INCOME DURING RETIREMENT 6
Question5: Sources of income during retirement
Socialsecurity is one of the sources of income for aged retirees. Theinstitution is the largest income source for retirees, at a rate of86% of older individuals above 65 years getting a monthly payment(Lecture 6A, 2015). However, because of this, it has been noted thatthere is a growing trend of individuals delaying to claim theirbenefits at the age of 65 with the aim of getting bigger and bettermonthly checks. In 2010, almost all older citizens aged 80 and overreceived their monthly checks. At that time the median socialsecurity sum was reported to be $15, 701 (Jezseck, 2010). It isevident that in the United States, social security remains at the topof all sources of income during retirement for about 66% of thebeneficiaries. Of these for about 24% social security accounts for90% or more as the main source of income.
Inaddition, about half of the retirees nearing 49%, draw their incomefrom interests received from assets held, treasury, bonds, IRAs,interest bearing savings, certificate of deposits, home equity,investments and checking accounts (Lecture 6A, 2015). Moreover, 19%of the retired senior individuals receive payments emanating fromdividends accrued from mutual fund shares as well as from stockholdings. Other senior individuals have received income throughrenting out their properties or the earned royalties from earliercareer jobs. However, it is important to note only a small percentageof income is received from such assets. In 2010, the reported medianasset was about $ 12,601 (Jezseck, 2010).
About27% of total annuities and private pensions are accessed by theretired individuals in the society and also about 15% of the totalpublic pensions that are facilitated through federal, state, militaryor local government (Lecture 6B, 2015). The reported median pensionfor those who received in 2010 was worth $ 12,700 (Jezseck, 2010).However, it is paramount to recognize that for those older citizensthat are 65 years and older and used to be government employees,usually get higher pensions than the rest.
Moreover,far fewer retirees receive a large portion of about 5% of their totalincome from continuing to work and some less portion of about 14% oftheir total income (Lecture 6B, 2015). There is a growing positivetrend for older individuals aged 65 and older, who are seekingemployment. In this regard it was reported that a quarter ofAmericans in these categories were self-employed or held a paid jobin 2010. Further, these individuals achieved a median of about$28,000 compared to a median by individuals between the ages of 62-64that was considerably higher at $45,000 in the same year 2010(Jezseck, 2010).
Ofthe total retired individuals about 8 percent keep a majority oftheir retirement incomes in a savings account (Lecture 6B, 2015). 36percent of retired individuals rely heavily on such account as theirmajor source of income. In the working force, about 23 percent ofworkers predict that the FDIC-insured accounts will hold asignificant fraction of their retirement income. And about 43 percentof the workers predict that it will only hold a minor fraction oftheir retirement money and thus a minor source of income (Jezseck,2010).
Failinghealth and the associated medical costs are the biggest drivers ofpoverty in old age. According to health and retirement studies,research has shown that a majority of retirees living below povertylines has suffered from lung diseases, heart problems, cancer orstroke. And about 96 percent of retirees who are poor have medicalconditions such as diabetes, high blood pressure, arthritis orpsychological problems (Milevsky, 2015). However the majority ofseniors relies on the retirement incomes that are more often than notinadequate. Social security remains to be the bedrock of mostretirees and slight changes to this program could have detrimentaleffects on their economic status (Jezseck, 2010).
Nearlyabout half of the elderly population is economically vulnerable inthe United States. Most of the retirees have an income that is lessthan double the supplemental poverty threshold. However, it has beenhighly noted that seniors who are 80 years and above have a higherrate of becoming poor. They are more susceptible to economicvulnerability a 58.1 percent than those aged between the ages of65-79 who have an economic vulnerability of about 44.4 percent(Jezseck, 2010).
Themajority of the elderly poor are women and higher poverty rate isrecorded in elderly women (Lecture 6B, 2015). The most contributingfactor to this is as a result of a lifetime of poorer earnings owingto wage discrimination and absence from work owing to maternityleaves. Of the elderly population about 11 percent are women belowthe poverty line as compared to 6.6 percent of men. Moreover, nearly19 percent of the elderly women who are widowed, single or divorcedare poor. As the age increases for women, their rate of poverty alsoincreases (Milevsky, 2015). For the women who are married, their riskof poverty is coupled by the fact that they may outlive theirspouses. Hence their longer life expectancy than that of theirspouses may render them poor due to no additional income after theirspouse’s death.
Thereare also more poverty levels among the elderly people of color thanthe whites (Lecture 6B, 2015). Older people who are 65 years and arepoor have recorded a 79 percent to be of the African American andHispanic Americans origins. Most of these groups rely heavily onsocial security programs as their main source of income. These groupsof elderly individuals are disadvantaged because they are less likelyto receive other sources of income, such as private retirementbenefits as well as asset income and many other sources of income.African American makes about 9 percent of the total elderlypopulation, but correspond to 21 percent of the poor (Milevsky,2015).
Finally,older individuals from social setting such as the Lesbian, Gay andTransgender community make up a higher percentage of the poor(Lecture 6B, 2015). This is largely due to social factors such asstigma from the society emanating from their sexual orientations.These groups usually are coupled with unfair legal representation andunequal treatment in the society. These communities usually relyheavily on their informal network as a result of societal rejection,but such networks do not frequently sponsor their retirement(Jezseck, 2010). Majority as a result of these individuals are lefton their own, and ultimately in poverty.
Lecture6A, 2015, Lecture6A Productive Aging and Economic Well Being.Class Notes, 2015 Pearson Education Inc. 2015
Lecture5B, 2015, Lecture 5A ProductiveAging and Economic Well Being. ClassNotes, 2015 Person Education Inc. 2015
Milevsky,A. Moshe. (2015). WhyRetirement Annuity of the Future Should Resemble its Past.New York. Cambridge University Press.
JeszeckCharles. (2010). RetirementIncome: Challenges for Ensuring Income During Retirement.Washington DC: United States Government Accounting Office Press.