New Research Confirms: No Crisis for Today's Retirees

Forbes ^ | 08/02/2017 | Andrew Biggs

[SeekAndFind]

There’s nothing so classy as a policy wonk reveling in vindication. And I’m nothing if not classy.

But there’s a bigger purpose to be served. What I – and more importantly, my co-author Syl Scheiber – were vindicated about is a 2014 Wall Street Journal op-ed arguing that perceptions of a “retirement crisis” are in part driven by bad data. Specifically, the Census Bureau’s Current Population Survey (CPS) is very poor at measuring the incomes that Americans derive from private retirement plans, including IRAs, 401(k)s and lump sum distributions from traditional pensions. As a result, retirees look poorer and more dependent on Social Security than they really are, and IRAs and 401(k)s look like they’re failing at providing Americans with retirement income. Once you correct for the CPS's poor measurement of private retirement incomes, retirees are a lot better off than you'd think.

The shortcomings of the CPS are important. It’s the official source of the poverty rate, which according to CPS data stands at 9.1 percent for Americans age 65 and over. The CPS is also used by the Social Security Administration in its “Income of the Aged” publications, which are widely cited by researchers and the media. For instance, if you hear that 61% of retirees receive the majority of their income from Social Security, and 31% receive 90% or more from Social Security, that’s the CPS talking through the SSA’s Income of the Aged publication.

At the time Syl and I published our piece, the response was skeptical. The Economic Policy Institute’s Monique Morrissey called our claims “eye-popping,” and not in a good way.

Morrissey argued that our macro point – that “the most commonly cited measure of retirement income ignores at least 60% of the money that seniors receive” – is mistaken,

[Sir Napsalot]

Does this mean many studies find baby boomers haven’t saved enough for retirement are faulty?

[Sir Napsalot]

I mean, I won’t be telling anybody exactly how much I have, either.

[buckalfa]

Been retired for two years, living comfortably on our Social Security income. We always have lived within our means and the thing in our favor is no debt. The problem is the future. Inflation, catastrophic medical expense over and beyond Medicare, government insolvency. All bets are off beyond today. Our modest nest egg could vanish quickly.

[ClearCase_guy]

Problem #1 — you won’t have enough money
Problem #2 — the seas are rising and you are going to drown

Newsflash #1 — you actually probably have enough money

Hang on ... looks like another newsflash is coming in ... stand by ...

[Sam Gamgee]

I know so many people who are seriously screwed. I am careful and fairly wise, and still think I will barely live much better than I do now. Others I know hardly have cent put aside, many don't even have pensions, ect. Don't know about boomers but Gen X is screwed.

[hal ogen]

I guess people must live with the consequences of their decisions . Who woulda thunk???