Trends in Retirement Income Adequacy: Evidence from IRS Tax Data
John Beshears, James Choi, David Laibson, Shanthi Ramnath

Concerns that Americans are not saving enough for retirement, and that this problem is getting worse over time, are common. For example, Munnell, Hou, and Sanzenbacher (2018) estimate that the fraction of working-age American households that will have inadequate income in retirement to maintain their pre-retirement standard of living has grown from 31% in 1983 to 40% in 1998 to 50% in 2016. The alleged decline in economic security in retirement has been attributed to declines in the personal savings rate, the prevalence of defined benefit pensions, and the real interest rate. On the other hand, Biggs (2019) argues that there is no retirement savings crisis. Among other things, he points out that over time, the over-65 poverty rate has fallen and median income in retirement has risen.
In this paper, we examine trends in retirement income across the 1930-1941 birth cohorts using a 5% random sample from IRS tax data, comprising 22.6 million personyears. An advantage of our analysis is that we do not rely upon survey reports of income, whose accuracy has been a subject of concern (e.g., Bee and Mitchell, 2017; Chen, Munnell, and Sanzenbacher, 2018).

The research reported herein was performed pursuant to grant RDR18000003 from the US Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA, any agency of the Federal Government, or NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. Justin Katz provided excellent research assistance. Beshears is on the advisory board of Nutmeg, a robo-advice asset management company. Laibson has been compensated to present academic research at events hosted by financial institutions. See the authors’ websites for a complete list of outside activities.