Do Census Data Understate Retirement Income?
The brief’s key findings are:
- Some claim that retirees are better off than many think, because Census’s Current Population Survey (CPS) does not capture most 401(k)/IRA income.
- Indeed, the CPS dramatically under-reports 401(k)/IRA income, a serious problem given the shift from defined benefit to defined contribution plans.
- Interestingly, though, the problem is largely concentrated among upper-income households, which hold most of the 401(k)/IRA wealth.
- As a result, the CPS currently provides a reasonably good measure of retirement income for the typical middle-income household.
- Moreover, Census is currently testing ways to improve the CPS survey design to better incorporate all sources of retirement income.