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Tax Records Debunk Social Security Income Myths
18 Aug
Summary
- Only 1 in 7 retirees get 90% of income from Social Security.
- Many retirees fail to report 401(k) and IRA withdrawals.
- Surveys overstate reliance on Social Security by 46%.
Surveys often suggest that a significant portion of retirees rely almost exclusively on Social Security for their income. However, federal tax-linked data presents a contrasting reality. Researchers found that only approximately one in seven retirees depend on Social Security for at least 90% of their income, a figure much lower than survey results indicate.
This disparity is largely due to retirees frequently failing to report withdrawals from their 401(k)s and IRAs in surveys. When Census Bureau researchers linked survey responses to actual IRS tax filings, they discovered that such withdrawals were omitted 46% of the time. This underreporting skews the perception of Social Security's sole financial importance, as most retirees actually have multiple income streams, including pensions and investments.
