Abstract

http://ssrn.com/abstract=2181632
 


 



Changing Sources of Income Among the Aged Population


Barry Bosworth


Brookings Institution - Economic Studies Program

Kathleen Burke


Brookings Institution

November 1, 2012

Center for Retirement Research at Boston College Working Paper No. 2012-27

Abstract:     
This paper focuses on an explanation for the large shift over the past two decades in the composition of the income of the aged (65 ), increasing the role of earned income and reducing the importance of income from their own assets. We find that the pattern of change is consistently reported in all of the major household surveys. The increase in the importance of labor income can be attributed to delayed exit from the labor force by workers at older ages. We attribute the increase in work time to a rise in the proportion of more educated workers who choose to continue working, changes within the pension system that previously encouraged early retirement, and a decline in the availability of retiree health insurance. The increase in work time is concentrated among the highest income groups and those with the most education, suggesting that it is largely voluntary. The fall in asset income can be traced to lower interest rates and a reduced propensity for the aged to convert their wealth to annuities. It does not reflect reduced wealth at older ages. A measure of the annuity equivalent of their wealth holdings suggests that there has been no decline for aged units. We also find only a weak relationship between changes in asset income and the decision to remain in the workforce.

Number of Pages in PDF File: 37

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Date posted: November 28, 2012  

Suggested Citation

Bosworth, Barry and Burke, Kathleen, Changing Sources of Income Among the Aged Population (November 1, 2012). Center for Retirement Research at Boston College Working Paper No. 2012-27. Available at SSRN: http://ssrn.com/abstract=2181632 or http://dx.doi.org/10.2139/ssrn.2181632

Contact Information

Barry Bosworth (Contact Author)
Brookings Institution - Economic Studies Program ( email )
1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6000 (Phone)
202-797-6181 (Fax)
Kathleen Burke
Brookings Institution ( email )
1775 Massachusetts Ave, NW
Washington, DC 20036
United States
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