Income of Americans Aged 65 and Older, 1968 to 2008

Income of Americans Aged 65 and Older, 1968 to 2008

Income of Americans Aged 65 and Older, 1968
to 2008
Patrick Purcell
Specialist in Income Security
November 4, 2009
Congressional Research Service
7-5700
www.crs.gov
RL33387
CRS Report for Congress
P
repared for Members and Committees of Congress

Income of Americans Aged 65 and Older, 1968 to 2008

Summary
This CRS report presents data collected by the Census Bureau in the Current Population Survey
from 1969 through 2009 about the employment status and the sources and amounts of income
received by people aged 65 and older. The report focuses on the sources and amounts of income
received by individuals aged 65 and older and by households in which either the household head
or the household head’s spouse (if present) was 65 or older in the year of the survey.
Since the 1960s, birth rates have fallen and average life expectancy has increased. Consequently,
the number of workers relative to the number of retirees is projected to decline, and retirees will
have to stretch their savings and other assets over longer periods of retirement than their parents
and grandparents experienced. The aging of the American population and the retirement of the
baby boom generation will place financial strains on Social Security, public and private pensions,
and on retirees’ personal savings. The increasing number of Americans living to age 80 and older
is of particular significance because it is the very old who are most likely to need medical, social,
and long-term care services, and who are at the greatest risk of depleting their financial resources
and falling into poverty.
Rates of employment among older persons have been rising in recent years. Employment rates
fell among men 55 and older from the late 1960s until about 1990. Since then, employment rates
have risen for older men, but they remain below the employment rates of the 1960s and 1970s.
Among older women, employment rates have steadily increased since the 1960s, but older
women’s employment rates today remain lower than those of men the same age.
Earnings, Social Security, pensions, and income from assets – mainly interest and dividends –
comprise the majority of income among people 65 and older. Information on pension income has
been reported separately on the CPS only since the 1970s. In 1975, Social Security comprised
42% of all income received by people aged 65 and older. Earnings and income from assets each
accounted for 20% of the income of the elderly, while pensions made up 14% of their income.
Public assistance and other sources each contributed just 2% to the total income of Americans
aged 65 and older in 1975. By 2008, Social Security comprised 39% of the income received by
people aged 65 and older. Earnings had increased to 26% of the income of the elderly, while
income from assets had fallen to 13% of the total. Pensions, including withdrawals from
retirement accounts, comprised 20% of the income of the elderly in 2008. Public assistance
provided less than 1% of the income of the elderly, and other sources accounted for just 2%.
Although 97% of persons 65 and older had income from at least one source in 2008, in most
cases household income is a better measure of available resources than individual income.
Median household income rose faster among elderly households than among nonelderly
households from 1968 through 2008, but in 2008 the median annual income of households in
which the householder or spouse was 65 or older ($30,774) was just 54% of the median income
of younger households ($56,604). In 2008, households in which either the household head or the
household head’s spouse (if present) was 65 or older had an average of 1.7 residents, compared to
an average of 2.7 residents in households in which neither the head nor spouse was 65 or older.
The poverty rate among people aged 65 and older fell from 25.0% in 1968 to 9.7% in 2008.
Growth in real wages—and in the Social Security and pensions based on wages—contributed to
the decline in the percentage of older Americans living in poverty; however, because the poverty
threshold is indexed to rising prices, the poverty line has fallen relative to median income.
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Income of Americans Aged 65 and Older, 1968 to 2008

Contents
Introduction: Demographics and Budget Issues .......................................................................... 1
Background: America’s Aging Population ............................................................................ 1
The Income of Older Americans and the Federal Budget ....................................................... 2
Income of Americans Aged 65 and Older: Outline of the Report........................................... 3
The Data ............................................................................................................................... 3
Employment Among People Aged 65 and Older .......................................................................... 4
Rates of Employment by Age ................................................................................................ 4
Employment Rates among Men and Women.......................................................................... 6
Full-Time vs. Part-Time Employment among Older Workers............................................... 10
Sources and Amounts of Income Among Persons Aged 65 and Older ........................................ 10
Earnings.............................................................................................................................. 11
Social Security.................................................................................................................... 11
Asset Income ...................................................................................................................... 12
Pension Income................................................................................................................... 12
Welfare Income................................................................................................................... 14
Other Income ...................................................................................................................... 14
Sources of Income, by Quartile ........................................................................................... 15
Household Income of Persons Aged 65 and Older ..................................................................... 20
Median Household Income, by Age..................................................................................... 20
Median Household Income, Adjusted for Household Size.................................................... 22
Household Income at the 75th and 25th Percentiles ............................................................... 23
Poverty Status of the Elderly ..................................................................................................... 25
The Decline in Poverty Among the Elderly.......................................................................... 26
Absolute vs. Relative Measures of Poverty.......................................................................... 26
Changes in Income as People Age ............................................................................................. 26
Changes in Individual Income from Ages 55-59 to 65-69 .................................................... 27
Changes in Household Income from Ages 55-59 to 65-69.................................................... 28
Conclusion................................................................................................................................ 31

Figures
Figure 1. Percentage of Men Employed by Age, 1968 to 2008 .................................................... 8
Figure 2. Percentage of Women Employed by Age, 1968 to 2008 ............................................... 9
Figure 3. Total Income by Source of Persons Aged 65+, Top Quartile, 1975 ............................. 16
Figure 4. Total Income by Source of Persons Aged 65+, Second Quartile, 1975........................ 16
Figure 5. Total Income by Source of Persons Aged 65+, Third Quartile, 1975........................... 17
Figure 6. Total Income by Source of Persons Aged 65+, Bottom Quartile, 1975........................ 17
Figure 7. Total Income by Source of Persons Aged 65+, Top Quartile, 2008 ............................. 18
Figure 8. Total Income by Source of Persons Aged 65+, Second Quartile, 2008........................ 18
Figure 9. Total Income by Source of Persons Aged 65+, Third Quartile, 2008........................... 19
Figure 10. Total Income by Source of Persons Aged 65+, Bottom Quartile, 2008..................... 19
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Income of Americans Aged 65 and Older, 1968 to 2008

Tables
Table 1. Projections of the Resident U.S. Population, by Age....................................................... 1
Table 2. Age Distribution of People Aged 65 and Older, 1970-2009............................................ 2
Table 3. Employment Rates, by Age, 1968 to 2008...................................................................... 6
Table 4. Employment Rates of Men and Women, by Age............................................................. 7
Table 5. Full-Time and Part-Time Employment, by Age of Worker ............................................ 10
Table 6. Percentage of Persons Aged 65 and Older with Income from Each Source.................... 13
Table 7. Income from Each Source as a Percentage of Aggregate Income of Persons Aged
65 and Older .......................................................................................................................... 13
Table 8. Mean Annual Income of Persons Aged 65 and Older from Each Source ....................... 13
Table 9. Median Annual Income of Persons Aged 65 and Older from Each Source .................... 14
Table 10. Mean and Median Household Income, by Age of Householder ................................... 21
Table 11. Percentage Change in Median Real Household Income, 1968 to 2008, by Age
of Householder ...................................................................................................................... 21
Table 12. Average Household Size by Year and Age of Householder.......................................... 22
Table 13. Median Household Income and Median Household Income Scaled to Size of
Household, by Age of Householder ........................................................................................ 23
Table 14. Household Income at 75th and 25th Percentiles, by Age of Householder ...................... 24
Table 15. Cumulative Percentage Change in Household Income at 75th and 25th
Percentiles, by Age of Householder ........................................................................................ 24
Table 16. Poverty Status of Individuals Age 18 and Older, by Year ............................................ 25
Table 17. Median Individual Income at Five-Year Intervals ....................................................... 29
Table 18. Median Household Income at Five-Year Intervals ...................................................... 30
Table A-1. Percentage of People Age 65 and Older with Income from Each Source, by
Year ....................................................................................................................................... 33
Table A-2. Median Annual Income of Individuals Age 65 and Older, by Income Source ............ 34
Table A-3. Mean and Median Annual Household Income in 2008 Dollars.................................. 35

Appendixes
Appendix. Historical Tables of Individual and Household Income ............................................. 32

Contacts
Author Contact Information ...................................................................................................... 36
Acknowledgments .................................................................................................................... 36

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Income of Americans Aged 65 and Older, 1968 to 2008

Introduction: Demographics and Budget Issues
Background: America’s Aging Population
Americans are living longer than ever before. The average life expectancy of Americans born in
1968 was 70.5 years. It has been estimated that those born in 2010 will live for an average of 78.3
years.1 Women continue to have a longer average life expectancy than men, but both men and
women have experienced gains in average life expectancy since the 1960s. A man who reached
age 65 in 1968 could expect to live another 13.0 years, whereas a woman who turned 65 in 1968
had a remaining life expectancy of 16.5 years. A man who reached age 65 in 2005 could expect to
live another 16.8 years, whereas a woman who turned 65 in 2005 had a remaining life expectancy
of 19.8 years. As more people live into old age, the age-profile of the population will shift. In
1968, 18.6 million people in the United States—9.4% of the population—were 65 or older. In
2010, there will be 40.2 million Americans aged 65 and older, representing 13.0% of the
population. By 2030, according to projections made by the Census Bureau, there will be 71.5
million people aged 65 and older, comprising 19.7% of the U.S. population. (See Table 1.)
The aging of the population will strain the components of the traditional “three-legged stool” of
retirement income: Social Security, pensions, and personal saving. Social Security is the largest
source of income among the elderly. The Social Security Board of Trustees has estimated that the
Social Security trust fund will be exhausted by 2039 unless actions are taken to preserve it.2
Earnings are the second largest source of income among people aged 65 and older, but much of
this income is earned by people under 70 years of age. Pensions are the third largest source of
income among the elderly, but only about half of all workers in the United States have pension
coverage through their jobs, and more employers offer 401(k) plans than traditional pension
plans. In a typical 401(k) plan, the worker must elect to participate, decide how much to
contribute to the plan, how to invest the funds, and what to do with the account when he or she
changes jobs or retires. Workers who do not choose to save, save too little, or make poor
investment choices may face difficult financial circumstances in retirement.
Table 1. Projections of the Resident U.S. Population, by Age
(in thousands, as of July 1 each year)
Age 2010 2020 2030 2040 2050
Under 20
83,236
88,887
95,104
101,625
109,147
20 to 64
185,456
192,285
197,027
210,270
224,001
65 to 84
34,120
47,363
61,850
64,640
65,844
85 and older 6,123
7,269
9,603
15,409
20,861
Total 308,935
335,804
363,584
391,944
419,853
65 and older 40,243 54,632
71,453
80,049
86,705
% of Total
13.0%
16.3%
19.7%
20.4%
20.7%
Source: U.S. Census Bureau http://www.census.gov/ipc/www/usinterimproj/.

1 National Center for Health Statistics, Vital Statistics of the United States and Bureau of the Census, 2008 National
Population Projections.
2 Social Security and Medicare Boards of Trustees, Status of the Social Security and Medicare Programs: A Summary
of the 2009 Annual Reports, http://www.ssa.gov/OACT/TRSUM/tr09summary.pdf.
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Income of Americans Aged 65 and Older, 1968 to 2008

As the proportion of the population who are 65 or older has risen, the number of people over age
80 has increased as well. In 1970, 18.9 million Americans were aged 65 and older and 17% of all
elderly persons (3.2 million) were 80 or older. In 2009, 37.8 million Americans are 65 or older,
and of this number 26.6% (10.1 million) are 80 years of age or older. (See Table 2.) The
increasing number of Americans living to age 80 and older is of particular significance because it
is the very old who are most likely to need medical, social, and long-term care services, and who
are at the greatest risk of depleting their financial resources and falling into poverty.
Table 2. Age Distribution of People Aged 65 and Older, 1970-2009
Percentage

Number
(thousands)
65-69 70-79 80 and
older
Total
of U.S.
populationa
1970 18,899
35.7% 47.3%
17.0%
100%
9.4%
1980 23,743
36.1 46.3
17.6
100
10.9
1990 29,566
34.3 46.1
19.6
100
12.0
2000 32,621
28.7 47.9
23.4
100
11.9
2008 36,790
30.3 42.9
26.8
100
12.3
2009 37,788
31.3 42.1
26.6
100
12.5
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
a. People age 65 and older as a percentage of the civilian, non-institutionalized resident U.S. population.
The Income of Older Americans and the Federal Budget
Congress is interested in the sources and amounts of income among older Americans not only
because they represent a large and growing proportion of the U.S. population, but also because
much of the income of older Americans is provided through government-sponsored income
transfers or is subsidized through income tax deductions and deferrals. In FY2010, for example,
federal expenditures for Social Security will exceed $690 billion, representing more than 19% of
total federal spending and more than 34% of federal spending on entitlement programs.3 The
federal government also provides income directly to low-income older Americans through the
Supplemental Security Income (SSI) program and to retired federal employees through the Civil
Service Retirement System and the Federal Employees’ Retirement System. Of the estimated $47
billion federal expenditure for SSI benefits in FY2010, approximately one-sixth, or $7.7 billion,
will be paid to recipients aged 65 and older.4 Federal outlays for retirement and disability
pensions for former federal employees will reach nearly $70 billion in FY2010, with most of this
amount being paid to individuals aged 55 and older.
The public also subsidizes the income of older Americans through several deferrals and
deductions that Congress has included in the Internal Revenue Code. These tax incentives
promote sponsorship of pension plans by employers and encourage workers to save for
retirement. The tax deductions and deferrals granted to qualified retirement plans are the second
largest tax expenditure in the federal budget, and will reduce federal tax revenues by an estimated

3 Budget of the United States Government, Fiscal Year 2010. Census Bureau data indicate that 76% of adult Social
Security recipients in 2008 were 65 or older. Individuals aged 65 and older received 78% of Social Security benefits.
4 Budget of the United States Government, Fiscal Year 2010, and Census Bureau data.
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Income of Americans Aged 65 and Older, 1968 to 2008

$126 billion in FY2010.5 Congress also allows taxpayers aged 65 and older to claim an additional
standard deduction on their income tax returns. This deduction will reduce federal tax revenues
by an estimated $1.9 billion in FY2010.
Income of Americans Aged 65 and Older: Outline of the Report
This CRS report presents data collected by the Census Bureau from 1969 through 2009 that
describe the employment status of older Americans and the sources and amounts of income
received by people aged 65 and older. The report begins by describing trends in employment
among people aged 55 and older, including differences in rates of employment among men and
women. The next section of the report provides detailed information on the sources and amounts
of income received by people aged 65 and older, and how the proportion of total income from
each source has changed over time. The third section examines trends in the distribution of
income among households and compares the household income of older Americans with the
household income of people under 65 years old. This is followed by a section that describes the
decline in the proportion of older Americans living in poverty since the 1960s. The final section
of the report explains how individual and household incomes fall as people age and gradually
reduce their attachment to the paid labor force.
The Data
The data presented in this report were collected by the Census Bureau through the Current
Population Survey (CPS), a monthly survey of the civilian, noninstitutional population of the
United States. The CPS was begun in the 1940s as a way to measure unemployment each month
on the basis of a random sample of U.S. households. It is still the source of the official rate of
unemployment reported each month by the Bureau of Labor Statistics. The CPS also collects
annual income data. Each year in March the survey includes a detailed set of questions on the
amounts and sources of income people received during the previous calendar year. Over the
years, the number of income questions has expanded, and today information is gathered on more
than 50 different sources of income and noncash benefits, such as food stamps, employer-
provided pension plans, employer-sponsored health insurance plans, Medicaid, Medicare, and
home energy assistance. The survey also collects detailed information on the employment status,
work experience, occupation, and industry of employment of people 15 years old and over. The
number of households surveyed has increased over the years. In March 1969, the earliest survey
CRS analyzed for this report, the CPS sample included 47,000 households and contained records
for 152,000 individuals. The March 2009 CPS, the most recent survey studied for this report,
included records for 76,000 households and 216,000 individuals.

5 Budget of the United States Government, Fiscal Year 2010: Analytical Perspectives. The largest tax expenditure is the
exclusion for employer contributions for employee health insurance, which will reduce federal tax revenues by an
estimated $155 billion in FY2010. The deduction for mortgage interest will reduce revenue by $108 billion in 2010.
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Income of Americans Aged 65 and Older, 1968 to 2008

People 65 and Older in Nursing Homes and Long-term Care Facilities
The data presented in this report were col ected by the Census Bureau through the Current Population Survey
(CPS). The CPS is conducted among the civilian, noninstitutional population of the United States. It does not include
residents of prisons, nursing homes, or military personnel living on base. According to the Census Bureau’s American
Community Survey, an estimated 1.84 million persons resided in nursing homes in 2006. Of this number, 1.59 million
(86%) were aged 65 or older, comprising 4.8% of the total number of persons aged 65 and older. Elderly residents of
nursing homes differ demographical y from older persons who live in the community. Nursing home residents are
older, more likely to be female, and are less likely to be married than community residents. In 2006, among people 65
and older living in the community, 53% were 65 to 74 years old, 36% were 75 to 84 years old and 11% were 85 or
older. The age distribution among nursing home residents aged 65 and older in 2006 was a mirror image of the
community population: 14% were 65 to 74 years old, 36% were 75 to 84 years old, and 50% were 85 or older.
Among people 65 and older living in the community in 2006, 57% were women. Among nursing home residents aged
65 and older, 74% were women. Among community residents aged 65 and older in 2006, 55% were married. Among
nursing home residents, just 20% were married. The remainder were widowed, divorced, or never married.
Employment Among People Aged 65 and Older
Patterns of employment among older Americans have changed since the 1960s, and the trends in
employment among older persons have differed between men and women. From the late 1960s to
the early 1990s, employment rates fell steadily among men 55 and older. Since then, employment
rates have risen for older men, but they remain below the employment rates that prevailed among
men 55 and older as recently as the late 1970s. Among older women, the trend in employment
since the late 1960s has been one of steady increase, as the large numbers of women who entered
the labor force in the 1960s and 1970s have begun to pass age 55. Despite this steady increase,
however, older women’s employment rates today remain lower than those of men the same age.
Two possible reasons for the increased rate of employment among older individuals are the long-
term trend away from defined benefit pensions to 401(k) plans and the decline in the proportion
of retirees with access to employer-sponsored group health insurance. Over the past 25 years, the
number of workers whose employers maintain traditional defined-benefit pensions that pay a
guaranteed annuity for life has fallen while the number who participate in defined contribution
plans – of which 401(k) plans are the most numerous – has risen sharply. In 2009, about 20
million workers in the private sector were covered by defined benefit pensions, while almost 50
million participate in 401(k)-type plans. Researchers have found that workers whose only
retirement plan is a defined contribution plan tend to work to later ages than those who are
covered by defined benefit plans so that they can build up their account balances before retiring.
In the area of health insurance, rising health care costs have discouraged employers from
beginning or continuing to offer health insurance to retirees. In the absence of this coverage,
workers may choose to continue working until age 65, when they become eligible for Medicare.
Rates of Employment by Age
As people grow older, they are less likely to work, and those who work are less likely to work
full-time. In 2008, 89.3% of men between the ages of 25 and 54 worked for pay at some time
during the year.6 Among men aged 55 to 64, 73.4% worked at some time in 2008, and of men

6 Employment rates were tabulated from the March 2009 CPS. For more about labor force participation rates among
older persons, see CRS Report RL30629, Older Workers: Employment and Retirement Trends, by Patrick Purcell.
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Income of Americans Aged 65 and Older, 1968 to 2008

aged 65 and older 25.7% were employed at some time during the year. Similarly, 77.1% of
women between the ages of 25 and 54 were employed at some time in 2008. The employment
rate among women 55 to 64 years old was 63.2%. Among women aged 65 and older, just 16.0%
were employed at some time in 2008.
Older workers tend to work fewer hours than younger workers. Among all workers between the
ages of 25 and 54, 86.5% worked full-time in calendar year 2008 and 13.5% worked part-time.
Even among workers aged 55 to 59, 85.4% worked full-time in 2008. However, among workers
aged 60 to 64, only 78.5% were employed full-time in 2008. Beginning at age 62, individuals are
eligible for Social Security retired worker benefits, and this appears to have some effect on rates
of full-time employment. Among people who were 60 or 61 years old and who worked in 2008,
82.9% were employed full-time. Among those who were 62 to 64 years old and who worked in
2008, 74.1% worked full time. Rates of full-time employment fall further after age 65. Of those
aged 65 to 69 who were employed in 2008, only 61.8% worked full-time, and among workers
aged 70 and older, just 46.2% worked full-time.7
The employment rate among people 55 and older declined from the 1960s until about 1990.
During the past 15 to 20 years, employment rates among older persons have risen. In 1968, 70.4%
of people 55 to 59 years old were employed at some time during the year, as were 60.3% of
people 60 to 64 years of age, 34.7% of those aged 65 to 69, and 14.6% of those aged 70 and older.
(See Table 3.) By 1990, employment rates for all four of these age groups had fallen. In 1990,
the employment rate among people 55 to 59 years old was 68.1%. Among those 60 to 64 years
old, the employment rate in 1990 was 49.3%, or 11 percentage points lower than in 1968. Among
people aged 65 to 69, the employment rate of 24.8% in 1990 was 9.9 percentage points lower
than it had been in 1968. Among people aged 70 and older, the 1990 employment rate of 8.3%
was 6.3 percentage points lower than it had been in 1968.
Since 1990, employment rates among older persons have risen, although among people aged 60
and older they remain lower than they were in the late 1960s. Among people 55 to 59 years old,
74.6% were employed at some time in 2008, an increase of 6.5 percentage points since 1990. The
employment rate among individuals aged 60 to 64 was 60.3% in 2008, an increase of 11
percentage points since 1990. The employment rate among those 65 to 69 years old also rose by
10.2 percentage points between 1990 and 2008, rising from 24.8% to 35%. The employment rate
among persons aged 70 and older rose from 8.3% to 13.5% during this time.

7 Although Social Security retired worked benefits are first available at age 62, beneficiaries who are under the full
retirement age (66 in 2009) are subject to an earnings test that reduces the monthly benefit if their earnings exceed a
threshold amount. In 2009, Social Security beneficiaries who are under the full retirement age have their benefit
reduced by $1 for every $2 of annual earnings over $14,160.
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Table 3. Employment Rates, by Age, 1968 to 2008
(persons employed full-time or part-time in any month of the year)
Age

Age
Age
Age 70
55-59
60-64
65-69
and Older
1968 70.4%
60.3%
34.7%
14.6%
1970 69.7
60.0
32.6
13.3
1975 68.2
56.1
30.2
11.4
1980 68.7
52.7
28.1
10.7
1985 68.5
50.8
26.0
9.3
1990 68.1
49.3
24.8
8.3
1995 69.3
50.0
24.2
8.3
2000 71.1
52.1
27.5
9.8
2005 74.4
58.2
32.0
12.1
2008 74.6
60.3
35.0
13.5
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Employment Rates among Men and Women
Employment rates differ between men and women at all ages. Recent trends in employment rates
among older Americans also differ between men and women. Although women have lower labor
force participation rates than men, most of the increase in employment among older Americans
since the mid-1980s has been the result of increasing labor force participation among women.
Employment rates among older men have begun to rise over the past 15 to 20 years, but they
remain lower than the employment rates that prevailed among men up until about 1970.
Employment rates among older women, on the other hand, were higher in 2008 than at any point
in the past 40 years.
In 1968, 90.4% of men between the ages of 55 and 59 were employed at some time during the
year. (See Table 4 ) The employment rate among men in this age group had declined to 78.8% by
1995. Between 1995 and 2008, the employment rate of men aged 55 to 59 remained relatively
steady at about 79%. Among men aged 60 to 64, the employment rate fell from 82.0% in 1968 to
59.2% in 1995 and then began to rise steadily. In 2008, 66.0% of men aged 60 to 64 were
employed at some time during the year. Similar patterns can be seen in the employment rates of
men aged 65 to 69 and those aged 70 and older. Among men aged 65 to 69, the employment rate
fell from 51.0% in 1968 to 30.7% in 1995. By 2008, the employment rate among men aged 65 to
69 had risen to 40.3%. Among men aged 70 and older, the employment rate fell from 22.4% in
1968 to 11.5% in 1990. By 2008, the employment rate among men aged 70 and older had risen to
17.9%.
Employment rates among women aged 55 to 59 did not follow the pattern of falling and then
rising that was evident in the employment rate of men between 1968 and 2008. Employment rates
among women aged 55 to 59 rose fairly steadily throughout the period, increasing from 52.1% in
1968 to 70.1% in 2008. Among women 60 and older, the trend in employment rates was similar
to that among men. Their employment rates fell slightly until about 1990 when they began to
increase. Since 1990, the employment rate among women aged 60 to 64 has risen from 38.8% to
55.0%. The employment rate among women aged 65 to 69 rose from 19.3% in 1990 to 30.1% in
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Income of Americans Aged 65 and Older, 1968 to 2008

2008. Over the same period, the employment rate among women aged 70 and older rose from
6.2% to 10.3%
Table 4. Employment Rates of Men and Women, by Age
(persons employed full-time or part-time in any month of the year)

Age
Age
Age
Age 70
55-59
60-64
65-69
and older
Men Women Men Women Men Women Men Women
1968
90.4% 52.1%
82.0% 41.3%
51.0%
21.2%
22.4% 9.0%
1970
90.0 51.3
79.9 42.7
46.7
21.0
21.2 7.8
1975
85.8 52.3
73.4 40.8
41.9
21.0
19.3 6.3
1980
85.1 54.0
67.3 40.2
38.5
19.9
16.9 6.7
1985
81.8 56.4
62.5 40.7
35.3
18.4
14.7 5.9
1990
79.6 57.2
61.3 38.8
31.3
19.3
11.5 6.2
1995
78.8 60.2
59.2 41.9
30.7
18.7
12.1 5.7
2000
78.8 63.9
60.3 45.0
34.6
21.2
14.1 6.8
2005
80.1 68.9
64.2 52.7
37.6
27.1
17.0 8.7
2008
79.3 70.1
66.0 55.0
40.3
30.1
17.9 10.3
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Figures 1 and 2 show the percentage of men and women, respectively, aged 55 and older who
were employed each year from 1968 to 2008.

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Income of Americans Aged 65 and Older, 1968 to 2008

Figure 1. Percentage of Men Employed by Age, 1968 to 2008
100.0%
90.0%
80.0%
70.0%
oyed
60.0%
pl
m
50.0%
E
cent
40.0%
Per
30.0%
20.0%
10.0%
0.0%
8
0
72
78
84
90
4
6
0
2
6
8
196
197
19
1974
1976
19
1980
1982
19
1986
1988
19
1992 199
199
1998 200
200
2004 200
200
Year
55-59
60-64
65-69
70+

Source: Congressional Research Service analysis of the annual March supplements to the Current Population Survey.
CRS-8

Income of Americans Aged 65 and Older, 1968 to 2008

Figure 2. Percentage of Women Employed by Age, 1968 to 2008
100.0%
90.0%
80.0%
70.0%
ed
oy
60.0%
pl
50.0%
t Em
en
40.0%
rc
e
P
30.0%
20.0%
10.0%
0.0%
8
0
2
4
6
8
0
2
4
6
8
0
2
4
6
8
0
2
4
6
8
196
197
197
197
197
197
198
198
198
198
198
199
199
199
199
199
200
200
200
200
200
Year
55-59
60-64
65-69
70+

Source: Congressional Research Service analysis of the annual March supplements to the Current Population Survey.
CRS-9

Income of Americans Aged 65 and Older, 1968 to 2008

Full-Time vs. Part-Time Employment among Older Workers
As noted earlier, individuals who continue to work past age 55 remain almost as likely to work
full-time as their younger counterparts until about age 62, the first age of eligibility for Social
Security retired worker benefits. For workers 55 to 59 years old, the distribution between full-
time and part-time employment fell slightly from 1968 to 1975, and has since remained relatively
stable at about 85%. Among workers aged 60 to 64, the proportion of workers employed full-
time fell from 86.2% in 1968 to 78.5% in 1985 and has remained nearly the same since then.
Among workers 65 to 69 years old and those aged 70 and older, the percentage who worked full-
time fell between 1968 and 1985, but has since increased. (See Table 5.)
Table 5. Full-Time and Part-Time Employment, by Age of Worker

Age
Age
Age
Age 70
55-59
60-64
65-69
and older
Full-time Part-time Full-time Part-time Full-time Part-time Full-time Part-time
1968
89.6% 10.4% 86.2% 13.8%
68.8%
31.2%
49.5% 50.5%
1970
89.4 10.6 84.5 15.5
64.2
35.8
42.6 57.4
1975
85.7 14.3 82.8 17.2
57.4
42.6
42.6 57.4
1980
85.5 14.5 81.3 18.7
55.7
44.3
37.5 62.5
1985
83.9 16.1 78.5 21.5
51.9
48.1
34.5 65.5
1990
84.9 15.1 77.6 22.4
51.2
48.8
42.5 57.5
1995
86.3 13.7 76.5 23.5
54.8
45.2
40.5 59.5
2000
86.8 13.2 78.2 21.8
58.3
41.7
43.8 56.2
2005
85.8 14.2 77.8 22.2
61.3
38.7
43.6 56.4
2008
85.4 14.6 78.5 21.5
61.8
38.2
46.2 53.8
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Sources and Amounts of Income Among Persons
Aged 65 and Older
Americans aged 65 and older receive most of their income from four sources: earnings, Social
Security, pensions, and income from assets.8 In 2008, these four income sources provided 97% of
all income received by persons aged 65 and older. This was a slight increase from 1975 (the first
year for which separate data on pension income were reported on the CPS) when these four
sources provided 95% of income received by persons aged 65 and older.
Wages and salaries today constitute a greater proportion of the aggregate income of the elderly
than at any time since the late 1970s, and while this is due in part to increasing rates of
employment, it is also partly the result of a decline over the past 15 years in the proportion of
income received as interest and dividends. Since the early 1990s, interest rates and dividend
yields have fallen, and both the share of aggregate income received from assets and the
percentage of older individuals who receive income from this source have fallen. Social Security

8 As defined on the CPS, pension income includes employer-sponsored pensions (including military retired pay),
veterans’ pensions, and periodic payments from annuities, insurance policies, individual retirement accounts, 401(k)
accounts, and Keogh plans. The CPS does not collect information on income received from capital gains.
Congressional Research Service
10

Income of Americans Aged 65 and Older, 1968 to 2008

has remained a fairly stable share (about 40%) of the income of people 65 and older for most of
the past 40 years.
The share of total income the elderly receive from pensions has fallen since the early 1990s. Over
this period of time, the proportion of men with pension income has fallen and the proportion of
women with pension income has increased; however, the rise in the proportion of women with
pension income has been offset by the smaller pensions they typically receive. Because the
proportion of the total workforce who participate in employer-sponsored pensions has remained
stable at about half the workforce since the 1970s, it is unlikely that the proportion of their total
income that the elderly received from pensions will rise substantially in the next 10 to 20 years.
Few individuals aged 65 and older do not receive any income. Between 1968 and 2008, the
percentage of people 65 and older receiving income from at least one source increased from 90%
to 97%.9 Among people who had income from at least one source, the mean annual amount (in
2008 dollars) rose from $14,541 in 1968 to $29,248 in 2008, an increase of 101% or 1.8% per
year. Median personal income in constant 2008 dollars rose from $8,962 in 1968 to $18,208 in
2008, an increase of 103%, which is also a 1.8% average annual rate. (See Tables 9 through 12.)10
Earnings
In 1968, 25.4% of all people 65 and older worked, and earnings provided 31.0% of the aggregate
income received by persons aged 65 and older. Both of these percentages declined sharply over
the next decade, and by 1980, the proportion of people 65 and older with earned income had
fallen to 16.6% and earnings had fallen to 15.9% of the aggregate income of the elderly. The
proportion of Americans aged 65 and older with earnings has increased in recent years, rising
from 16.3% in 1990 to 20.1% in 2008. As a share of aggregate income, earnings rose from 15.3%
of the total income of the elderly in 1990 to 26.0% in 2008. The increase in the proportion of
income from earnings is the result mainly of four factors: (1) growth in real wages; (2) increased
employment among people 65 and older; (3) an increase in the percentage of working elderly
who are employed full-time; and (4) a drop in interest and dividend income that resulted from
falling interest rates, falling dividend yields, and a decline in the percentage of people receiving
interest and dividend income.11 Among people who had earned income, the mean total amount in
2008 dollars rose from $15,991 in 1968 to $36,499 in 2008, an increase of 128% or 2.1% per
year. Median earned income, also in 2008 dollars, rose from $7,975 in 1968 to $20,000 in 2008,
an increase of 151% or 2.3% per year.
Social Security
In 1968, 74.1% of people aged 65 and older received Social Security income, either as retired
workers, spouses, or as survivors of deceased workers. By 1990, the proportion of elderly persons
receiving Social Security benefits had risen to 91.0%. Since 2000, the proportion of people aged
65 and older who receive Social Security has fallen from 90% to 86%. Social Security provided

9 The majority of older persons with no income are women. In 1969, 16% of women and 1% of men received no
income. By 2008, the share of men who received no income had risen slightly (to 2%) and the share of women who
received no income had fallen to 4%.
10 The median lies at the middle of the income distribution. Half of the population have higher incomes, and half have
lower incomes. Mean income is generally higher than median income because a relatively small percentage of people
have very high incomes. The median is therefore widely considered to be a more accurate measure of average income.
11 Between 1984 and 1994, the yield on 10-year Treasury notes fell from 12.4% to 7.1%. By 2008, the yield had fallen
to 3.8%. Dividend yields declined from 4.6% in 1984 to 2.8% in 1994 and to 2.3% in 2008. (Source: Economic Report
of the President, 2009, Tables B-73 and B-96).
Congressional Research Service
11

Income of Americans Aged 65 and Older, 1968 to 2008

33.5% of all income received by people 65 and older in 1968. By 1980, Social Security benefits
accounted for 42.8% of all income received by persons aged 65 and older. Since 1980, Social
Security has consistently comprised between 38% and 40% of the aggregate income of the elderly
population. Among people 65 and older who received Social Security income, the mean annual
amount, in 2008 dollars, rose from $5,918 in 1968 to $12,859 in 2008, an increase of 117% or
2.0% per year. Median Social Security income, also in 2008 dollars, rose from $5,483 in 1968 to
$12,437 in 2008, an increase of 127% or 2.1% per year.
Asset Income
Income from assets—primarily interest and dividends, but also including rents and royalties—
was received by 36.1% of people aged 65 and older in 1968. The proportion of older persons
receiving asset income rose steadily over the next decade, and by 1980 two-thirds of the elderly
received income from assets. This proportion remained relatively stable until the late 1990s when
it began to decline. By 2008, the proportion of people aged 65 and older who received income
from assets had fallen to 54.0%. The decline in the proportion of people receiving income from
assets coincided with a long period of falling interest rates and dividend yields. As the rate of
return on these assets fell, fewer people chose to hold such assets.
In 1968, interest, dividends, rent, and royalties provided 18.2% of the aggregate income of
persons aged 65 and older. This proportion steadily increased over the next two decades, and by
1990 income from assets comprised 24% of the aggregate income of persons aged 65 and older.
The share of the income of the elderly provided by income from assets has progressively fallen
since the early 1990s, and in 2008 only 12.8% of all income received by people 65 and older
came from interest, dividends, rents, and royalties. Measured in 2008 dollars, mean income from
assets rose from $6,605 in 1968 to $7,729 in 1990 and fell to $6,697 in 2008. Median income
from assets has consistently been substantially lower than mean asset income because a relatively
small proportion of individuals receive a very large share of the total income from assets.
Expressed in 2008 dollars, median income from assets rose from $2,243 in 1968 to $2,710 in
1990 and fell to $1,054 in 2008.
Pension Income
The CPS has collected data on pension income as a separate category only since the March 1976
survey, which collected information on income received in 1975. Before that, income from
pensions was included in a broad category of “other income.” In 1975, 22% of persons aged 65
and older received income from pensions earned through previous employment or as the
surviving beneficiaries of workers who were receiving pensions. (See Appendix Table A-1.) The
percentage of people 65 and older receiving income from pensions rose until the early 1990s,
peaking at 38% in 1992. The proportion of the elderly population receiving pension income has
fallen slightly since 1992. In 2008, 34.2% of people 65 and older received pension income.12
In 1975, income from pensions made up 14% of the total income of persons aged 65 and older.
This proportion increased over the next 15 years, along with the percentage of older persons
receiving income from pensions, reaching a peak of 22% in 1993. Since then, pension income has
comprised roughly 20% of the total income of people 65 and older each year. In 2008, income
from pensions comprised 19.5% of the aggregate income of the elderly. Among people 65 and

12 This category includes pensions from previous employers or unions, and other retirement income, excluding Social
Security and Veterans’ Administration payments. It includes company or union pensions and profit sharing plans;
annuities; military retirement; federal government pensions; state or local government pensions; Railroad Retirement;
payments from annuities or paid-up insurance policies; and regular payments from 401(k), IRA, and Keogh accounts.
Congressional Research Service
12

Income of Americans Aged 65 and Older, 1968 to 2008

older who received pension income, the mean annual amount in 2008 dollars rose from $9,641 in
1975 to $16,079 in 2008, an increase of 67% or 1.6% per year. Median pension income rose from
$6,627 in 1975 to $10,800 in 2008, an increase of 63% or 1.5% per year.
Table 6. Percentage of Persons Aged 65 and Older with Income from Each Source
Source
of
Income
1968 1970 1980 1990 2000 2005
2008
Any income
90.0%
90.4%
98.7%
98.8%
97.8%
96.9%
96.6%
Earnings 25.4
23.4
16.6
16.3
16.9
17.8
20.1
Social Security
74.1
75.9
90.5
91.0
89.8
87.8
85.8
Asset income
36.1
39.5
67.1
69.9
59.2
54.9
54.0
Pension income
n/a
n/a
26.6
37.0
34.9
35.0
34.2
SSI/Public Assistance
8.9
9.2
8.5
5.5
3.8
3.4
3.2
Other income
23.6
24.2
6.9
7.7
6.0
5.9
6.1
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
n/a = not available
Table 7. Income from Each Source as a Percentage of Aggregate Income of Persons
Aged 65 and Older
Source
of
Income
1968 1970 1980 1990 2000 2005
2008
Earnings 31.0%
27.1%
15.9%
15.3%
20.0%
24.8%
26.0%
Social Security
33.5
35.3
42.8
37.9
40.3
39.3
39.0
Asset income
18.2
19.5
22.4
24.0
17.2
13.2
12.8
Pension income
n/a
n/a
15.3
19.8
19.7
19.7
19.5
SSI/Public Assistance
2.7
2.6
1.6
0.8
0.7
0.7
0.6
Other income
14.5
15.5
2.0
2.2
2.1
2.3
2.1
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
n/a = not available
Table 8. Mean Annual Income of Persons Aged 65 and Older from Each Source
(Mean income by source of persons with income from that source in 2008 dollars)
Source of
1968 1970 1980 1990 2000 2005 2008
Income
Al
sources
$14,541
$14,857 $17,379
$22,805
$26,790
$27,943 $29,248
Earnings
15,991
15,532 16,410
21,135
31,103
37,777 36,499
Social Security
5,918
6,258
8,106
9,377
11,765
12,122
12,859
Asset
income 6,605
6,623 5,727
7,729
7,628
6,498 6,697
Pension income
n/a
n/a
9,902
12,063
14,756
15,271
16,079
SSI/Public
Asst. 3,957
3,770 3,127
3,448
4,779
5,211 5,188
Other
income 8,079
8,616 4,932
6,524
9,113
10,656 9,741
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
n/a = not available
Congressional Research Service
13

Income of Americans Aged 65 and Older, 1968 to 2008

Table 9. Median Annual Income of Persons Aged 65 and Older from Each Source
(Median income by source of persons with income from that source in 2008 dollars )
Source of
1968 1970 1980 1990 2000 2005 2008
Income
Al sources
$8,962
$9,150
$11,899
$15,364
$16,964
$17,062
$18,208
Earnings 7,975
7,351

9,189
9,891
14,903
17,996
20,000
Social Security
5,483
5,827
8,003
9,130
11,408
11,933
12,437
Asset income
2,243
2,255
1,838
2,710
1,701
1,194
1,054
Pension
income n/a n/a

6,653
7,943
9,935
10,547
10,800
SSI/Public Asst.
3,648
3,518
2,635
2,629
3,741
4,614
4,488
Other income
5,732
5,741
2,729
3,287
4,470
5,273
6,000
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
n/a = not available
Welfare Income
In 1968, 8.9% of the elderly population in the United States received some form of cash welfare
assistance from the federal or state governments. 13 Currently, the largest source of cash welfare
assistance for people 65 and older is the Supplemental Security Income (SSI) program, which
was authorized by Congress in 1972 and began making payments to eligible low-income aged
and disabled persons in 1974. The proportion of the elderly population receiving cash welfare
payments has steadily fallen since the mid-1970s, mainly because the percentage of people 65
and older who receive Social Security benefits has increased and the value of Social Security
benefits has risen due to the growth in real wages. The maximum eligible income limit for SSI
benefits, in contrast, grows at the annual rate of price inflation.14 As a share of the aggregate
income of persons aged 65 and older, cash welfare payments fell from 2.7% in 1968 to less than
1% in the late 1980s. Welfare income has been less than 1% of the total income of Americans
aged 65 and older for the past 20 years. During the period from 1968 to 2008, the mean and
median amounts of welfare income received by older individuals fluctuated within relatively
narrow ranges. Measured in 2008 dollars, mean welfare income fell from $3,957 in 1968 to
$3,448 in 1998 and then slowly rose to about $5,200 in 2008. Median welfare income fell from
$3,648 in 1968 to $2,629 in 1990, rose to $4,614 in 2005 and fell to $4,488 in 2008.
Other Income
Other sources of income recorded on the CPS include workers’ compensation, unemployment
compensation, alimony, child support, and financial assistance from friends or relatives not living
in the same household. Since 1975, the proportion of persons aged 65 and older receiving income
from any of these sources has consistently remained in a narrow range of 6% to 8% of the elderly
population. As a share of the aggregate income of the elderly, all of these sources combined have
accounted for just 2% to 3% of the total income of older Americans since 1975. Among people 65
and older who received income from one or more of these sources in 2008, the mean amount
received was $9,741 and the median amount was $6,000. Thus, for the relatively small

13 This category includes only cash welfare payments. It does not include the value of food stamps, medical assistance,
rental subsidies, heating assistance, or other in-kind transfers.
14 In any given year the rate of price inflation may exceed the rate of growth of average wages, but over long periods of
time wages grow faster than prices because average wages grow at the average rate of inflation plus the rate of growth
of labor productivity. Prices will grow faster than wages in the long run only if labor productivity fails to increase.
Congressional Research Service
14

Income of Americans Aged 65 and Older, 1968 to 2008

percentage of people aged 65 and older who received income from other sources, it represented a
substantial share of their total income.
Sources of Income, by Quartile
The sources of income received by persons aged 65 and older whose incomes are at the lower end
of the income distribution differ from the sources of income of people at the upper end of the
income distribution. Individuals aged 65 and older whose income is in the top quartile (the top
25%) receive substantially more income from earnings, pensions, and assets than those in the
bottom three quartiles. Between 1975 and 2008, the proportion of total income received from
earnings, pensions, and assets changed more among persons aged 65 and older in the top income
quartile than among those in the bottom three quartiles.15 Among persons aged 65 and older in
the bottom three income quartiles, Social Security proved more than half of all income received
in both 1975 and 2008.
In 1975, individuals aged 65 and older whose incomes in 2008 dollars exceeded $19,383 were in
the top income quartile among people in this age group. In the aggregate, persons aged 65 and
older in the top income quartile received 30% of total income from earnings, 27% from assets,
22% from Social Security, 19% from pensions, less than 1% from welfare, and 2% from other
sources. (See Figure 3.) That same year, individuals whose incomes were less than $7,006 in
2008 dollars were in the bottom income quartile among persons aged 65 and older. Individuals
aged 65 and older in the bottom income quartile in 1975 received 80% of total income from
Social Security, 13% from public assistance, 3% from assets, 1% from pensions, less than 1%
from earnings, and 2% from other sources. (See Figure 6.)
Between 1975 and 2008, the biggest changes in the sources of income among persons aged 65
and older who were in the top income quartile were the decline in the share of total income
received from assets and the increase in the share of total income received from earnings. Among
persons aged 65 and older who were in the top quartile in 2008 (those with income of $33,677 or
more) earnings accounted for 38% of total income and pensions provided 23% of total income.
Social Security comprised 20% of aggregate income among persons aged 65 and older in the top
income quartile in 2008. Interest, dividends, rent, and royalties accounted for 17% of the total
income of older persons in the top income quartile in 2008. Other sources accounted for 2% of
income among persons aged 65 and older who were in the top income quartile in 2008. (See
Figure 7.)
In the bottom income quartile—people with income of less than $11,139—Social Security
accounted for 84% of total income in 2008, up from 80% in 1975. Pensions provided 3% of the
total income of elderly persons in the bottom income quartile in 2008, while assets and earnings
comprised 4% and 2%, respectively, of total income in the bottom income quartile. Public
assistance provided just 6% of the total income of Americans aged 65 and older in the bottom
income quartile in 2008, down from 13% in 1975. This was due both to the increase in the
proportion of people 65 and older who received Social Security benefits and to growth in the real
value of Social Security benefits. Other sources provided 2% of the total income received by
persons aged 65 and older who were in the bottom income quartile in 2008. (See Figure 10.)

15 The March 1976 CPS, which collected income data for calendar year 1975, was the first in which pension income
was reported separately in the public-use data files. Previously, pension income had been grouped with other income.
Congressional Research Service
15

Income of Americans Aged 65 and Older, 1968 to 2008

Figure 3. Total Income by Source of Persons Aged 65+, Top Quartile, 1975
1975 Individual Income of More than $19,383 (in 2008 $)
Other Income, 1.8%
Public Assistance,
0.1%
Social Security,
21.9%
Asset Income, 27.0%
Pensions, 18.8%
Earnings, 30.4%

Figure 4. Total Income by Source of Persons Aged 65+, Second Quartile, 1975
1975 Income of $11,057 to $19,383 (in 2008 $)
Other Income, 3.4%
Public Assistance,
1.1%
Asset Income, 13.2%
Pensions, 12.4%
Social Security,
60.3%
Earnings, 9.7%

Source: Both figures from CRS analysis of the March 1976 Current Population Survey.
Congressional Research Service
16

Income of Americans Aged 65 and Older, 1968 to 2008

Figure 5. Total Income by Source of Persons Aged 65+, Third Quartile, 1975
1975 Income of $7,006 to $11,057 (in 2008$)
Public Assistance,
Other Income, 3.7%
5.9%
Asset Income, 5.6%
Pensions, 2.6%
Earnings, 3.2%
Social Security,
79.0%

Figure 6. Total Income by Source of Persons Aged 65+, Bottom Quartile, 1975
1975 Incom e of Less than $7,006 (in 2008 $)
Other Incom e, 2.0%
Public Assistance,
13.4%
Asset Incom e, 3.1%
Pensions, 0.9%
Earnings, 0.7%
Social Security,
79.9%

Source: Both figures from CRS analysis of the March 1976 Current Population Survey.
Congressional Research Service
17

Income of Americans Aged 65 and Older, 1968 to 2008

Figure 7. Total Income by Source of Persons Aged 65+, Top Quartile, 2008
2008 Individual Incom e of More than $33,677
Other Incom e, 2.3%
Public Assistance,
0.0%
Asset Incom e,
Social Security,
16.8%
19.9%
Pensions, 22.9%
Earnings, 38.1%

Figure 8. Total Income by Source of Persons Aged 65+, Second Quartile, 2008
2008 Individual Income of $18,208 to $33,677
Other Income, 2.6%
Public Assistance,
0.3%
Asset Income, 9.0%
Pensions, 22.0%
Social Security,
54.6%
Earnings, 11.7%

Source: Both figures from CRS analysis of the March 2009 Current Population Survey.
Congressional Research Service
18

Income of Americans Aged 65 and Older, 1968 to 2008

Figure 9. Total Income by Source of Persons Aged 65+, Third Quartile, 2008
2008 Individual Income of $11,139 to $18,208
Public Assistance,
Other Income, 1.3%
0.8%
Asset Income, 4.8%
Pensions, 6.8%
Earnings, 4.0%
Social Security,
82.4%

Figure 10. Total Income by Source of Persons Aged 65+, Bottom Quartile, 2008
2008 Individual Income of Less than $11,139
Public Assistance,
6.5%
Other Income, 0.7%
Asset Income, 3.7%
Pensions, 3.1%
Earnings, 2.1%
Social Security,
84.0%

Source: Both figures from CRS analysis of the March 2009 Current Population Survey.
Congressional Research Service
19

Income of Americans Aged 65 and Older, 1968 to 2008

Household Income of Persons Aged 65 and Older
The previous section of this report described the sources and amounts of income received by
individuals aged 65 and older. Although a substantial—and growing—proportion of Americans
live in single-person households, a majority live with a spouse, other relatives, a roommate, or
others with whom they share household expenses.16 Consequently, a complete picture of the
income of older Americans, how it has changed over time, and how it compares with the income
of the non-elderly population, must include household income as well as individual income. This
section of the report describes income among three groups: (1) all U.S. households, (2) elderly
households—defined here as those in which either the household head or the household head’s
spouse (if present) is 65 or older, and (3) nonelderly households, defined here as those in which
neither the householder nor spouse is 65 or older. 17
During the period from 1968 through 2008, median household income rose faster among
households in which the householder or spouse was 65 or older than among households headed
by persons under age 65. Nevertheless, in 2008, the median income of households in which the
household head or the household head’s spouse (if present) was 65 or older ($30,774) was just
54% of the median income of households in which both the household head and the household
head’s spouse were under age 65 ($56,604).
Although the median income of households in which the head or spouse is 65 or older is less than
that of households headed by younger persons, there are some factors that tend to ameliorate the
effects of lower average income on the standard of living of older persons. First, elderly
households tend to be smaller than nonelderly households. In 2008, households in which the
head or spouse was 65 or older had an average of 1.7 residents, compared to an average of 2.7
residents in households in which both the head and spouse were under 65. Second, because of the
lower labor-force participation rates of people 65 and older, most elderly households have fewer
work-related expenses, such as commuting expenses, than many nonelderly households. Finally,
elderly households are less likely to incur child-rearing expenses than non-elderly households.
On the other hand, elderly households have higher average out-of-pocket costs for health care
than non-elderly households, and health care expenses have historically grown more rapidly than
other categories of household expenditures.
Median Household Income, by Age
Measured in 2008 dollars, median income among all U.S. households rose from $38,254 in 1968
to $50,000 in 2008, an increase of 31% or 0.7% per year in real terms. (See Tables 15 and 16.)
Real median household income reached a peak of $52,189 in 2000 and fell by $2,189 or 4.2%
between 2000 and 2008. Among households in which both the household head and the household
head’s spouse (if present) were under 65, median income rose from $42,865 in 1968 to $56,604 in
2008, an increase of 32% or 0.7% annually on average. Among households in which both the
householder and spouse were under 65, median income reached a peak of $60,688 in 2000 and
fell by $4,084 or 6.7% between 2000 and 2008. Among households in which either the
household head or the household head’s spouse (if present) was 65 or older, real median income

16 In March 1969, 16.6% of all U.S. households were one-person households, as were 38.9% of households in which
the householder was 65 or older. In March 2009, 27.0% of all households were one-person households, as were 45.8%
in which the householder was 65 or older.
17 The Census Bureau defines the household head as the person in whose name the housing unit is owned or rented. In a
married couple, either spouse may be designated as the household head.
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rose from $16,089 in 1968 to $30,774 in 2008, an increase of 91.3%, or 1.6% annually on
average. Between 2000 and 2008, the real median income of households in which either the
household head or the household head’s spouse was 65 or older rose from $29,457 to 30,774, an
increase of 4.5%.
In summary, between1968 and 2008, the real median income of households in which the
householder or the householder’s spouse (if present) was 65 or older grew by 91.3%, compared to
32.1% for households in which both the householder and the householder’s spouse (if present)
were under 65. The median income of elderly households grew at an average annual rate of 1.6%
from 1968 to 2008, while the median income of non-elderly households grew at an average
annual rate of just 0.7%. Between 1990 and 2008, the median income of elderly households grew
18.2%, or 0.9% per year on average, while the median income of non-elderly households grew by
just 9.5%, or 0.5% per year on average. While the median income of elderly households grew by
4.5% between 2000 and 2008, the median income of non-elderly households fell by 6.7% during
this period.
Table 10. Mean and Median Household Income, by Age of Householder
(in 2008 dollars)
All
Householder and
Householder or Spouse
Households
Spouse Under Age 65
65 or Older
Income Year
Mean Median Mean Median Mean Median
1968 $43,208
$38,254
$47,879
$42,865
$24,336
$16,089
1970 44,724
39,234
49,773
44,583
24,676
16,199
1980 47,549
40,659
52,423
46,446
29,323
20,447
1990 55,745
45,497
60,933
51,680
37,698
26,036
2000 70,803
52,189
78,040
60,668
44,314
29,457
2005 69,595
50,558
76,104
57,295
45,883
29,286
2008 68,426
50,000
74,447
56,604
47,608
30,774
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.

Table 11. Percentage Change in Median Real Household Income, 1968 to 2008, by
Age of Householder
(in 2008 dollars)
All
Householder and
Householder or
Households
Spouse Under Age 65
Spouse 65 or Older
Income
Years
Total Change
Annual
Total Change
Annual
Total Change
Annual
Average
Average
Average
1968-2008
30.7% 0.7%
32.1%
0.7%
91.3% 1.6%
1970-2008 27.4
0.6
27.0
0.6
90.0
1.7
1980-2008 23.0
0.7
21.9
0.7
50.5
1.5
1990-2008 9.9
0.5
9.5
0.5
18.2
0.9
2000-2008 -4.2
-0.5
-6.7
-0.9
4.5
0.5
2005-2008 -1.1
-0.4
-1.2
-0.4
5.1
1.7
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.

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Income of Americans Aged 65 and Older, 1968 to 2008

Median Household Income, Adjusted for Household Size
When comparing the median incomes of elderly households and nonelderly households, it is
important to keep in mind that the households in which people aged 65 and older live tend to be
smaller than the households of younger adults. During the past 40 years, average household size
has shrunk among both elderly and nonelderly households, and although the decline has been
greater among nonelderly households, they remain larger on average than elderly households. In
1968, there were 3.6 persons in the average nonelderly household: 2.1 adults and 1.5 children.
(See Table 12.) The average elderly household had 1.9 people in 1968. By 2009, the average
nonelderly household had just 2.7 residents: 2.0 adults and 0.7 children. By 2009, the average size
of an elderly household had fallen to 1.7 residents. Because the average elderly household has
one less resident than the average nonelderly household, it requires – other things being equal –
less income to maintain a comparable standard of living.
Table 12. Average Household Size by Year and Age of Householder
Householder under 65
Householder Age 65+
Year
Mean
Mean
Mean
Mean
household
number of
household
number of
size
adults
size
adults
1968 3.6
2.1
1.9
1.8
1970 3.5
2.1
1.9
1.8
1980 3.0
2.0
1.7
1.7
1990 2.9
2.0
1.7
1.7
2000 2.8
1.9
1.7
1.7
2005 2.8
1.9
1.7
1.7
2008 2.7
1.9
1.7
1.6
2009 2.7
2.0
1.7
1.7
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
The income of households of can be measured in a way that takes into account differences in the
number of persons per household. Household income can be adjusted – or “scaled” – to the
number of adults and children in the household. These adjustments typically take into account
economies of scale – i.e., that household consumption does not rise in direct proportion to the
increase in the number of household residents – and lower average household consumption
expenditures per child compared to average consumption expenditures per adult. Economists
have developed several methods for scaling household income to household size, but in virtually
all of these methods the household’s nominal income is multiplied by factors that take into
account economies of scale and the ratio of adults to children in the household.
Table 13 shows scaled and unscaled median household income in 2008 dollars for elderly and
nonelderly households in selected years from 1968 to 2008.18 Scaled median household income
is lower than unscaled median household income because of the adjustments for economies of
scale and the number of children in the household, as discussed above. The two right-most
columns show (1) the ratio of the unscaled real median income of elderly households to the
median income of nonelderly households and (2) the ratio of the scaled median income of elderly

18 CRS scaled household incomes according to the following formula:
Scaled household income=(Household income / (Number of adults + .5*Number of children under 18) )
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Income of Americans Aged 65 and Older, 1968 to 2008

households to the scaled median income of nonelderly households. Three facts are notable in
these two columns.
• The ratio of the real median income of elderly households to the real median income of
non-elderly households has risen over the past 40 years, whether or not median
household income is scaled to household size and number of children present.
• Due to the smaller average size of elderly households, the ratio of the scaled median
household income of the elderly to the scaled median household income of the
nonelderly is consistently higher than the ratio of the unscaled median household
income of the elderly to the unscaled median household income of the nonelderly.
• Even when scaled to account for the smaller average number of residents in elderly
households, in 2008 the median income of households in which the household head
or the household head’s spouse (if present) was 65 or older was less than two-thirds
of the median income of households in which both the household head and spouse (if
present) were under age 65.
Table 13. Median Household Income and Median Household Income Scaled to Size
of Household, by Age of Householder
(in 2008 dollars)
Householder and
Householder or Spouse
Ratio of Elderly to Nonelderly
Income
Spouse Under Age 65
65 or Older
Household Income
Year
Unscaled Scaled Unscaled Scaled Unscaled Scaled
1968 $42,865 $26,164 $16,089
$12,293
.375
.470
1970 44,583 27,208 16,199
12,474
.363
.458
1980 46,446 30,630 20,447
16,107
.440
.526
1990 51,680 34,599 26,036
20,566
.504
.594
2000 60,688 40,982 29,457
23,257
.485
.567
2005 57,295 39,551 29,286
23,443
.511
.593
2008 56,604 38,891 30,774
24,511
.544
.630
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey
Household Income at the 75th and 25th Percentiles
Over the period from 1968 to 2008, the incomes of nonelderly households rose more rapidly
above the median (at the 75th percentile) than below the median (at the 25th percentile). Among
elderly households – those in which either the household head or the household head’s spouse (if
present) was 65 or older – income grew by roughly the same percentage at the 75th and 25th
percentiles between 1968 to 2008. Over the more recent periods from 1980 to 2008, 1990 to
2008, and 2000 to 2008, income among elderly households grew more rapidly at the 75th
percentile than at the 25th percentile, as was also the case for nonelderly households.
Measured in 2008 dollars, household income at the 75th percentile—the point that separates
households with income in the highest quarter from households with income in the lowest three-
quarters—real income among all households grew from $57,818 in 1968 to $89,140 in 2008, an
increase of 54.2%. (See Table 14 and Table 15.) Among households in which the householder
and the householder’s spouse (if present) were under age 65, real income at the 75th percentile
grew from $61,307 in 1968 to $96,002 in 2008, an increase of 56.6%. Among households in
which either the householder or the householder’s spouse (if present) was 65 or older, real income
at the 75th percentile grew from $31,102 in 1968 to $58,985 in 2008, an increase of 89.7%.
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At the lower end of the income distribution, rates of growth in household income differed
dramatically between elderly and nonelderly households over the period from 1968 to 2008. At
the 25th percentile—marking the point that separates the lowest quarter of household incomes
from the highest three-quarters of household incomes—real income among all households grew
from $20,321 in 1968 to $25,000 in 2008, an increase of just 23% over 40 years. Among
households in which the householder and the householder’s spouse (if present) were under age
65, real income at the 25th percentile grew from $27,095 in 1968 to $30,000 in 2008, an increase
of only 10.7% in 40 years. Among households in which either the householder or the
householder’s spouse (if present) was 65 or older, real income at the 25th percentile grew from
$8,613 in 1968 to $16,836 in 2008, an increase of 95.5%.
Table 14. Household Income at 75th and 25th Percentiles, by Age of Householder
(in 2008 dollars)
All
Householder and
Householder or Spouse
Households
Spouse Under Age 65
65 or Older
Income
Year
75th
25th
75th
25th
75th
25th
percentile
percentile
percentile
percentile
percentile
percentile
1968 $57,818
$20,321 $61,307
$27,095
$31,102 $8,613
1970 59,645
20,632 64,105
27,509
31,117 8,663
1980 65,432
20,906 70,408
26,803
36,543 11,392
1990 75,366
23,070 81,332
28,911
46,837 14,164
2000 90,657
26,718 98,265
32,444
52,816 16,028
2005 88,991
25,323 96,913
30,762
54,932 16,216
2008 89,140
25,000 96,002
30,000
58,985 16,836
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Table 15. Cumulative Percentage Change in Household Income at 75th and 25th
Percentiles, by Age of Householder
(in 2008 dollars)
All
Householder and
Householder or
Households
Spouse under Age 65
Spouse 65 or Older
Income
Years
75th
25th
75th
25th
75th
25th
percentile
percentile
percentile
percentile
percentile
percentile
1968-2008
54.2%
23.0% 56.6%
10.7%
89.7% 95.5%
1970-2008
49.4
21.2 49.8
9.1
89.6 94.3
1980-2008
36.2
19.6 36.4
11.9
61.4 47.8
1990-2008
18.3
8.4 18.0
3.8
25.9 18.9
2000-2008 -1.7
-6.4
-2.3
-7.5
11.7
5.0
2005-2008 0.2
-1.3 -0.9
-2.5
7.4
3.8
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
The steady growth in income among elderly households in the lowest quartile of the income
distribution since the late 1960s is largely due to the fact that the great preponderance of their
income comes from Social Security. Initial Social Security benefits are based on the real value of
average lifetime wages, and the benefit formula is designed to replace a higher percentage of
average lifetime earnings for low-wage workers than for high-wage workers. Adjusted for
inflation, the national average annual wage rose from $27,771 in 1968 to $41,335 in 2008, an
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Income of Americans Aged 65 and Older, 1968 to 2008

increase of 48.8%, or 1.0% per year on average.19 Because initial Social Security benefits
awarded to new retirees are based on their lifetime earnings indexed to age 60 based on the
growth in the national average wage, the real value of Social Security benefits awarded to new
retirees grows over time at approximately the rate of growth of real wages. Once Social Security
benefits begin, they are adjusted each year by the rate of growth in the Consumer Price Index,
thus preventing the real value of the benefit from being eroded by inflation.20
Poverty Status of the Elderly
The steady rise in the median income of elderly households over the past 40 years coincided with
a dramatic decline in the proportion of older Americans living in poverty. In 1968, 25.0% of
Americans aged 65 and older had family incomes below the federal poverty threshold. In the late
1960s, the poverty rate among persons aged 65 and older was more than double the poverty rate
among adults 18 to 64 years old. By the early 1990s, the poverty rate among people 65 and older
had fallen below the poverty rate among adults aged 18 to 64. The elderly poverty rate has
remained lower than the nonelderly adult poverty rate since that time. The poverty rate of 9.7%
among Americans aged 65 and older in 2008 was two percentage points lower than the poverty
rate among adults aged 18 to 64, and it was just half the 19% poverty rate among children under
18 years old. However, while the proportion of persons aged 65 and older in poverty has fallen
over the past 40years, the number of poor elderly has remained relatively constant since the mid-
1970s due to the growth in the total number of elderly persons. In 2008, 3.6 million people aged
65 and older had income below the federal poverty thresholds of $10,326 for single elderly
persons and $13,014 for elderly couples. (See Table 16.)
Table 16. Poverty Status of Individuals Age 18 and Older, by Year
Year
People 18 to 64 Years Old
People 65 and Older
Number
Number in
Percent in
Number
Number in
Percent in
(000s)
poverty
poverty
(000s)
poverty
poverty
1968 108,684
9,803
9.0
18,559
4,632
25.0
1970
113,554
10,187
9.0
19,470
4,793
24.6
1975
124,122
11,456
9.2
21,662
3,317
15.3
1980
137,428
13,858
10.1
24,686
3,871
15.7
1985
146,396
16,598
11.3
27,322
3,456
12.6
1990
153,502
16,496
10.7
30,093
3,658
12.2
1995
161,508
18,442
11.4
31,658
3,318
10.5
2000
173,638
16,671
9.6
33,566
3,323
9.9
2005
184,345
20,450 11.1
35,505
3,603 10.1
2008 189,185
22,105
11.7
37,788
3,656
9.7
Source: See http://www.census.gov/hhes/www/poverty/histpov/hstpov3.html and March 2009 CPS.

19 The national average wage was $5,572 in 1968. From 1968 to 2008, the price level as measured by the Personal
Consumption Expenditure Index rose from 24.916 to 124.188, an increase of 398.4%. (Sources: Economic Report of
the President, January 2009, Table B-7, page 292 and http://www.ssa.gov/OACT/COLA/AWI.html)
20 The annual cost-of-living adjustment applied to Social Security benefits in January is equal to the percentage change
in the Consumer Price Index for Urban Wage Earners (CPI-W), as determined by the ratio of the average monthly level
of the CPI-W in the most recent third calendar quarter to the average monthly level of the CPI-W in the third calendar
quarter one year earlier. If this ratio is less than one, there is no COLA, but Social Security benefits are not reduced.
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The Decline in Poverty Among the Elderly
The reduction in the proportion of older Americans living in poverty from 25% in 1968 to 10% in
2008 is one of the most significant economic developments to occur in the last four decades.
Without the decline in elderly poverty, the economic burden of supporting those who can no
longer work in old age would weigh that much more heavily on their adult children, and many
millions of older Americans would likely have to apply for public assistance or give up their
homes to live with their children.
Absolute vs. Relative Measures of Poverty
The amount of annual family income below which persons are considered to be in poverty by the
federal government is adjusted each year by the rate of inflation as measured by the percentage
change in the Consumer Price Index (CPI). The growth in wages from year to year reflects both
the rising general level of prices and gains in labor productivity. Most income received by persons
under age 65 consists of wages and salaries, and over long periods of time wages and salaries
grow faster than prices because labor becomes more productive as a result of better education and
training, improved methods of production and distribution, and new technologies. During the
period from 1968 through 2008, the ratio of the poverty threshold to the median income of the
population fell because incomes rose faster then prices. As a consequence, the gap between the
official poverty threshold and the median household income has grown, and persons with
incomes at or below the poverty threshold have become relatively poorer compared to households
with incomes at the median.
The federal poverty threshold was developed by government economists in the 1950s to designate
the amount of income necessary to maintain a minimally adequate standard of living.21 The
poverty threshold is adjusted annually by the rate of inflation as measured by the consumer price
index, which means that the real (inflation-adjusted) value of income at the poverty threshold
remains constant over time. Because the real value of the poverty threshold has remained
constant while the real median income of the elderly has been rising, the poverty threshold has
fallen as a percentage of median income.
In 1968 the poverty threshold for an individual 65 or older ($8,308 in 2008 dollars) was equal to
93% of the median individual income ($8,962 in 2008 dollars) of all persons aged 65 and older.
In 2008, the poverty threshold for a single person 65 or older ($10,326) was only 57% the real
median income of individuals aged 65 and older ($18,208). In the future, other things being
equal, the disparity between rising real incomes and a fixed real poverty threshold will lead to a
decreasing proportion of the elderly having incomes below the federal poverty threshold. This
means that the income gap between those with incomes below the poverty threshold and those
with incomes at the median will grow larger. As a result, the proportion of the elderly who are in
poverty will shrink, but those who are in poverty will be poorer compared to those who have
average incomes.
Changes in Income as People Age
As workers pass age 60, they begin—gradually, in many cases—to withdraw from the labor force
and to rely on pensions, Social Security, and personal savings as their main sources of income.

21 The poverty threshold has changed slightly over time. For a history of the poverty threshold see Gordon M. Fisher
“The Development and History of the Poverty Threshold” Social Security Bulletin, vol. 55 no. 4, 1992 at
http://www.ssa.gov/history/fisheronpoverty.html.
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Income of Americans Aged 65 and Older, 1968 to 2008

Since the late 1960s, the rate of decline in median personal and household income (measured in
constant dollars) that occurs as individuals age from their late 50s to their late 60s appears to have
slowed. This has occurred despite the fact that a smaller proportion of people over age 60 work
today than was the case 40 years ago.
As was noted earlier in Table 3, employment rates are lower among people 60 to 64 years old
than among those under age 60, and they fall even further after age 65. Among people 65 to 69
years old, for example, just 35% were employed at any time during 2008. Rates of full-time
employment also decline as workers age because many older persons who remain in the
workforce choose to work part-time. In 2008, 86% of 55 to 59 year-old workers worked full-time,
compared to 78% of workers who were 60 to 64 years old and 59% of workers who were 65 to
69 years old. As older workers reduce their hours of work and gradually withdraw from the labor
force, their earnings fall and they begin to rely to a greater extent on income from pensions,
savings, and Social Security.22
Changes in Individual Income from Ages 55-59 to 65-69
The income data collected in the CPS allow us to see how the median individual and household
incomes differ by age, and also how incomes fall as people age. For example, the top row of
Table 17 shows that the median individual income of people who were 55 to 59 years old in 1968
was $24,991 in 2008 dollars. Everyone who was 55 to 59 years old in1968 was born between
1909 and 1913. People born in the same year or group of years are called a “birth cohort.”
Following this same birth cohort forward five years to 1973, Table 17 shows that individuals who
were 60 to 64 years old in 1973 had a median individual income of $19,883, or $5,108 lower than
the median income of this same birth cohort five years earlier. Five years later in 1978, people in
the 1909-1913 birth cohort were 65 to 69 years old, and they had median individual income of
$12,994, or $11,997 less than the median income of individuals in this birth cohort 10 years
earlier. Following each of the pairs of diagonal arrows in this table allows one to see how the
median individual incomes of successive cohorts changed as they aged. The most recent birth
cohort for which income data are available over a 10-year period comprises people who were 55
to 59 in 1998. In 2008 dollars, the median income of individuals in this birth cohort declined from
$32,216 in 1998 to $28,095 in 2003 (at ages 60-64) and to $22,057 in 2008 (at ages 65 to 69).
The right panel of Table 17 shows median individual income at ages 60 to 64 and ages 65 to 69
as a percentage of the median income of the same birth cohort at ages 55 to 59. For example, the
median income of individuals who were 60 to 64 years old in 1973 was 79.6% of the median
income of this same cohort in 1968, when they were 55 to 59 years old. Their median income in
1978, at ages 65 to 69, was 52.0% of their income in 1968 at ages 55 to 59. Looking at the most
recent cohort for which income data are available for a 10-year period, the reader can see that the
median individual income of people who were 60 to 64 years old in 2003 was 87.2% of the
median income of the same birth cohort in 1998 at ages 55 to 59. In 2008, when the people in this
cohort had reached ages 65 to 69, their median income was 68.5% of the median income of
people who were ages 55 to 59 ten years earlier in 1998.

22 Social Security retired worker benefits are available at age 62, but they are reduced for those under age 66 whose
earnings are above certain thresholds. Disabled workers are eligible for Social Security Disability Insurance at any age.
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Income of Americans Aged 65 and Older, 1968 to 2008

Changes in Household Income from Ages 55-59 to 65-69
Table 18 the median household income of people in these same three age cohorts: 55 to 59, 60 to
64, and 65 to 69. As with individual income, median household income falls as people age.
Among those who were 55 to 59 years old in 1968, median household income was $41,036 in
2008 dollars. Five years later in 1973, the median household income of individuals in this age
group, who were then 60 to 64 years old, was $36,897, or $4,139 lower than the household
income of this cohort in 1968. By 1978, at ages 65 to 69, the median household income of this
cohort was $27,008, or $14,028 lower than the median household income of this cohort 10 years
earlier. For the most recent available 10-year period, the median household income in 1998 of
individuals who were 55 to 59 years old was $66,551 in 2008 dollars. Five years later in 2003
when they were 60 to 64 years old, the median household income of this cohort was $54,888. By
2008, at ages 65 to 69, the median household income of individuals in this cohort was $47,000.23
The right panel of Table 18 shows median household incomes at ages 60 to 64 and ages 65 to 69
as a percentage of the median household income of the same birth cohort at ages 55 to 59. The
median household income of people aged 60 to 64 in 1973 was 89.9% of the median household
income of this same cohort five years earlier when they were 55 to 59 years old. By 1978, the
median household income of people aged 65 to 69 was 65.8% of the median household income of
this same cohort ten years earlier when they were 55 to 59 years old. For the most recent ten-year
period for which income data are available, the median household income of people who were 60
to 64 years old in 2003 was 82.5% of the median household income of the same cohort five years
earlier at ages 55 to 59. By 2008, when they had reached ages 65 to 69, the median household
income of this cohort was 70.6% of the median household income of the same cohort ten years
earlier when they were 55 to 59 years old.
The income data displayed in Tables 17 and 18 show that real median incomes have risen at both
the individual and household levels among all three age groups since 1968. Real median
individual income was more variable than median household income, but the trend was upward
for both. Some of the increase in real median incomes in the three age categories was due to
increased employment among older persons, particularly women. Since the mid-1990s,
employment among men 60 and older also has risen. Over time, the ratio of median individual
and household incomes at ages 65 to 69 to median income at age 55 to 59 also has risen, although
the changes in the household income ratios were variable rather than increasing steadily.
Although the trend in median incomes shown in Tables 11 and 18 is upward, it is important to
keep in mind that by definition half of all individuals and households have incomes below the
median. For some people, their income in old age may be less than the amount they need to
maintain their desired standard of living. Many financial analysts recommend that workers aim
for an income replacement rate of 70% to 80% in their first year of retirement if they want to
maintain the standard of living they enjoyed while working.24 The median household income of
people who were 65 to 69 years old in 2008 was 70.6% of the household income of people in this
age cohort 10 years earlier when they were 55 to 59 years old. Thus, a household that was at the

23 The decline in median household income appears to be due more to the declining income of the people in households
rather than to a decline in the number of people in the household. Among households of fixed sizes, median household
income also fell between ages 55 to 59 and 65 to 69. The median household income in 1979 of persons 65 to 69 years
old in two-person households was 73% of the median household income in 1969 of persons 55 to 59 years old in two-
person households. The equivalent ratio for one-person households was 67%. Likewise, the median household income
in 2008 of persons 65 to 69 years old in two-person households was 74% of the median household income in 1998 of
persons 55 to 59 years old in two-person households. The equivalent ratio for one-person households was 71%.
24 The ratios in Table 17 and 18 are not replacement rates, i.e., the ratio of income in the first year of retirement to
income in the last year of employment. These tables show the median income of everyone in an age cohort, whether
working or retired. They do, however, show the effect on median income of the retirement of members of the cohort.
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Income of Americans Aged 65 and Older, 1968 to 2008

median income for its birth cohort in both 1998 and 2003, and that had retired in the interim,
would probably find itself able to maintain a standard of living in retirement that was comparable
to the lifestyle they had enjoyed while working. Those whose income from pensions, savings, and
Social Security do not reach this threshold may have to make difficult adjustments in order to
keep their spending in retirement within their more limited incomes.
Table 17. Median Individual Income at Five-Year Intervals
(in 2008 dollars)
Median Personal Income
Percentage of Age 55-59 Income
Income
Age
Age
Year
55-59
60-64
65-69
55-59
60-64
65-69
1968
$24,991
100%
1973
$28,686
$19,883
100%
79.6%
1978
$26,427
$19,545
$12,994
100%
68.1%
52.0%
1983
$23,292
$19,234
$15,684
100%
72.8%
54.7%
1988
$26,018
$20,679
$17,011
100%
88.8%
64.4%
1993
$26,629
$21,033
$17,231
100%
80.8%
74.0%
1998
$32,216
$24,458
$18,871
100%
91.8%
72.5%
2003
$35,771
$28,095
$20,249
100%
87.2%
76.0%
2008
$30,000
$22,057

83.9%
68.5%

Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Note: Income has been adjusted to 2008 dol ars based on the Personal Consumption Expenditure Index of the
National Income and Product Accounts.
Congressional Research Service
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Income of Americans Aged 65 and Older, 1968 to 2008

Table 18. Median Household Income at Five-Year Intervals
(in 2008 dollars)
Median Household Income
Percentage of Age 55-59 Income
Income
Age
Age
Year
55-59
60-64
65-69
55-59
60-64
65-69
1968
$41,036
100%
1973
$48,733
$36,897
100%
89.9%
1978
$50,846
$38,102
$27,008
100%
78.2%
65.8%
1983
$50,998
$40,410
$32,158
100%
79.5%
66.0%
1988
$55,780
$43,799
$34,448
100%
85.9%
67.8%
1993
$56,200
$43,932
$36,413
100%
78.8%
71.4%
1998
$66,551
$53,120
$41,204
100%
94.5%
73.9%
2003
$72,110
$54,888
$43,381
100%
82.5%
77.2%
2008
$60,412
$47,000
83.8%
70.6%

Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey.
Note: Income has been adjusted to 2008 dol ars based on the Personal Consumption Expenditure Index of the
National Income and Product Accounts.
Congressional Research Service
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Income of Americans Aged 65 and Older, 1968 to 2008

Conclusion
Over the past 40 years, the real median income of Americans aged 65 and older has more than
doubled, and the proportion of older persons living in poverty has fallen by 60%. These
developments can be attributed mainly to increases in real earnings, higher Social Security
benefits and pension income – both of which reflect increases in earnings – and to an increase
over the past 20 years in the proportion of Americans who continue working beyond age 65.
Nevertheless, while the gains in the real income of older Americans have been substantial, the
decline in the poverty rate among the elderly is partly the result of measuring poverty relative to a
standard that maintains the same constant-dollar value from year to year while the median income
of the population continues to increase over time. Although the percentage of older persons who
are defined as being in poverty has declined over time, the incomes of those in poverty have
fallen relative to the median income of all persons aged 65 and older.
Perhaps the single greatest contributor to the rising real income of the elderly in the United States
has been the growth in real wages that they experienced during their working lives. Measured in
2008 dollars, the median annual earnings of workers between the ages of 18 and 64 rose from
$24,501 in 1968 to $30,950 in 2008. Among households in both the householder and his or her
spouse (if present) were under age 65, real median income rose from $42,865 in 1968 to $56,604
in 2008. The incomes of retired persons have grown because the Social Security benefits and
pensions of each successive cohort of retirees have reflected their higher real lifetime earnings.
Actions taken by Congress over the past 40 years also have affected the incomes of older
Americans. In 1974, Congress passed the Employee Retirement Income Security Act (ERISA),
which set funding standards and vesting requirements for pension plans sponsored by employers
in the private sector. This law also authorized individual retirement accounts (IRAs) which
encourage workers to save for retirement by deferring income taxes on some contributions and on
investment earnings. In the Revenue Act of 1978, Congress added section 401(k) to the Internal
Revenue Code, which authorized employers to establish retirement savings plans for employees
in which contributions and investment earnings grow on a tax-deferred basis until retirement.
Legislation affecting Social Security has also contributed to increasing the income of older
Americans. The Social Security Amendments of 1972 provided for automatic cost-of-living
adjustments (COLAs), which prevent the real value of Social Security benefits from being eroded
by inflation. The 1977 Social Security amendments established the current benefit formula, in
which initial benefits are based on each worker’s career-average wages, indexed to current values
based on a national average wage index. This assures that each successive cohort of workers
receives a Social Security benefit that reflects the growth in real wages that occurred during their
working lives. In 2000, Congress repealed the “earnings test” for workers who have reached the
Social Security full retirement age. This test reduces benefits for Social Security beneficiaries
whose earnings exceed a threshold set in law. The earnings test now applies only to beneficiaries
who are under the full retirement age (66 in 2009).
As the 78 million members of the “baby boom”—people born between 1946 and 1964—approach
retirement, Congress is likely to continue to debate changes to the federal laws affecting pensions,
retirement savings, and Social Security. Future retirees are likely to live longer and will need to
accumulate relatively greater retirement assets than past retirees if they are to maintain their
standard of living through these longer periods of retirement. With Social Security facing a
financial shortfall and the number of private-sector pensions continuing to decline, it is likely that
a relatively greater share of current workers’ future retirement income will have to be financed
from their own personal savings.
Congressional Research Service
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Income of Americans Aged 65 and Older, 1968 to 2008

Appendix. Historical Tables of Individual and
Household Income
Congressional Research Service
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Income of Americans Aged 65 and Older, 1968 to 2008

Table A-1. Percentage of People Age 65 and Older with Income from Each Source, by Year
Percentage
Percentage
Percentage
Income
Number of
Number with
Percentage Percentage
Receiving
Percentage
Receiving
Percentage
Receiving
Year
People 65+
Any Income
with Any
With
Receiving
Receiving
(thousands)
(thousands)
Income
Earnings
Social
Pension
Other
Security
Asset Income
Income
Welfare
Incomea
1968 18,550 16,691 90.0%
25.4%
74.1%
36.1%
a
8.9%
23.6%
1970 19,231 17,393 90.4
23.4
75.9
39.5
a
9.2
24.2
1975 21,662 20,311 93.8
19.5
83.5
45.4 22.3%
10.0
8.2
1980 24,686 24,353 98.7
16.6
90.5
67.1 26.6
8.5
6.9
1985 27,322 26,976 98.7
15.0
92.0
67.6 30.3
6.6
6.2
1990 30,093 29,734 98.8
16.3
91.0
69.9 37.0
5.5
7.7
1991 30,590 30,256 98.9
15.5
90.2
69.2 37.7
5.9
7.9
1992 30,870 30,538 98.9
14.7
91.7
68.0 38.0
5.9
7.5
1993 30,779 30,223 98.2
15.8
90.5
67.8 37.5
5.0
8.1
1994 31,267 30,676 98.1
15.4
90.8
68.0 36.2
4.9
7.4
1995 31,658 31,081 98.2
15.7
90.8
67.2 35.4
4.3
7.1
1996 31,877 31,199 97.9
15.6
90.1
64.1 35.2
4.7
6.9
1997 32,082 31,401 97.9
15.3
89.9
62.9 35.5
4.4
6.8
1998 32,394 31,694 97.8
15.9
89.4
63.8 35.9
3.9
6.7
1999 32,621 31,978 98.0
16.9
89.5
62.7 36.3
4.1
6.2
2000 32,979 32,258 97.8
16.9
89.8
59.2 34.9
3.8
6.0
2001 33,770 32,911 97.5
16.2
90.1
58.4 34.5
3.7
6.3
2002 34,234 33,334 97.4
16.6
88.8
55.8 34.4
3.6
6.1
2003 34,659 33,779 97.5
17.5
89.1
56.4 35.3
3.7
5.6
2004 35,213 34,184 97.1
18.1
88.1
55.5 35.1
3.5
5.5
2005 35,505 34,418 96.9
17.8
87.8
54.9 35.0
3.4
5.9
2006 36,035 34,821 96.6
18.7
86.4
53.4 34.7
3.0
4.9
2007 36,790 35,485 96.5
19.7
85.8
51.0 33.7
3.2
5.4
2008 37,787 36,506 96.6
20.1
85.8
54.0 34.2
3.2
6.1
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
a. Prior to the March 1976 survey, the CPS included income from pensions with “other income.”
CRS-33

Income of Americans Aged 65 and Older, 1968 to 2008

Table A-2. Median Annual Income of Individuals Age 65 and Older, by Income Source
(in 2008 dollars)
Income
Number
Median
Median
Median
Median
Median
Median
Median All
Year
With Income
Total Income
Earnings
Social Security
Asset Income
Pension Income
Welfare Income
Other Incomea
1968
16,691
$8,962
$7,975
$5,483
$2,243
a
$3,648
$5,732
1970
17,393
9,150
7,351
5,827
2,255
a
3,518
5,741
1975
20,311
11,057
7,515
7,809
2,353
6,627
2,777
3,398
1980
24,353
11,899
9,189
8,003
1,838
6,653
2,635
2,729
1985
26,976
13,962
8,824
8,849
2,823
6,512
2,779
2,672
1990
29,734
15,364
9,891
9,130
2,710
7,943
2,629
3,287
1991
30,256
15,066
10,249
9,315
2,206
7,923
3,053
3,529
1992
30,538
14,802
10,756
9,190
1,725
7,762
2,587
3,622
1993
30,223
15,018
10,959
9,695
1,405
8,413
3,232
3,122
1994
30,676
15,354
11,007
10,254
1,376
8,255
3,285
2,889
1995
31,081
15,921
12,269
10,447
1,730
8,219
3,074
4,173
1996
31,199
16,089
11,974
10,582
1,682
8,837
3,271
4,222
1997
31,401
16,415
12,646
10,930
1,952
9,215
3,327
4,608
1998
31,694
16,895
12,873
11,072
1,931
9,268
3,537
4,634
1999
31,978
17,431
13,197
11,352
1,903
9,542
3,852
4,369
2000
32,258
16,964
14,903
11,408
1,701
9,935
3,741
4,470
2001
32,911
16,900
15,034
11,642
1,819
10,100
3,638
4,365
2002
33,334
16,792
17,879
11,757
1,225
10,012
4,048
4,576
2003
33,779
16,899
18,673
12,026
1,024
10,504
4,145
5,475
2004
34,184
17,243
17,018
11,798
925
10,892
4,084
5,431
2005 34,418 17,062
17,996
11,933
1,194
10,547
4,614
5,273
2006 34,821 17,977
20,223
12,434
1,799
10,474
4,649
5,328
2007 35,485 18,016
20,729
12,357
1,655
10,572
4,975
5,182
2008 36,506 18,208
20,000
12,437
1,054
10,800
4,488
6,000
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
Note: Incomes have been adjusted to 2008 dol ars based in the Personal Consumption Expenditure Index of the National Income and Product Accounts.
a. Prior to the March 1976 survey, the CPS included income from pensions with “other income.”
CRS-34

Income of Americans Aged 65 and Older, 1968 to 2008

Table A-3. Mean and Median Annual Household Income in 2008 Dollars
All Households
Householder and Spouse Under Age 65a
Householder or Spouse 65 or Olderb
Income
Number of
Mean
Median
Number of
Mean
Median
Number of
Mean
Median
Year
Households
Household
Household
Households
Household
Household
Households
Household
Household
(thousands)
Income
Income
(thousands)
Income
Income
(thousands)
Income
Income
1968
62,164
$43,208
$38,254
49,833
$47,879
$42,865
12,331
$24,336
$16,089
1970 64,648
44,724 39,234
51,644 49,773
44,583
13,005 24,676
16,199
1975 72,867
44,626 38,364
57,715 49,359
43,942
15,152 26,601
18,488
1980 82,368
47,549 40,659
64,988 52,423
46,446
17,380 29,323
20,447
1985 88,458
51,308 42,035
69,319 56,101
47,735
19,138 33,950
23,814
1990 94,312
55,745 45,497
73,251 60,933
51,680
21,061 37,698
26,036
1991 95,669
54,806 44,113
74,268 60,161
51,289
21,401 36,223
25,262
1992 96,391
54,849 43,839
75,011 60,210
50,882
21,380 36,039
25,030
1993 97,262
55,205 43,555
75,823 60,475
50,243
21,439 36,568
25,290
1994 99,087
56,197 44,219
77,054 61,773
51,112
22,033 36,698
25,296
1995 99,683
60,560 45,838
77,546 66,697
52,721
22,137 39,060
26,093
1996 101,081
62,332 46,537
78,979 68,738
53,894
22,102 39,444
26,198
1997 102,584
64,663 48,064
80,234 70,952
55,087
22,350 42,085
27,476
1998 103,991
66,698 49,966
81,600 73,068
57,580
22,391 43,482
28,439
1999 104,780
68,266 51,462
82,201 74,717
59,513
22,579 44,779
29,389
2000 106,509
70,803 52,189
83,653 78,040
60,688
22,856 44,314
29,457
2001 109,387
70,552 51,087
85,839 77,878
59,723
23,548 43,845
28,726
2002 111,381
68,915 50,514
87,694 76,066
58,880
23,687 42,442
28,309
2003 112,015
68,953 50,418
87,860 75,801
58,354
24,154 44,043
28,584
2004 113,352 68,615 50,112
89,022
75,270
57,118
24,330
44,267
28,620
2005 114,401 69,595 50,558
89,758
76,104
57,295
24,642
45,883
29,286
2006 116,041 70,854 51,135
91,110
77,496
58,222
24,931
46,583
30,380
2007 116,819 70,104 51,823
91,336
76,314
58,249
25,483
47,846
30,334
2008 117,205 68,426 50,000
90,913
74,447
56,604
26,292
47,608
30,774
Source: CRS analysis of the annual social and economic (March) supplements to Current Population Survey. Data represent the civilian, noninstitutional population.
Note: Incomes have been adjusted to 2008 dol ars based in the Personal Consumption Expenditure Index of the National Income and Product Accounts.
a. Neither the householder nor the householder’s spouse were 65 or older.
b. Either the householder or householder’s spouse was 65 or older.
CRS-35

Income of Americans Aged 65 and Older, 1968 to 2008

Author Contact Information

Patrick Purcell

Specialist in Income Security
ppurcell@crs.loc.gov, 7-7571

Acknowledgments
An earlier version of this report was co-authored by Debra B. Whitman, Ph.D., formerly a Specialist in the
Economics of Aging with the Congressional Research Service and currently the Staff Director of the
United States Senate Special Committee on Aging.

Congressional Research Service
36