The U.S. Census Bureau “dramatically underreports” some retirement income but still provides a relatively accurate picture when it comes to the middle class, according to a new brief from the Center for Retirement Research at Boston College.
Alicia Munnell, center director, and Anqi Chen, research associate, found that because the Census Bureau's widely used Current Population Survey does not capture 401(k) plan and individual retirement account assets, the amount of U.S. retirement income might be off by more than $200 billion when measured against what is reported to the IRS and the Federal Reserve's Survey of Consumer Finances.
The population survey reported $18 billion in defined contribution income in 2012, compared to $229 billion reported to the IRS and $220 billion reported in the Survey of Consumer Finances.
While that throws the Current Population Survey value into question, “all is not lost,” the Center for Retirement Research brief states, because the majority of households hold few such defined contribution assets. The incomplete picture really affects only the top two income brackets, which hold most of the retirement wealth. The Census Bureau survey might be understating retirement assets by as much as 25%, the CRR said.
As defined contributions assets take up a growing share of retirement income, their omission in the Census Bureau's survey “needs to be fixed,” the authors said.
The report can be found at www.pionline.com/CRR-120814.