What Explains Low Old-Age Income? Evidence from the Health and Retirement Study
We examine respondents in the Health and Retirement Study (HRS) to observe how their financial situations unfolded as they aged. We focus on low income older adults and follow them over time to identify the factors associated with having low income at baseline and thereafter. We find that (a) real income remained relatively stable as individuals approach and enter retirement, and progress through their retirement years, and (b) labor force participation declined and thus earnings became less important with age, while Social Security and retirement savings rose as a proportion of annual income.
This research was performed pursuant to a grant from the Institute of Consumer Money Management; the authors also acknowledge support from the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania. The authors particularly thank Yong Yu for invaluable research help with the project. Any opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy any institutions with which the authors are affiliated. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Olivia S. Mitchell
I am an Independent Trustee of the Wells Fargo Advantage Funds Board and I am a NBER Research Associate. None of these parties had the right to review or influence this paper in any way prior to circulation.