Industry News

On January 14, 2020, the National Institute on Retirement Security (NIRS) published its report, Examining the Nest Egg: The Sources of Retirement Income for Older Americans.  This report examines the sources of retirement income for older Americans to determine the number of older Americans that achieve the “three-legged stool” of retirement savings including: Social Security, a defined benefit pension, and individual savings (typically through a defined contribution plan).

In addition, the report identifies sources of retirement income that varies based on demographic characteristics including gender, race, and education.  The analysis also studies the effects of various sources of retirement income on poverty status and the likelihood of older Americans experiencing a hardship during retirement (i.e., food insecurity).

According to NIRS, the report finds that “a large portion (40 percent) of older Americans rely only on Social Security income in retirement while only a small percentage of older Americans (seven percent) receive income from Social Security, a defined benefit pension, and a defined contribution account.  Retirement income from these three sources is widely considered to be the ideal situation to ensure retirement security, particularly for the middle class.  Retirees with these three sources of income are far less likely to face poverty and economic hardship. “   

The report concludes, “Protecting, strengthening, and expanding Social Security should be a top priority for those who are interested in retirement security.”  It adds, “Defined benefit pensions continue to have an important role to play in reducing elder poverty.  Nearly a quarter of older persons receives income from a pension and defined benefit income meaningfully reduces the number of poor and near-poor older households.  It is clear from the data that pensions serve an important function in keeping working families in the middle class in retirement.”

The report is available here.