No Surprise, the Money is Not Rolling in from 401(k)s and IRAs

As I noted in earlier blog posts, Andrew Biggs of the American Enterprise Institute and retired Towers Watson executive Sylvester Schieber have been leading a chorus of retirement crisis deniers, based in large part on the claim that income surveys don’t count lump-sum distributions from retirement accounts. While no one denies that the Census Bureau’s Current Population Survey income measures don’t include these distributions, it has always been clear from other survey data—notably the Federal Reserve’s Survey of Consumer Finances—that savings in these accounts are so unequally distributed that they make little difference to most retiree households.

Starting in 2014, the Census Bureau began asking some survey respondents about lump-sum distributions as well as other questions designed to better capture income from interest-earning accounts and other sources. Preliminary results are in, and they don’t support Biggs and Schieber’s vision of sugar plums for retiree households. The median income of households 65 and older increased from $35,611 to $37,252—less than 5 percent—a far cry from the 60 percent difference Biggs and Schieber were throwing about. This is less than the increase seen by households age 45-54, whose median income rose from $67,141 to  $70,802, presumably because income from retirement sources increased less than income from other interest-earning accounts.

Biggs and Schieber, usually impressively quick on the draw, have been noticeably silent.