The impact of retirement account distributions on measures of family income.

Abstract

In recent decades, employers have increasingly replaced defined benefit (DB) pensions with defined contribution (DC) retirement accounts for their employees. DB plans provide annuities, or lifetime benefits paid at regular intervals. The timing and amounts of DC distributions, however, may vary widely. Most surveys that provide data on the family income of the aged either collect no data on nonannuity retirement account distributions, or exclude such distributions from their summary measures of family income. We use Survey of Income and Program Participation (SIPP) data for 2009 to estimate the impact of including retirement account distributions on total family income calculations. We find that about one-fifth of aged families received distributions from retirement accounts in 2009. Measured mean income for those families would be about 15 percent higher and median income would be 18 percent higher if those distributions were included in the SIPP summary measure of family income.