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June 03, 2009

How are we paying for retirement?

As our retiree population continues to expand, knowing how we will pay for our golden years becomes increasingly important. What is the current breakdown on sources for retiree incomes?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, if we look at people over age 65 - we define that as the retirement cohort - we find that Social Security still is the biggest source of income for those individuals. It funds 40 percent of the income of people over age 65. Second, perhaps surprisingly, are earnings from work. A lot of retired people still work. They work part-time, and those earnings account for 24 percent of their income. And then comes retirement plans, funding 18 percent, and then income from investments, funding 15 percent. So what this, I think, shows is why retirees are so very sensitive to Social Security. And, of course, we still have big questions with Social Security. The trustees of the Social Security account forecast that that program will go bankrupt, if you will, sometime this century. So that's a very sensitive program. It's a program that we need to look at and address, not only for the overall fiscal health of our country but clearly for the fiscal health of retirees."

Posted by Dave at June 3, 2009 08:00 AM