August 27, 2012
--- A report
published by the Social Security Administration (SSA) contends the Census
Bureau should adapt its retirement income measures to the changing retirement
landscape. ---
According to “Shifting Income Sources of the Aged,” the
Census Bureau’s Current Population Survey (CPS)—one of the primary sources of
income data—greatly underreports distributions from defined contribution (DC)
plans and individual retirement accounts (IRAs), posing an increasing problem
for measuring retirement income in the future. While the CPS shows current
retirees still receive significant retirement income from defined benefit (DB)
plans, the data also indicated DC and IRA balances for those not retired is
increasing.
The CPS measures IRA distributions as money income if they
occur “regularly,” like annuity payments. However, because most IRA
distributions are irregular, they are not measured as income in the CPS, the
report says. In addition, very few DC plan participants take their retirement
distributions as annuities.
Excluding periodic (irregular)
distributions misses much of the money distributed from IRAs and DC plans that
supports retirement consumption. As retirees increasingly rely on periodic
distributions from DC plans and IRAs, the problem of underreporting pension
income in the CPS could become increasingly serious, the report authors
contend.