Current or Past Job in 2000 . . . 17
Table 11. Median Family Net Worth in 2000, by Age of Family Head . . . . . . . 18

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Retirement Savings and Household Wealth:
A Summary of Recent Data
Background: America’s Aging Population
The aging of the American population and the impending retirement of the
“baby boom” generation will place significant strains over the next several decades
on Social Security and on retirees’ own financial resources. The decline in birth rates
since the 1960s and increases in life expectancy will result in fewer workers relative
to the number of retirees. Consequently, Social Security benefits will have to be
financed by a working population that is shrinking relative to the number of retirees
and retirees will have to stretch their savings and other assets over longer periods of
retirement than their parents and grandparents experienced.
Americans Are Living Longer Then Ever Before. The average life
expectancy of Americans born in 1960 was 69.7 years. It has been estimated that
those who were born in 2000 will live for an average of 76.4 years.1 A man who
reached age 65 in 1960 could expect to live another 13 years, while a woman who
turned 65 in 1960 had a remaining life expectancy of 16 years. A man who reached
age 65 in 2000 could expect to live another 15.6 years, while a woman who turned
65 in 2000 had a remaining life expectancy of 19.4 years. As more people live into
old age, the age-profile of the population will shift. In 1960, 16.7 million people in
the United States — 9.2% of the population — were age 65 or older. In 2000, there
were 35.0 million Americans age 65 or older, representing 12.4% of the population.
By 2025, according to projections made by the Bureau of the Census, there will be
62 million people age 65 or older, comprising 18.5% of the U.S. population.
These demographic trends will strain the components of the traditional “three-
legged stool” of retirement income: Social Security, pensions, and personal saving.
The Social Security Board of Trustees has estimated that the Social Security trust
fund will be exhausted by 2044 unless actions are taken to preserve it.2 Pensions are
the second largest source of income among the elderly, after Social Security, but only
about half of all workers in the United States have pension coverage through their
jobs. Moreover, the traditional pension that provides a lifelong annuity is becoming
less common. Today, more workers participate in savings and thrift plans than in
traditional pension plans. A key characteristic of these savings plans is that the
worker must actively participate, deciding whether to contribute to the plan, how
much to contribute, and how to invest the funds. Workers who do not choose to
save, or who save too little, may face difficult financial circumstances in retirement.
1 U.S. National Center for Health Statistics, Vital Statistics of the United States.
2 Social Security and Medicare Boards of Trustees, Status of the Social Security and
Medicare Programs: A Summary of the 2003 Annual Reports, Washington DC, March 2003.

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CRS-2
Congress and Retirement Saving
Congress has acted several times over the years to encourage workers to save
for retirement, mainly by allowing income taxes to be deferred on amounts that
workers and/or their employers contribute to certain types of savings plans
established to prepare for retirement. For example:
! The Technical Amendments Act of 1958 (P.L. 85-866) added Internal
Revenue Code section 403(b), authorizing deferral of taxes on
employer and employee contributions to retirement plans of
religious, charitable, educational, research, and cultural institutions.
! The Self-Employed Individuals Tax Retirement Act of 1962 (P.L.
87-792) authorized tax-deferred Keogh Plans (after Rep. Eugene J.
Keogh of New York) for workers who are self-employed.
! The Employee Retirement Income Security Act of 1974 (P.L. 93-406)
authorized Individual Retirement Accounts (IRAs) in which
eligible contributions and investment earnings are tax-deferred.
! The Revenue Act of 1978 (P. L. 95-600) added Internal Revenue
Code section 401(k). Employers and employees can make pre-tax
contributions to these retirement plans. Earnings are tax-deferred.
! The Revenue Act of 1978 also added Internal Revenue Code section
457 to permit state and local government employees to defer income
taxes on a portion of salary that is deposited into a retirement plan.
! The Taxpayer Relief Act of 1997 (P.L. 105-34) authorized the Roth
IRA, which accepts only after-tax contributions but provides for
tax-free distributions.
! The Economic Growth and Tax Relief Reconciliation Act of 2001
(P.L. 107-16) increased the maximum contribution to an IRA to
$3,000 in 2002, 2003, and 2004; to $4,000 in 2005, 2006, and 2007,
and to $5,000 in 2008. It then will be indexed to inflation in $500
increments. Individuals age 50 and older may contribute an
additional $500 to an IRA in 2002 through 2005 and $1,000 in each
year thereafter. The law increased the maximum employee salary
deferral under I.R.C. §401(k) to $11,000 in 2002 and by an
additional $1,000 each year through 2006, when it will reach
$15,000. After 2006, the maximum deferral will be indexed to
inflation. The law raised the maximum contribution to retirement
plans under §§403(b) and 457 to the same amount as under section
401(k). People age 50 or older can make additional contributions to
retirement plans authorized under I.R.C. §§401(k), 403(b), or 457.
The maximum permissible additional contribution is $1,000 in 2002,
$2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in 2006.
This amount is indexed to inflation in years after 2006.

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CRS-3
Employer-sponsored Retirement Plans
Social Security, employer-sponsored retirement plans, and personal savings are
sometimes called the “three-legged stool” of retirement income, but for many
workers at least one of the legs is missing. Coverage under Social Security is nearly
universal, but access to employer-sponsored retirement plans is limited. Data from
the Federal Reserve Board’s Survey of Consumer Finances indicate that in 2001,
58% of families in which the head or spouse was a worker between the ages of 21
and 64 included at least one worker who participated in an employer-sponsored
retirement plan. (See Table 1.) Forty-seven percent of families with a worker
between the ages of 21 and 64 included someone who participated in a defined
contribution plan. Only 25% of families included at least one worker who was
covered by a defined benefit plan that guarantees a fixed monthly payment for life.
Trends in Retirement Plan Design. Over the past 25 years, there has been
a shift in the distribution of retirement plans and of plan participants from defined
benefit plans to defined contribution plans. In a defined benefit or “DB” plan, the
retirement benefit is usually paid as a lifelong annuity based on the employee’s length
of service and average salary in the years just before retirement. DB plans usually
are funded by employer contributions. A defined contribution or “DC” plan is much
like a savings account maintained by the employer on behalf of each participating
employee. The employer contributes a specific dollar amount or percentage of pay,
which is invested in stocks, bonds, or other assets. The employee usually contributes
to the plan, too. In a DC plan, it is the employee who bears the investment risk. At
retirement, the balance in the account is the sum of all contributions plus interest,
dividends, and capital gains — or losses. The account balance is usually distributed
as a single lump sum. Many large employers recently have converted their traditional
DB pensions to hybrid plans that have characteristics of both DB and DC plans, the
most popular of which has been the cash balance plan. In a cash balance plan, the
benefit is defined in terms of an account balance. The employer makes contributions
to the plan and pays interest on the accumulated balance. However, these account
balances are merely bookkeeping devices. They are not individual accounts owned
by the participants. Legally, therefore, a cash balance plan is a defined benefit plan.
The Growth of Defined Contribution Plans. After section 401(k) was
added to the IRC in 1978, DC plans overtook traditional defined benefit pensions in
number of plans, participants, and total assets. Earlier defined contribution plans had
been funded exclusively by employer contributions. In a 401(k) plan, however, both
the employer and the employee can make contributions. These characteristics leave
most of the responsibility of preparing for retirement with the employee, who must
decide whether to participate, how much to contribute, and how to invest the assets.
In 1998 and 2000, the IRS issued rulings that permit employers to enroll employees
automatically in a 401(k) plan. IRS Revenue Ruling 98-30 allows employers to
provide for automatic enrollment into 401(k) plans for newly eligible employees.
Under a so-called “negative election” workers may be automatically enrolled in their
employer’s retirement savings plan. Employees who are enrolled automatically must
be given an option to drop out of the plan. IRS Revenue Ruling 2000-8 allows
automatic enrollment in 401(k) plans of current employees who had not elected to
participate.

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CRS-4
Table 1. Participation in Retirement Plans at Current Main Job in 2001a
Number
Any Type
Defined
Defined
Both
Family Head Characteristics
of Families
of Planb
Contributionb
Benefitb
Typesb
(in thousands)
Age
Under 35
21,372
48.1%
41.0%
14.6%
7.5%
35 to 44
22,440
63.1
52.7
25.6
15.2
45 to 54
19,759
64.7
49.5
33.2
18.0
55 or older
12,043
54.0
40.3
25.7
12.0
Race
White, non-Hispanic
56,993
59.8
48.6
26.1
14.9
Black, Hispanic, or Asian
18,620
51.7
40.4
19.5
8.2
Sex and Marital Status
Couple
43,791
65.0
52.5
29.9
17.5
Single Male
16,183
50.3
41.0
18.1
8.8
Single Female
15,639
45.6
35.6
15.8
5.8
Education
Did not graduate High School
8,938
32.1
24.3
12.9
5.1
High School graduate
22,404
53.8
41.7
22.7
10.6
Some college
18,776
57.3
45.8
22.9
11.4
College graduate
25,495
70.8
59.2
31.3
19.7
Annual family income
Under $25,000
15,450
24.9
22.8
7.9
1.6
$25,000 to $49,999
22,391
51.9
38.8
18.6
5.4
$50,000 to $74,999
15,765
72.5
59.0
31.5
18.0
$75,000 or more
22,008
76.6
65.3
37.1
26.0
Own or rent home
Own
50,887
66.5
54.2
29.7
17.3
Rent
24,726
39.9
30.9
13.8
4.8
Full time or part time worker
Not currently working
3,276
33.0
26.2
14.3
7.5
Full time (35+ hours per week)
6,915
29.5
23.3
10.8
4.7
Part time
65,422
62.1
50.1
26.4
14.4
Establishment size
Not currently working
3,276
33.0
26.2
14.3
7.5
Under 20 employees
19,288
29.4
24.3
9.1
4.0
20 to 99 employees
11,135
53.4
45.0
17.9
9.6
100 to 499 employees
12,378
67.2
54.3
25.9
13.0
500 or more employees
29,536
76.9
60.7
37.5
21.4
Covered by Union contract?
Not currently working
3,276
33.0
26.2
14.3
7.5
Union
13,539
81.7
53.9
51.3
23.5
Non-union
58,798
53.7
46.0
18.9
11.2
Have an IRA or Keogh plan?
Yes
25,238
66.8
53.8
30.3
17.2
No
50,375
53.3
43.0
21.6
11.2
Total
75,613
57.8%
46.6%
24.5%
13.2%
Source: CRS analysis of the Federal Reserve Board’s 2001 Survey of Consumer Finances.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64
b. Percentage of families in which head or spouse participated, by type of plan

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CRS-5
Retirement Savings of American Families
With the trend away from defined benefit plans to defined contribution plans,
workers now bear much of the responsibility of preparing for retirement. Workers
whose employers offer savings or “thrift” plans such as those authorized under
sections 401(k), 403(b), and 457 of the Internal Revenue Code can accumulate assets
on a tax-deferred basis while they are working. In addition, most people with earned
income can contribute to an Individual Retirement Account (IRA). In both cases,
taxes are paid when the funds are withdrawn, and a penalty may apply if the
withdrawals occur before retirement.3 For many people, the marginal income tax rate
that they will face in retirement will be lower than the rate that was applied to their
earnings prior to retirement.
The Survey of Consumer Finances. The Survey of Consumer Finances
(SCF) is sponsored by the Board of Governors of the Federal Reserve System in
cooperation with the Department of the Treasury. It is conducted once every three
years to collect information on the assets and liabilities of households, their pension
coverage, sources and amounts of income, and demographic characteristics. Data
from the SCF are widely used by analysts at the Federal Reserve, in other branches
of government, and by scholars in private-sector research organizations and
academic institutions. Since 1992, SCF data have been collected by the National
Organization for Research at the University of Chicago (NORC). The most recent
available SCF data were collected in 2001.4 For the 2001 Survey of Consumer
Finances, members of 4,449 families were interviewed.
Defining the Terms of the Analysis. In the Survey of Consumer Finances,
each household is divided into a “primary economic unit” (PEU) and everyone else
in the household. The PEU in the Survey of Consumer Finances is the economically
dominant single individual or couple in the household together with everyone else
who is economically interdependent with them. In the tables that follow, the primary
economic unit is called a family, even if it is a single individual. The tables present
information on the retirement savings of families in which the family head or spouse
was an employed adult between 21 and 64 years old.5 According to the SCF there
were 75.6 million families in which the family head or spouse was an employed adult
between 21 and 64 years old in 2001. We restricted the analysis to families with a
worker between the ages of 21 and 64 because younger workers have low rates of
participation in retirement plans and are generally more concerned with establishing
themselves in their careers than in accumulating assets for retirement. Workers age
65 or older are more likely than those under 65 to have retired from their career jobs
and to be working part-time. The tables do not include the portion of retirement
wealth that is represented by the present value of benefits accrued under Social
3 In a traditional IRA, pre-tax contributions can be made only if the worker is not covered
by an employer-sponsored retirement plan or has income below amounts specified in law.
All investment earnings accrue on a tax-deferred basis. Roth IRAs accept only after-tax
contributions; however, withdrawals from a Roth IRA during retirement are tax-free.
4 For more information, see http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html.
5 The term “family head” is used here for convenience, not to indicate status in the family.

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CRS-6
Security and employer-sponsored defined-benefit pension plans. They include only
the balances accumulated in individual retirement accounts (IRAs), Keogh plans for
the self-employed, and employer-sponsored defined contribution plans, such as those
authorized under sections 401(k), 403(b), and 457 of the tax code.
The following tables show the retirement savings of American families in which
there was at least one worker between the ages of 21 and 64. The tables show the
number of families that owned at least one retirement account as well as the average
balances held in those accounts.

Summary of Retirement Plan Ownership. According to the SCF, there
were 75.6 million families with an employed head or spouse between the ages of 21
and 64 in 2001. An estimated 47.8 million of these families (63.2%) owned one or
more retirement accounts, including IRAs, Keogh accounts, 401(k) accounts and
other employer-sponsored savings or thrift plans. (See Table 2). According to the
SCF, an estimated 36.4 million families (48.1%) owned a 401(k)-type plan, 25.2
million (33.4%) owned an IRA or Keogh plan, and 13.8 million (18.3%) owned both
an IRA/Keogh and a 401(k) plan. An estimated 27.8 million families with at least
one worker between the ages of 21 and 64 (36.8%) did not own a retirement savings
account of any kind, according to the Survey of Consumer Finances.
The data displayed in Table 2 also summarize the average account balances
among families that owned at least one retirement account. According to the SCF,
among the 47.8 million families who owned a retirement savings account of any kind
in 2001, the mean value of all such accounts was $95,943. The median value of all
the families’ accounts was $27,000. (Half of the families owned accounts totaling
more than $27,000 and half owned accounts with a total value of less than $27,000.)
The mean balance of 401(k)-type plans was reported as $68,320, and the median
balance was $20,000. The mean balance of IRA/Keogh plans was reported as
$83,240 on the SCF, and the median account balance was reported as $21,000.
Means and Medians
The average values of retirement accounts are shown in this report in
terms of both the mean and the median values. The mean is a simple arithmetic
average.6 It is calculated by adding up the reported values of all accounts and
then dividing this total by the number of account-holders. As a measure of
central tendency — what an “average” represents — the mean is flawed
because it can be influenced by a relatively small number of unusually high or
low values. The median is another kind of average that is more representative
of the population because it is not biased by unusually high or low values. The
median is calculated by ordering all of the observed values from highest to
lowest and finding the value that lies exactly at the midpoint of the distribution.
One half of all observed values are greater than the median and the other half
are less than the median.
6 A survey weight has been assigned to each family. The weights sum to the number
families in the U.S. The means in the tables are the weighted means for each observation.

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CRS-7
Table 2. Retirement Account Balances in 2001a
( in thousands)
Number
Percent
Mean
Median
of
of
Value of
Value of
Families
Families Accounts Accounts
All families
75,613
100%

Owned either an IRA/Keogh or a 401(k)-type plan
47,806
63.2
All retirement accounts in family, all types
$95,943
$27,000
Owned a 401(k) or other type of thrift planb
36,385
48.1
All 401(k)-type accounts in family
68,320
20,000
All retirement accounts in family, all types
97,298
29,000
Owned an IRA or Keogh planc
25,238
33.4
All IRA/Keogh accounts in family
83,240
21,000
All retirement accounts in family
144,880
49,000
Owned both a 401(k) and an IRA/Keogh plan
13,817
18.3
All 401(k)-type accounts in family
112,589
35,000
All IRA/Keogh accounts in family
76,307
24,000
All retirement accounts in family, all types
188,896
83,000
Owned neither an IRA/Keogh nor a 401(k)-type plan
27,807
36.8
Source: CRS analysis of the Federal Reserve Board’s Survey of Consumer Finances.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64.
b. May also have owned an IRA or Keogh plan.
c. May also have owned a 401(k)-type plan.
Retirement Account Balances by Age of Family Head. A worker’s age
is an important consideration when evaluating the adequacy of his or her retirement
wealth. The more time that a worker has until reaching retirement age, the greater
will be the opportunity for additional contributions and investment earnings to build
up the account balance. Table 3 shows average retirement account balances,
categorized by the age of the family head. The SCF indicates that 10.9 million
families headed by a worker 21 to 34 years old (51.2% of families in this age group)
owned one or more retirement accounts. The SCF data show mean and median
account balances for these families of $19,123 and $7,000, respectively. Even among
workers 55 to 64 years old, median retirement account balances were not very large.
The median value of the retirement accounts held by families headed by a worker
between the ages of 55 and 64 was $55,000 in 2001, according to the SCF. For a 65-
year-old retiring in December 2003, $55,000 would be sufficient to purchase a level,
single-life annuity that would pay $408 per month, based on the federal Thrift
Savings Plan’s current annuity interest rate of 4.375%.7 A balance of $55,000 would
be sufficient to purchase a joint-and-survivor annuity of $394 per month at age 65 at
an interest rate of 4.375%.
7 Example is based on 50% annuity for a spouse 3 years younger than the annuitant.

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CRS-8
Of course, the median account values reflect only balances of families that own
a retirement account. The data collected by the SCF show a median account balance
of $55,000 among families headed by a worker 55 to 64 years old. This means that
half of all retirement account owners in this age category had total account balances
of more than $55,000 and half had account balances of less than $55,000. However,
when we take into account those who had no retirement accounts, and thus had total
retirement account balances of zero, 7.8 million families headed by a worker 55 to
64 years old — 65.1% of families in this age group — had total retirement account
balances of $55,000 or less in 2001.
Table 3. Retirement Account Balances by Age in 2001a
( in thousands)
Number
Families
Percent
Mean
Median
Age of Family Head
Of
With
with
Value, All Value, All
Families Accounts Accounts Accountsb Accountsb
21 to 34 years old
Value of all retirement accounts, all types 21,372
10,944
51.2%
$19,123
$7,000
35 to 44
Value of all retirement accounts, all types 22,439
14,815
66.0
65,583
29,000
45 to 54
Value of all retirement accounts, all types 19,759
13,643
69.0
132,741
48,000
55 or older
Value of all retirement accounts, all types 12,043
8,403
69.8
189,779
55,000
All households
Value of all retirement accounts, all types 75,613
47,806
63.2
95,943
27,000
Source: CRS analysis of the Federal Reserve Board’s Survey of Consumer Finances.
Notes: Includes single persons as well as families. Includes defined contribution plan account balances from both
current and past employment.
a. Families with an employed head or spouse age 21-64.
b. Means and medians reflect balances in all types of plans.
Retirement Plan Ownership and Demographic Traits. Table 4 and
Table 5 show the rate of ownership and average account balances for individual
retirement accounts (IRAs) and Keogh plans in 2001 as reported on the Survey of
Consumer Finances. The rates of ownership and average account balances are
shown in these tables in relation to the demographic characteristics of the family head
or householder. In summary:
! IRA ownership and average account balances rose steadily with
family income;
! Families headed by a white worker were twice as like as those in
which the family head was a non-white worker to own an IRA;

---

CRS-9
! Married couples were almost twice as likely as unmarried
individuals to have owned an IRA, in part because these data
measure retirement plan ownership at the family level, and many
married couples include two workers;
! IRA ownership rose with education, and college graduates were
much more likely than those who had not graduated from college to
own an IRA;
! homeowners were about three times as likely as renters to own an
IRA;
! IRA ownership differed little between full-time workers and part-
time workers;
! IRA ownership among employees of small businesses differed only
a little from that of workers at large businesses;
! Union membership appears to have little relationship to IRA
ownership, and
! Families where one or more workers participated in a 401(k) were
more likely to own an IRA than families in which no one
participated in an 401(k) plan.
Many of the relationships between demographic characteristics and 401(k)
participation were similar to the relationships between demographic characteristics
and IRA ownership, but there were some differences. For example, while IRA
ownership increased in each age group, 401(k) ownership dropped in the 55-or-older
category. This can likely be attributed in part to the large number of people who roll
over 401(k) account balances into an IRA when they retire. While 401(k) ownership
was greater among families headed by a white worker than a non-white worker, the
difference was not as great as the difference in the rate of IRA ownership by race.
Likewise, while 401(k) ownership was greater among couples than singles, the
difference was not as great as the difference in the rate of IRA ownership by marital
status. Finally, while IRA ownership differed little among employees of small firms
and large firms, 401(k) ownership was higher among workers at large businesses than
among workers at small businesses by a ratio of about 2:1.

---

CRS-10
Table 4. Ownership of Individual Retirement Accounts/Keogh Accounts in 2001a
(in thousands)
Number of
Percent that own Mean Balance in
Median balance
Families with One an IRA or Keogh
All Ira/keogh
in All IRA/Keogh
Family head characteristics:
or More Workers
Planb
Plansb
Plansb
Age
Under 35
21,372
20.3%
$ 15,081
$ 7,000
35 to 44
22,440
30.9
43,277
15,000
45 to 54
19,759
41.0
102,943
40,000
55 or older
12,043
48.6
153,961
45,000
Race
White, non-Hispanic
56,993
38.5
90,926
25,000
Black, Hispanic, or Asian
18,620
17.7
31,926
7,500
Sex and Marital Status
Married
43,791
42.1
98,521
28,000
Single Male
16,182
21.3
47,481
12,000
Single Female
15,639
21.5
36,172
7,500
Education
Did not graduate High School
8,938
12.3
24,558
10,000
High School graduate
22,404
22.2
53,718
15,000
Some college
18,776
27.0
50,145
14,000
College graduate
25,495
55.2
110,178
31,000
Family income in 2000
Under $25,000
15,449
10.1
16,563
5,000
$25,000 to $49,999
22,391
23.3
30,486
10,000
$50,000 to $74,999
15,765
33.4
60,479
16,000
$75,000 or more
22,008
60.0
121,055
40,000
Own or rent home
Own
50,887
42.2
93,538
27,000
Rent
24,726
15.3
24,640
7,000
Full time or part time worker

Not currently working
3,276
32.4
165,397
43,000
Full time (35+ hours per week)
65,422
33.5
76,235
20,000
Part-time
6,914
32.3
113,121
40,000
Establishment size
Not currently working
3,276
32.4
165,397
43,000
Under 20 employees
19,288
36.5
110,187
30,000
20 to 99 employees
11,135
31.9
57,069
16,500
100 to 499 employees
12,378
27.6
72,041
20,000
500 or more employees
29,536
34.4
68,915
16,000
Covered by Union contract?
Not currently working
3,276
32.4
165,397
43,000
Union
13,539
29.9
50,490
10,000
Non-union
58,797
34.2
85,492
24,000
Have a 401(k) type plan?
Yes
36,385
38.0
76,307
24,000
No
39,228
29.1
91,627
20,000
Total
75,613
33.4%
$ 83,240
$ 21,000
Source: CRS analysis of the Federal Reserve Board’s 2001 Survey of Consumer Finances.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64.
b. Percentage of families in which head or spouse participated in plan, by type of plan.

---

CRS-11
Table 5. Ownership of 401(k)-type Plans from Current or Past Job in 2001a
(in thousands)
Number of
Percent That
Mean Balance
Median Balance
Family Head Characteristics
Families with One OwnOne or More In All Such Plans in All Such Plans
or More Workers
DC Plansb
Age
Under 25
21,372
41.8%
$16,098
$ 6,000
35 to 44
22,440
54.5
54,920
24,000
45 to 54
19,759
51.4
96,271
30,000
55 or older
12,043
42.2
136,518
43,000
Race
White, non-Hispanic
56,993
50.1
77,863
24,000
Black, Hispanic, or Asian
18,620
42.1
33,547
9,000
Sex and Marital Status
Married
43,791
53.8
85,816
27,000
Single Male
16,182
43.0
40,537
10,000
Single Female
15,639
37.7
31,197
8,000
Education
Did not graduate High School
8,938
25.9
32,038
6,000
High School graduate
22,404
43.6
33,838
12,000
Some college
18,776
47.3
49,564
16,000
College graduate
25,495
60.5
106,383
31,000
Family income in 2000
Under $25,000
15,449
20.2
9,076
2,200
$25,000 to $49,999
22,391
40.3
21,795
7,800
$50,000 to $74,999
15,765
60.4
41,538
21,000
$75,000 or more
22,008
66.9
126,703
50,000
Own or rent home
Own
50,887
55.8
81,542
27,000
Rent
24,726
32.3
21,244
4,650
Full time or part time worker
Not currently working
3,276
31.5
64,670
25,000
Full time (35+ hours per week)
65,422
51.2
68,116
20,000
Part time
6,914
26.5
74,101
11,000
Establishment size
Not currently working
3,276
31.5
64,670
25,000
Under 20 employees
19,288
26.2
95,334
18,000
20 to 99 employees
11,135
46.3
52,653
12,000
100 to 499 employees
12,378
55.9
54,909
16,000
500 or more employees
29,536
61.7
70,581
23,000
Covered by Union contract?
Not currently working
3,276
31.5
64,670
25,000
Union
13,539
54.2
52,204
23,000
Non-union
58,797
47.7
72,673
18,000
Have an IRA or Keogh plan?
Yes
25,238
54.7
112,589
35,000
No
50,375
44.8
41,217
11,000
Total
75,613
48.1%
$68,320
$20,000
Source: CRS analysis of the Federal Reserve Board’s 2001 Survey of Consumer Finances.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64.
b. Percentage of families in which head or spouse participated in plan, by type of plan.

---

CRS-12
Family Net Worth. Most families have forms of wealth other than retirement
accounts on which they will be able to draw during retirement. More than 95% of
workers in the United States are covered by Social Security, and about a quarter of
families included a worker who participated in a defined-benefit pension plan in
2001.8 In addition, many workers have assets that could be used to pay expenses
during retirement. For example, the most valuable asset owned by most people is
their home, and some may find when they are older that they prefer to live in a
smaller house or apartment, or they may choose to move to an area where property
taxes and other living expenses are lower than where they lived during their working
years. In addition to equity in their homes, many individuals have financial assets,
equity in businesses, real estate, or other valuables that can either provide a stream
of income through interest, dividends, or rents, or that can be fully or partially
liquidated to finance their consumption needs during retirement. “Net worth” is the
difference between a family’s assets and liabilities. The median net worth of all
families in the U.S. in 2001, categorized by the age of the family head or
householder, is shown in Table 6.
Table 6. Median Family Net Worth in 2001,
by Age of Family Head
(All families)
Age of Family Head or Householder
Amount
Under 35 years old
$11,600
35 to 44
77,600
45 to 54
132,000
55 to 64
181,500
65 to 74
176,300
75 or older
151,400
All families
86,100
Source: Federal Reserve Bulletin, January 2003, vol. 89, no. 1.
The Survey of Income and Program Participation. The Bureau of the
Census collects data on household assets and liabilities through its Survey of Income
and Program Participation (SIPP). The households selected to participate in the
SIPP are a nationally representative sample of the civilian, noninstitutionalized
population of the United States. The SIPP is a longitudinal survey, meaning that it
measures changes in the economic and demographic characteristics of individuals
and households over time. Families who participate in the survey are interviewed
once every 4 months over a period that ranges from 2½ years 4 years. At each
interview, respondents are asked to provide information covering the 4 months since
the previous interview. This 4-month span is called the “reference period” for the
interview. While it was designed as a longitudinal survey, the SIPP also can be used
to study characteristics of the population at a point in time (cross-sectional analysis)
by looking at the data from a particular 4-month reference period.
8 See Table 1.

---

CRS-13
The SIPP is an important source of information about the demographic and
economic status of United States residents. By collecting data on labor force
participation, sources of income, and participation in federal and state programs, the
SIPP provides a wealth of information about government programs and their effects
on the economic situations of families and individuals. For example, the SIPP can
be used to examine participation in means-tested programs (such as Temporary Aid
to Needy Families, Food Stamps, and Medicaid) and in programs that are not means-
tested (such as Social Security and Medicare). In addition to asking about amounts
and sources of income, the SIPP collects information on asset ownership to provide
a more complete picture of the total economic resources available to families and
individuals. The SIPP data on household wealth and asset ownership presented in
this report are the most recent available from the Bureau of the Census.
According to the Census Bureau, the main objective of SIPP is to provide
accurate and comprehensive information about the income and program participation
of individuals and households in the United States, and about the principal
determinants of income and program participation. The large sample size of the SIPP
allows it to be used to analyze the demographic and economic characteristics of
various sub-populations of interest to policy makers. The initial four-month wave
of the 1996 panel of the SIPP included almost 37,000 households. The twelfth wave
of the 1996 panel of the SIPP — on which the analysis in this report is based —
included more than 28,000 households. The SIPP collects detailed information on
income from all sources, on taxes paid, and on participation in government transfer
programs. More importantly for purpose of this report, the SIPP collects data on
household assets and liabilities, including ownership of individual retirement
accounts (IRAs) and Keogh accounts for the self-employed, and on participation in
employer-sponsored retirement savings plans, such as those authorized under
sections 401(k), 403(b), and 457 of the Internal Revenue Code.9
SIPP Data on Retirement Savings. The SIPP most recently collected data
on household assets and liabilities in late 1999 and early 2000. In comparing the data
from the SIPP with that collected on the Survey of Consumer Finances, it is
important to note that the Census Bureau and the Federal Reserve Board define
families differently. The Census Bureau defines a family as any two or more people
related by birth, marriage, or adoption who live together. Households may contain
more than one family, but all members of the household who are related by birth,
marriage, or adoption are members of the same family. In the Survey of Consumer
Finances, each household is divided into a “primary economic unit” (PEU) and
everyone else in the household. The PEU is the economically dominant single
individual or couple in the household. It is roughly equivalent to a family in the
SIPP. Using these definitions of family — and treating single adults living alone as
one-persons families — the SIPP and the SCF yield similar numbers of family units.
According to the SIPP, there were 78 million families with an employed head or
spouse between the ages of 21 and 64 in 2000, while according to the SCF there were
75.6 million such families in 2001.
9 [http://www.sipp.census.gov/sipp/intro.html]

---

CRS-14
Summary of Account Ownership. According to the SIPP, an estimated
38.1 million families headed by a worker 21 to 64 years old (48.9% of all such
families) owned one or more retirement accounts, including IRAs, Keogh accounts,
401(k) accounts and other employer-sponsored savings or thrift plans in 2000. An
estimated 29.9 million families (38.4%) owned a 401(k)-type plan, 18.0 million
(23.1%) owned an IRA or Keogh plan (mostly IRAs), and 9.8 million (12.6%) owned
both an IRA/Keogh and a 401(k)plan. An estimated 39.9 million families with at
least one worker between the ages of 21 and 64 (51.1%) did not own a retirement
savings account of any kind.10 Among the 38.1 million families who owned a
retirement savings account of any kind in 2000, the mean value of all such accounts
was $60,510. For families with more than one account, this is the mean value of all
accounts summed together. The median value of all the families’ accounts was
$24,000. (Half of the families owned accounts totaling more than $24,000 and half
owned accounts with a total value of less than $24,000.) Mean retirement account
balances reported on the SIPP were substantially lower than those reported on the
SCF, but the median account balances on the two surveys differed by much less.
Table 7. Retirement Account Balances in 2000a
(in thousands)
Number
Percent
Mean
Median
of
of
Value of
Value of
Families
Families Accounts Accounts
All families
77,984
100%
Owned either an IRA/Keogh or a 401(k)-type plan
38,119
48.9
All retirement accounts in family, all types
$60,510
$24,000
Owned a 401(k) or other type of thrift planb
29,937
38.4
All 401(k)-type accounts in family
47,949
20,000
All retirement accounts in family, all types
64,586
26,000
Owned an IRA or Keogh planc
18,018
23.1
All IRA/Keogh accounts in family
48,348
19,000
All retirement accounts in family
86,871
41,500
Owned both a 401(k) and an IRA/Keogh plan
9,837
12.6
All 401(k)-type accounts in family
70,565
35,000
All IRA/Keogh accounts in family
50,635
20,000
All retirement accounts in family, all types
121,200
75,500
Owned neither an IRA/Keogh nor a 401(k)-type plan
39,865
51.1
Source: CRS analysis of the Census Bureau’s Survey of Income and Program Participation.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse 21 to 64 years old.
b. May also have owned an IRA or Keogh plan.
c. May also have owned a 401(k)-type plan.
10 These figures also indicate that 20.1 million families had only a 401(k)-type plan:
(29.9-9.8=20.1). An estimated 8.2 million families had only an IRA: (18.0-9.8=8.2).

---

CRS-15
Account Balances, by Age . The SIPP and the CPS show very similar
mean and median account balances among families headed by someone between the
ages of 21 and 34, although the SIPP reports fewer families owning retirement
accounts in this age group. According to the SIPP, 8.4 million families — 37.3% of
families headed by a person 21 to 34 years old — owned at least one retirement
account. The SIPP reports mean and median account balances of $19,695 and
$7,500, respectively. The data collected on the SIPP show a median account balance
of $48,000 among families headed by a worker 55 to 64 years old. However, when
we take into account those who had no retirement accounts — and thus had
retirement account balances of zero — 7.9 million families headed by a worker 55
to 64 years old — 71.4% of families in this age group — had total retirement account
balances of $48,000 or less, according to the SIPP.
Table 8. Retirement Account Balances by Age in 2000a
(in thousands)
Families
Percent
Number
Mean
Median
That
with One
Age of Family Head
Of
Value, All Value, All
Owned
or More
Families
Accountsb Accountsb
Accounts Accounts
21 to 34 years old
Value of all retirement accounts, all types 22,570
8,423
37.3%
$19,695
$ 7,500
35 to 44
Value of all retirement accounts, all types 24,264
12,276
50.6
54,498
25,000
45 to 54
Value of all retirement accounts, all types 20,049
11,074
55.2
78,567
37,875
55 or older
Value of all retirement accounts, all types 11,102
6,346
57.2
94,807
48,000
All households
Value of all retirement accounts, all types 77,984
38,119
48.9
60,511
24,000
Source: CRS analysis of the Census Bureau’s Survey of Income and Program Participation.
Notes: Includes single persons as well as families. Includes defined contribution plan account balances from both
current and past employment.
a. Families with an employed head or spouse age 21-64.
b. Means and medians reflect balances in all types of plans.
Table A-3 and Table A-4 show the rate of ownership and average account balances
for individual retirement accounts (IRAs) and Keogh plans as reported on the Survey
of Income and Program Participation. The rates of ownership and average account
balances are shown in these tables in relation to the demographic characteristics of
the family head or householder. As was noted earlier, among all families that
included a worker between the ages of 21 and 64, rates of IRA ownership and
average account balances were higher on the Survey of Consumer Finances than on
the SIPP. Nevertheless, the relationship between IRA ownership and demographic
characteristics are broadly similar in the two surveys.

---

CRS-16
Table 9. Ownership of Individual Retirement Accounts/Keogh Accounts
in 2000a
(in thousands)
Number of
Percent That
Mean Balance in Median Balance
Families with
Family Head Characteristics
Own an IRA or
All IRA/Keogh
in All IRA/Keogh
One or More
Keogh Planb
Plans
Plans
Workers
Age
Under 35
22,570
12.0%
$ 14,529
$ 5,000
35 to 44
24,264
21.2
39,324
15,000
45 to 54
20,049
29.5
55,661
23,000
55 or older
11,102
38.3
70,600
35,000
Race
White, non-Hispanic
65,800
25.4
49,878
20,000
Black, Hispanic, or Asian
12,184
11.0
29,233
8,200
Sex and Marital Status
Married
44,713
28.7
54,506
22,541
Single Male
14,950
15.6
36,693
13,000
Single Female
18,321
15.5
30,103
10,000
Education
Did not graduate High School
9,430
4.9
31,205
12,221
High School graduate
22,415
14.7
38,142
14,900
Some college
23,943
21.4
38,888
13,000
College graduate
22,196
41.1
58,239
25,000
Family income (annualized)
Under $25,000
18,647
8.9
28,136
8,892
$25,000 to $49,999
25,996
16.6
35,067
12,000
$50,000 to $74,999
16,499
28.0
38,457
15,000
$75,000 or more
16,843
44.0
66,786
30,000
Own or rent home
Own
51,412
29.9
52,012
20,600
Rent
26,572
9.9
26,921
8,000
Full time or part time worker

Not currently working
4,994
27.2
65,998
29,735
Full time (35+ hours per week)
54,324
21.7
45,137
17,000
Part-time
18,667
26.0
51,207
20,000
Establishment size
Not reported
12,940
31.5
61,369
27,000
Under 25 employees
18,485
21.4
43,228
15,000
25 to 99 employees
12,726
19.1
43,374
18,000
100 or more employees
22,193
21.6
48,297
16,000
Public sector employees
11,641
23.9
40,956
17,000
Covered by Union contract?
Yes
10,205
21.3
38,061
16,000
No
67,780
23.4
49,762
20,000
Have a 401(k)-type plan?
Yes
29,937
32.9
50,635
20,000
No
48,047
17.0
45,598
17,000
Total
77,984
23.1%
$ 48,348
$ 19,000
Source:
CRS analysis of the Census Bureau’s Survey of Income and Program Participation.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64.
b. Percentage of families in which head or spouse participates in plan, by type of plan.

---

CRS-17
Table 10. Ownership of 401(k)-type Plans from Current or Past Job in 2000a
(in thousands)
Number of
Percent That
Families with
Own One or
Mean Balance
Median Balance
Family Head Characteristics
One Or More
More DC Plansb In All Such Plans in All Such Plans
Workers
Age
Under 25
22,570
31.1%
$18,065
$ 7,000
35 to 44
24,264
42.1
45,643
21,000
45 to 54
20,049
43.1
62,676
30,869
55 or older
11,102
36.7
73,933
37,000
Race
White, non-Hispanic
65,800
40.1
50,162
20,000
Black, Hispanic, or Asian
12,184
28.9
31,324
12,000
Sex and Marital Status
Married
44,713
44.9
56,406
25,000
Single Male
14,950
30.9
32,537
14,000
Single Female
18,321
28.7
29,241
10,000
Education
Did not graduate High School
9,430
16.0
23,748
8,900
High School graduate
22,415
31.3
34,265
15,000
Some college
23,943
41.1
39,610
16,000
College graduate
22,196
52.1
66,542
32,000
Family income (annualized)
Under $25,000
18,647
12.8
20,585
5,000
$25,000 to $49,999
25,996
33.6
25,404
10,000
$50,000 to $74,999
16,499
51.2
41,040
19,602
$75,000 or more
16,843
61.5
78,878
45,000
Own or rent home
Own
51,412
45.6
54,871
25,000
Rent
26,572
24.4
22,888
8,000
Full time or part time worker
Not currently working
4,994
34.5
67,204
30,000
Full time (35+ hours per week)
54,324
39.8
45,030
19,000
Part time
18,667
35.2
52,511
20,000
Establishment size
Not reported
12,940
26.8
64,619
30,000
Under 25 employees
18,485
27.7
41,555
15,000
25 to 99 employees
12,726
39.9
38,075
15,000
100 or more employees
22,193
52.2
49,387
20,000
Public sector employee
11,641
40.2
49,720
23,000
Covered by Union contract?
Yes
10,205
42.3
46,367
23,260
No
67,780
37.8
48,215
18,500
Have an IRA or Keogh plan?
Yes
18,018
54.6
70,565
35,000
No
59,966
33.5
36,881
15,000
Total
77,984
38.4%
$47,949
$20,000
Source: CRS analysis of the Census Bureau’s Survey of Income and Program Participation.
Notes: Includes single persons as well as families.
a. Families with an employed head or spouse age 21-64.
b. Percentage of families in which head or spouse participates in plan, by type of plan.

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CRS-18
Family Net Worth. The net worth of households is the difference between
their assets and liabilities. As with the average balances in retirement accounts that
are the principal focus of this report, family net worth as measured by the SIPP is
lower than the family net worth recorded on the SCF.11
Table 11. Median Family Net Worth in 2000,
by Age of Family Head
(All families)
Age of family head
Amount
Under 35 years old
$ 7,200
35 to 44
44,300
45 to 54
83,200
55 to 64
112,000
65 to 74
117,000
75 or older
100,100
All families
55,000
Source: U.S. Census Bureau, Current Population Reports, P70-88.
Policy Issues
Are Americans saving adequately for retirement? The median retirement
account balances reported by respondents to the Survey of Consumer Finances would
not by themselves provide an income in retirement that most people in the United
States would find to be adequate. The median retirement account balance reported
on the SCF among families headed by a worker 55 to 64 years old who owned one
or more retirement accounts was just $55,000 in 2001. This amount would provide
a monthly annuity of $408 per month to a person retiring at age 65 if converted to an
annuity. Moreover, as the data in preceding tables show, an estimated 28 million
families headed by a worker under age 65 had no retirement savings accounts in
2001.
Although most workers in the United States — about 96% — are covered by
Social Security, only about 25% of families include a worker who participates in a
defined-benefit pension plan. For workers who do not have coverage through a
11 On the public use file of the SIPP, total household wealth is defined as the sum value for
all adults in the household of home equity, net equity in vehicles, business equity, interest-
earning assets held in banking institutions, interest earning assets held in other institutions,
equity in stocks and mutual fund shares, equity in real estate other than the home, equity in
other assets, and equity in IRA and Keogh accounts. For this table of net worth, the Census
Bureau has added the sum value for all adults in the household of all 401(k) plans and other
thrift plans. This is consistent with the method used by the Federal Reserve Board, which
includes the value of such accounts in the estimates of household wealth that it derives from
the Survey of Consumer Finances. Household debt is the sum of debts owed by all adults
in the household, including home mortgages, home equity loans, other real estate debts,
automobile loans, installment loans, credit card debt, and other household debt.

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CRS-19
defined-benefit pension, personal saving is an essential element of preparing for
retirement. Whether workers save by putting money aside in an account that is
earmarked specifically for retirement or by accumulating other assets on which they
can draw after they have retired is not necessarily important. The act of saving is of
greater consequence to retirement security than the manner in which it is
accomplished. Nevertheless, the fact that at 28 million families headed by a worker
under age 65 have no retirement savings accounts indicates that, at the very least,
many people are not using the most tax-efficient means of setting aside funds for
retirement.
While the widespread adoption of tax-favored retirement savings plans over the
past 25 years can be viewed as a substantial public policy success, greater personal
saving will be needed for the current generation of workers to maintain their desired
standard of living in retirement. The uncertain future of Social Security and the
declining prevalence of traditional defined-benefit pensions that provide a guaranteed
lifelong annuity have put much of the responsibility for preparing for retirement on
the shoulders of the worker. The low rate of personal saving in the United States,
and the lack of any retirement savings accounts among millions of American
workers, indicate that there is a need for greater awareness among the public about
the importance of setting aside funds to prepare for life after they have stopped
working.
References
Aizcorbe, Ana M., Arthur B. Kennickell, and Kevin B. Moore. “Recent Changes in
U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer
Finances.” The Federal Reserve Bulletin, vol. 89, no. 1 (January 2003).
Orzechowski, Shawna and Peter Sepielli. Net Worth and Asset Ownership of
Households: 1998 and 2000. U.S. Census Bureau, Washington, DC. Current
Population Reports, pp. 70-88. May 2003.

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CRS-20
Appendix: Why Do the Survey Results Differ?
The tables in this report summarize the rate of retirement plan ownership, and
the mean and median balances of retirement accounts, as reported on the Census
Bureau’s Survey of Income and Program Participation (SIPP) and the Federal
Reserve Board’ Survey of Consumer Finances (SCF). The survey results differ
substantially with respect to two of these variables: the rate of retirement plan
ownership and the mean value of families’ retirement account balances. They differ
much less with respect to the median value of families’ retirement account balances.
The results of a survey depend mainly on four factors, the most important of which
is why the survey is being conducted. The reasons for conducting the survey
critically influence what questions are asked, who is asked, and to a lesser extent,
when they are asked. The SIPP and the SCF differ with respect to all four factors.
Why Was the Survey Conducted?
The Federal Reserve Board conducts the Survey of Consumer Finances “to
provide detailed information on the finances of U.S. families.”12 The SCF
questionnaire has been developed over the years to elicit responses that will provide
the most complete information on household finances that can be obtained without
subjecting the respondents to an interview of such length that their willingness to
participate in the survey is adversely affected. The method of selecting households
to participate in the survey has been developed to take into account the skewed
distribution of wealth in the United States. (A relatively small percentage of
households own a substantial percentage of total household wealth.) The sample of
households is selected to ensure that a sufficient number of high-income families are
included so that even relatively infrequently held assets are represented in the survey.
In contrast to the SCF, the SIPP is a multi-purpose survey that must satisfy the
needs of the many government agencies that co-sponsor it and that make use of the
data the SIPP collects. According to the Census Bureau, the main objective of SIPP
is “to provide accurate and comprehensive information about the income and
program participation of individuals and households in the United States, and about
the principal determinants of income and program participation. SIPP data allow the
government to evaluate the effectiveness of federal, state, and local programs.”13
The portions of the survey that focus on collecting information on household assets
and liabilities are shorter and the questions less detailed than on the SCF. The
method of selecting households to participate in the survey takes into account the
higher rate of participation in income-support programs among low-income families.
What Questions Were Asked?
The SIPP contains a “core” set of questions that focus on income and
employment. These are asked during each of the six to twelve interviews in which
a household participates over the 24- to 48-month life of each panel of the survey.
12 http://www.federalreserve.gov/pubs/oss/oss2/about.html
13 http://www.sipp.census.gov/sipp/intro.html

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CRS-21
Among the core set of questions are two that ask whether anyone in the household
owned an IRA or Keogh plan during the previous four months and whether anyone
in the household owned a 401(k) plan or other thrift plan during the same period. In
addition to the core questions, the SIPP includes in each wave one or more “topical
modules” that ask detailed questions on topics of particular interest to policymakers
and analysts. A topical module on assets, liabilities, and eligibility for means-tested
government programs is typically administered three times over the course of each
panel of the SIPP. In the topical module, respondents who answered “yes” to either
of the questions about IRA/Keogh ownership or 401(k) ownership in the core are
asked up to six follow-up questions:
! As of the last day of the reference period did ... have any Individual
Retirement Accounts — any IRAs — in ...’s own name?
! As of the last day of the reference period, what was the total balance
or market value (including interest earned) of the IRA accounts in
...’s own name?
! As of the last day of the reference period, did ... have a Keogh
account in ...’s own name?
! As of the last day of the reference period, what was the total balance
or market value of assets in ...’s Keogh account(s)?
! As of the last day of the reference period, did ... have any 401K or
thrift plans in ...’s own name?
! As of the last day of the reference period, what was the total balance
or market value (including interest earned) of any 401K or thrift
plans held in ...’s own name?14
The SCF asks a more detailed series of questions about ownership of, and
account balances in, IRAs, Keogh plans, 401(k) plans, and other employer-sponsored
thrift plans. One advantage of this more extensive series of questions is that they
provide more opportunities for respondents to introduce information about plans that
might have been overlooked or forgotten during the first few questions. Furthermore,
because the SCF is designed primarily to collect information about family finances,
respondents are likely to be more focused on these aspects of their families and more
prepared with papers and documents that would help them provide complete
information. Interviewers also are able to focus their efforts at maximizing
participant cooperation on a single topic. In contrast, because the SIPP interview
must move from one subject area to another to meet its more diverse objectives,
respondents are more likely to overlook or omit some information about their assets
and liabilities when answering those questions.
14 The corresponding variables on the SIPP data file are EALR, TALRB, EALK, TALKB,
EALT, and TALTB. These are “person-level” variables, but they can easily be summed
over all members of a family or household.

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CRS-22
Who Was Asked the Questions?
The SIPP and the SCF differ in sample size and, more importantly, in sampling
methodology. The 12th wave of the 1996 panel of the SIPP, during which the data
analyzed in this report were collected, was conducted among approximately 28,000
households. The analysis in this report was based on the records of 20,448
respondents representing an estimated 78 million families in which the family head
or spouse was employed and between the ages of 21 and 64. For the 2001 Survey
of Consumer Finances, members of 4,449 families were interviewed. The analysis
in this report was based on the records of 3,230 respondents representing an
estimated 75.6 million families in which the family head or spouse was employed
and between the ages of 21 and 64.
Both the SIPP and the SCF are conducted among samples of households that —
when used in conjunction with the appropriate sample weights — are intended to be
representative of the civilian, non-institutional resident population of the United
States.15 The survey results must be used with the appropriate sample weights
because neither survey employs simple random sampling of the population. A simple
random sample consists of a number (n) of individuals or households chosen from
the population in such a way that every set of n individuals or households has an
equal chance of being selected for the sample. Both the SIPP and SCF employ
complex sample designs that are intended to allow detailed analysis of sub-
populations that are of particular interest to policymakers. In the case of the SIPP,
the sub-populations of particular interest are low-income households and households
headed by African-American and Hispanic householders. In the SCF, the sub-
population of interest is households that hold specific forms of wealth — such as
individual corporate stocks, corporate bonds, and municipal bonds — that are owned
by a relatively small percentage of all U.S. households. Consequently, each survey
over-samples some households. The SIPP over-samples households in census tracts
with above-average rates of poverty and the SCF over-samples high-income
households using data derived from tax returns.
According to the documentation of the Survey of Consumer Finances,
The SCF combines two techniques for random sampling. First, a standard multi-
stage area probability sample (a geographically based random sample) is selected
to provide good coverage of characteristics, such as home ownership, that are
broadly distributed in the population. Second, a supplemental sample is selected
to disproportionately include wealthy families, who hold a relatively large share
of such thinly held assets as noncorporate businesses and tax-exempt bonds.
Called the list sample, this group is drawn from a list of statistical records
derived from tax returns. Of the 4,449 interviews completed for the 2001 SCF,
2,917 were from the area probability sample, and 1,532 were from the list
sample. The 2001 survey represents 106.5 million families.16
15 Thus, both surveys exclude uniformed military personnel (unless living off-base in
civilian housing), residents of nursing homes and prisons, and Americans living abroad.
16 Federal Reserve Bulletin, January 2003 (89, 1), page 30.

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CRS-23
The Census Bureau employs a two-stage sample design to select the SIPP
sample. First, primary sampling units (PSUs) are selected from a list of counties and
cities. Counties are either grouped with adjacent counties to form PSUs or a single
county may constitute a PSU by itself. Second, specific addresses are selected within
the PSUs for inclusion in the survey sample.17 In the 1996 panel of the SIPP, the
Census Bureau over-sampled the low-income population, based on 1990 decennial
census information. As described by the Census Bureau:
Housing units within each PSU were split into high- and low-poverty strata. If
the housing unit received the Census long form that included income questions,
the unit’s poverty status was determined directly; for other housing units, poverty
status was assumed on the basis of responses to Census short-form items
predictive of poverty rates. The Census Bureau then sampled the low-income
stratum at 1.66 times the rate of the high-income stratum in each PSU. Compared
with the number of cases produced without over-sampling, this over-sampling
produced an 18 percent increase in the number of cases in and near poverty at
Wave 1. Even greater gains occurred in some subgroups, such as blacks and
Hispanics in poverty, with a gain in the number of sample cases as high as 24
percent. The increases in effective sample sizes were somewhat smaller after
allowance was made for the increased variance associated with differential
weighting. Also, the sample sizes for the higher income and higher age groups
were reduced.18
When were the questions asked?
The reference periods for the SIPP and SCF data presented in this report differ
by a about a year and a half, on average. The SIPP questions on retirement assets
were asked between December 1999 and March 2000, and they reflect account
balances at the end of November 1999 through the end of February 2000, depending
on when each particular household was interviewed. The SCF data were collected
between May and December 2001. It’s uncertain how much this difference in data
collection periods contributed to the difference in survey results between the SIPP
and the SCF. Other things being equal (which they were not), new contributions
would have increased average account balances from 2000 to 2001. The
performance of financial markets also affects account balances. The major stock
indices fell in 2000 and 2001, but bond funds performed well.19 About all that can
be said with some measure of confidence is that if equity markets had risen from
2000 to 2001, the difference in average account balances between the 2000 SIPP and
the 2001 SCF would have been greater. However, the roughly 1.5 year difference in
the dates of data collection between the two surveys probably is not the most
important factor contributing to the difference in rates of ownership and average
account balances between the two surveys.
17 For more information, see [http://www.sipp.census.gov/sipp/selecting.html].
18 For more information, see [http://www.sipp.census.gov/sipp/oversample.html].
19 The Standard & Poor’s 500 index fell by 9.1% in 2000 and 11.9% in 2001. The Lehman
Brothers U.S. Aggregate Bond Index gained 11.7% in 2000 and 8.6% in 2001. The average
rate of return on outstanding long-term Treasury Bonds was 6.4% in 2000 and 5.4% in 2001,

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CRS-24
In summary, the SIPP and the SCF differ in their main purpose. The SIPP is
intended to collect information on a much wider range of topics than the SCF.
Consequently, the surveys differ with respect to the number of questions asked about
retirement assets, with the questions on the SCF being both more numerous and more
detailed than those on the SIPP. Because the main focus of the SCF interview is
family assets and liabilities, and because the questions it asks are more numerous and
detailed, the data on assets and liabilities from the SCF are likely to be more
representative of the full population than the asset and liability data from the SIPP.
The SIPP and the SCF also differ with respect to sample size and the sub-
populations that they over-sample. The greater sample size of the SIPP allows more
detailed analysis of certain sub-populations with above-average rates of poverty, such
as female-headed households and or households headed by African-Americans. In
general, the standard error of an estimate falls as the sample size increases. (Think,
for example, of the “margin of error” that is reported along with the results of most
polls. The larger the number of people in the poll, the smaller is the margin of error.)
The difference in sample size, however, does not adequately explain the lower rates
of ownership of retirement plans and the lower mean balances of those accounts as
reported on the SIPP. If, for example, exactly the same survey were conducted
among two random samples of the population that differed only in that one sample
was significantly larger than the other, the survey results should be centered around
the same mean, with the difference attributable mainly to the “sampling error”
inherent in selecting any sample from a population.
While the difference in sample size between the SIPP and the SCF is not likely
to have contributed significantly to the different results obtained in the two surveys,
the specific sub-populations selected for over-sampling may have contributed to
these differences. Survey designers take account of the effect of over-sampling by
assigning an appropriate survey weight to each observation. The weighted number
of observations is matched to a set of control totals — such as the number of people
with certain characteristics that were counted in a recent census of the population.
It is possible, however, that even if the weighted number of observations matches the
control totals for a population along a range of characteristics such as age, race, and
sex, that the weights may not fully capture differences between the sample and the
population with respect to some other traits — such as ownership of retirement
assets, for example. We merely note here that the SCF — which over-samples high
income households — shows significantly higher rates of account ownership and
higher mean balances than does the SIPP — which over-samples low-income
households.20
20 As can be seen by comparing the distribution of families by annual income in Tables 4
and 5 and Tables A-3 and A-4, the SIPP data indicate that 23.9% of families with a working
head or spouse between the ages of 21 and 64 had annual incomes under $25,000 in the year
preceding the survey, and 21.6% had incomes of $75,000 or more. In contrast, the SCF data
indicate that only 20.4% of families had incomes under $25,000 in the year preceding the
survey while 29.1% of families had incomes of $75,000 or more. Some — perhaps most —
of this difference may be due to under-reporting of income on the SIPP, but we cannot fully
exclude the possibility that some of the difference may be due to the over-sampling of poor
households on the SIPP and/or the over-sampling of high-income households on the SCF.

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CRS-25
Researchers who have compared the asset values reported on the SIPP with
aggregate data from the National Income and Product Accounts have found that the
values of financial assets are under-reported on the SIPP. In part because it more
closely matches these national aggregate totals, the SCF is considered by many
economists to be more accurate than the SIPP in representing the assets owned by
American families. The asset data collected on the SIPP, however, are extremely
useful in public policy analysis, both because the large sample size allows analysis
of sub-populations at high risk of needing assistance through government income
support programs, and because the SIPP is a rich source of information on economic,
demographic, and social characteristics that are not recorded on the SCF or other
surveys.

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