NCPA - National Center for Policy Analysis


May 1, 2007

Retirement -- for most people most of the time -- is somewhere in between the luxurious apartment condos in Florida and Arizona and the editorial content that warns us of dementia, incipient poverty and the inevitability of long-term care, says economic writer Scott Burns.

According to an Employee Benefit Research Institute (EBRI) survey:

  • Only 6 percent of workers expect to feel well-off in retirement, but 8 percent of retirees feel well-off.
  • Retirees discover that their post-retirement spending compares favorably with their pre-retirement spending; while 20 percent of workers expect and 20 percent of retirees experience large declines in spending, 55 percent of retirees spend the same, or more.

And while another report by the Social Security Administration shows that income falls dramatically as people age -- the median income for married couples declines from $68,612 at ages 55 to 61 to $28,490 for couples 80 and older -- these figures understate actual living standards, says Burns:

  • Taxes tend to take a smaller bite in retirement.
  • Also, many seniors have no payment obligations and own their homes mortgage-free.
  • And retirees are likely to spend down their principal as well as the income from their savings as they get older.

But the understated living standards should not underscore the importance of Social Security, says Burns:

  • Even for those in the second-highest income quintile, Social Security is usually the largest single source of income.
  • In 48 percent of those households, it accounts for half or more of all income.
  • In the bottom 80 percent of all households, income from assets accounts for half or more of income in less than 4 percent of households.
  • Even in the top 20 percent of all households, asset income accounts for half or more of all income in only 12 percent of households.

Source: Scott Burns, "Myths and realities of retirement," Dallas Morning News, May 1, 2007.

For EBRI survey:

For Social Security Administration report: 


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