Examining the Nest Egg

Jan 31, 2020 / Amanda Chase, Horsesmouth Assistant Editor

Retirement security is built on a foundation of secure income during retirement. For decades, researchers, financial advisors, and others have encouraged working Americans to pursue the so-called “three-legged stool” of retirement savings: Social Security, a defined benefit pension, and individual savings, typically through a defined contribution plan. This National Institute on Retirement Security report examines the actual sources of retirement income for older Americans to find out, in part, just how many older Americans actually achieve on the three-legged stool in retirement.

Only a small percentage of older Americans, 6.8 percent, receive income from Social Security, a defined benefit pension, and a defined contribution plan (the three-legged stool). A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement. Roughly equal numbers of older Americans receive income from defined benefit pensions as from defined contribution plans. This is likely to change in the future as fewer private sector workers have access to defined benefit pensions now than in the past.

Defined benefit pensions have a much greater poverty-reducing effect than defined contribution plans. This may be partly due to the fact that recipients of defined contribution income tend to have much higher net worths than the recipients of defined benefit income.

Unmarried older men and unmarried older women receive retirement income from similar combinations of sources, but the older men consistently have higher incomes than the older women. Both unmarried men and women have lower retirement incomes than married older men and women. Race and educational attainment both have very strong roles to play in determining retirement outcomes. Whites have consistently higher retirement incomes than blacks or Hispanics, and those with a college degree have significantly higher retirement incomes than those with only a high school education. Race and educational attainment also intersect in meaningful ways.


This material is provided exclusively for use by individuals with an active license to the Savvy Social Security Planning Program. Use of this material is subject to the Social Security Planning Program Agreement and applicable copyright laws. Unauthorized use, reproduction or distribution of this material is a violation of federal law and punishable by civil and criminal penalty. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness is not guaranteed and all warranties express or implied are hereby excluded.

© 2020 Horsesmouth, LLC. All Rights Reserved.