elderly woman's hands holding coins dumped from purse

Politicians hindering efforts to support Social Security had better hope they never get cornered by those who rely on those checks for their only income—because that amounts to 40.2 percent of seniors.

So says a report from the National Institute on Retirement Security, "Examining the Nest Egg: The Sources of Retirement Income for Older America," which points out that although in 2013 pensions did keep nearly a million retirees out of poverty while cutting the cost of public assistance by $4 billion, Social Security did far more—it kept more than 7.5 million households out of poverty and cut public assistance costs by $10 billion the same year.

Of course there are far fewer pensions in 2020 than there were in 2013. And, says the report, just 6.8 percent of American seniors get the "ideal situation" in retirement—income from Social Security, a defined benefit pension and a defined contribution account—to ensure retirement security.

The rest are either solely receiving Social Security, which was never intended to completely replace a worker's income, or cobbling together an income stream from wherever else they can manage.

Social Security was designed as a replacement for 40 percent of income. But in spite of the fact that 40.2 percent of retirees are dependent on it alone to live on, financial planners say that a minimum of 70 percent of working income needs to be replaced in retirement by Social Security/pensions/other income—something that's not happening.

And that's not even accounting for the longer lifespans and higher health costs that fall to today's retirees.

Without that Social Security check in 2013, says the report, the number of poor older U.S. households would have increased by more than 200 percent to 11 million households. And without defined benefit pensions, in the same year, the number of poor older households would have increased by 19 percent to more than four million households. Defined contribution plans? They just don't cut it—with the study estimating that without that income, poor older households would have increased by an estimated five percent.

Then there are marital status, race and education, with the first's effect meaning that the unmarried face lower incomes in retirement than married—with women lagging behind whether married or not. Whites "have consistently higher retirement income than blacks or Hispanics, and those with a college degree have significantly higher retirement incomes than those with only a high school education.

The report's conclusion: Social Security benefits should be expanded to help policymakers fight elder poverty.

Instant Insights /

Social Security is the sole retirement plan of 40 percent of older Americans

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