Family Economics Review [1994, Volume 7, Number 2]

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I L Y
M I C S •••
Feature Articles • 2
11
19
Nonmonetary Assistance and Advice Between
Baby-Boomer Respondents and People in Other
Households
Julia M. Dinkins
Rural Southern Elderly: Housing Characteristics
Julia M. Dinkins
Trends in the Economic Status of Retired People
Nancy E. Schwenk
Research Summaries • 28 Can IRA's Raise the Low National Savings Rate?
30 Social Security and Older Workers
31 Household Characteristics Mfect Food Choices
33 The Economic Well-Being of Farm Operator Households
Regular Items • 36 Recent Legislation Mfecting Families
37 Data Sources
38 Charts From Federal Data Sources
40 Journal Abstracts and Book Summary
41
42
Cost of Food at Home
Consumer Prices PROPERTY OF THE
LIBRARY
JUN 071994
University of North Carolina
at Greensboro
2
Feature Articles •
Nonmonetary Assistance and
Advice Between Baby-Boomer
Respondents and People in
Other Households
By Julia M. Dinkins
Consumer Economist
Family Economics Research Group
Families and individuals interact with people in other households for many
reasons, one of which is to provide or obtain help with day-to-day tasks.
The 1987-88 National Survey of Families and Households (NSFH) was
used to examine selected socioeconomic and demographic characteristics
of baby-boomer respondents who, over a 1-month period, provided unpaid
help to, or received it from, people in other households. Help with baby­sitting
or child care, transportation, home or car repairs, other kinds of
household tasks; and advice, encouragement, and moral or emotional
support were reported. A majority of baby-boomer respondents were
involved with interhousehold assistance (85 percent) and advice (80 percent).
They were more likely to give and receive help (assistance, 63 percent;
and advice, 62 percent) than to give help only, receive help only, or to
neither give nor receive help. Those that boomers helped and were helped
by were more likely to be nonrelatives than relatives. These findings are
useful to family professionals who are concerned about this "sandwich"
generation with multiple responsibilities to children and parents.
amities and individuals
interact with people in
other households for many
reasons, one of which is to
provide or obtain help with day-to-day
tasks so that demands on resources are
met. This help may be transferred
(one-way transaction) or exchanged
(two-way transaction), nonfmancial
or fmancial, voluntary or involuntary,
may occur between or among genera­tions,
and may be in the form of goods
or services (3 ,6). These interactions
are ot particular importance to baby
boomers because they are the middle
or "sandwich" generation. They have
responsibilities to their children and
their parents; however, they may also
receive assistance from their parents or
adult children.
In a study of intergenerational assistance,
researchers found that among elderly
people with at least one living child,
23 percent gave household assistance
to, and 38 percent received household
assistance from, adult children residing
in other housing units. However, the
adult children were less likely to report
receiving (13 percent) and providing
(20 percent) household assistance (4).
The degree of differences between the
generations may reflect family size,
whether exchanges were made with
Family Economics Review
only one child or all children, and the
correlation between making an ex­change
and family size (4). In a study
of three-generation Black families, the
grandparent generation was more likely
than the adult child and grandchild
generations to receive companionship,
goods and services, transportation, and
help when ill. Those in the adult child
generation were more likely to receive
advice and help with problem solving,
encouragement, and fmancial help (11).
The type of help provided or received
is related to a family's passage through
the life cycle, socioeconomic and demo­graphic
characteristics of recipients and
donors, and events that may prompt the
need for short- or long-term assistance.
Some research indicates that advice is
more likely to be given to young adults
than to middle-age adults (1). As ex­pected,
younger generations are more
likely than older generations to receive
child-care related assistance (11). It
appears that adults will assist their
seriously mentally ill siblings when
parents are not available to do so (5).
A conclusion from one study indicates
that support between generations may
be episodic.
"Thus, parents more often provide
support to their adult children when
they are young and getting started,
when they have young children, or
when they are ill. Children increase
support to their parents when they
are ill. The amount and type of
support depends on the resource
levels of each generation, and on
competing demands for their
support." (3, p. 18)
What kind of interhousehold assistance
and advice is the baby-boomer genera­tion-
a large segment of the U.S.
population-giving and receiving as it
enters middle age? Because of decisions
made earlier in the life cycle, perhaps
baby boomers have demands on their
resources that may not have been
shared by their parents' generation at
1994 Vol. 7 No.2
middle age. The baby-boom generation
has dual-earner households and geo­graphic
mobility and has divorced
more often. Also, their parents are
living longer, so baby boomers are
more likely than previous generations
in middle age to have parents who may
provide or need assistance. These types
of life-cycle events influence the de­mands
placed on boomers for non­monetary
resources to maintain their
level of living. A more comprehensive
picture of interhousehold transfers and
exchanges is needed in order to deter­mine
how boomers are meeting and
helping others to meet some demands
of day-to-day living. The purpose of
this study is to examine the extent
to which baby-boomer respondents
receive and provide interhousehold
nonmonetary assistance (baby-sitting
or child care, transportation, home or
car repairs, and other household tasks)
and advice.
Source of Data and Sample
Data for this study are from the 1987-88
National Survey of Families and House­holds
(NSFH). The NSFH collects data
on a range of American family life
issues, including couple and parent­child
interactions, economic and psy­chological
well-being, family attitudes,
and adult family transitions (10). The
NSFH is a national probability sample
of 13,017 respondents (19 years old
and older). Data were weighted.
In each household, one adult was
randomly selected as the primary
respondent. On a self-administered
questionnaire, respondents indicated if
they provided or received unpaid help
and support to and from people living in
other households during the past month. 1
1The questionnaire item was: "Next, we are
interested in the help and support that you receive
from or give to other people who are NOT living
with you in this household. We are talking here
about help that is not paid for. During the past
month have you GIVEN the following kinds of
help TO: ... During the past month have you
RECEIVED the following kinds of help
FROM: ... "
• ... baby-boomer
respondents
participated in
exchanges and
transfers of assis­tance
most often
with nonrelatives ...
3
Distribution of respondents: Nonmonetary assistance and advice provided and received between
households over a 1-month period in 1987-88
Assistance
<23 23-41 42-65 >65
years years years years
old old old old
Boomers
The types of help were baby-sitting or
child care; transportation; repairs to the
home or car; help with other kinds of
work around the house; and advice,
encouragement, and moral or emotional
support. For each category of assistance
and advice, respondents were instructed
to indicate people not living in their
household to whom they gave help and
from whom they received help. The
response categories were no one; friends,
neighbors, and coworkers; sons or
daughters (19 years old and older);
parents; brothers or sisters; and other
relatives.
4
0 Did not provide and
did not receive
Provided and received
• Received only
• Provided only
Interhousehold Nonmonetary
Assistance and Advice Patterns
by Age
Less than half ( 43 percent) of the re­spondents
were baby boomers (23-41
years old in 1988). Eleven percent were
less than 23 years old, 32 percent were
42-65 years old, and 14 percent were
over 65 years old. As respondents' age
increased, the likelihood that inter­household
nonmonetary assistance or
advice occurred decreased (see figure).
Whereas 89 percent of the youngest
age group participated in transfers and
exchanges of interhousehold assistance,
85 percent of boomers, 76 percent of
the 42-65 age group, and 66 percent
of the oldest age group participated.
Advice
<23 23-41 42-65 >65
years years years years
old old old old
Boomers
Eighty-three percent of those less
than 23 years old and 80 percent of
the boomers transferred and exchanged
advice, compared with 74 percent of
the 42-65 age group and 61 percent of
the oldest age group.
Nonmonetary Assistance and
Advice Patterns by Baby-Boomer
Respondents' Characteristics
When assistance and advice were
combined, 77 percent of baby-boomer
respondents provided and received assis­tance
and advice; 10 percent provided
only; 2 percent received only. Eleven
percent did not participate. For the rest
of this article, assistance and advice are
reported separate! y.
Family Economics Review
A majority (63 percent) of baby-boomer
respondents both provided and received
assistance (table 1, p. 6). A similar ma­jority
(62 percent) of the baby boomers
provided and received advice (table 2,
p. 7).
Marital Status
Marital status had only a small effect on
whether boomers exchanged and trans­ferred
assistance or advice. Married
boomers were somewhat more likely
than boomers in other marital categories
to give and receive assistance (table 1)
and to give advice (table 2).
Race/Ethnic Origin
Respondents of Hispanic origin were
least likely, compared with other race
or ethnic groups, to give and receive
assistance or advice. Non-Hispanic
Whites were most likely to give and
receive assistance or advice.
Gender
Males were less involved in interhouse­hold
assistance and advice than females.
Sixteen percent of males did not provide
or receive assistance and 25 percent did
not provide or receive advice. However,
among those participating, males were
more likely than females to give assis­tance
or advice without receiving it.
Education
The higher the educational level of
baby-boomer respondents, the higher
the percentage of those who provided
and received assistance and advice.
Sixty-six percent of the baby boomers
with a college degree, compared with
53 percent of those with less than a
high school education and 62 percent
of those with a high school education,
provided assistance to and received
assistance from people in other house­holds.
Seventy-five percent of those
with a college education exchanged
advice with people in other households,
compared with 40 percent of those with
less than a high school education who
1994 Vol. 7 No.2
did so. Baby-boomer respondents with
less than a high school education were
most likely to neither give nor receive
assistance or advice.
Household Size
People who lived alone were active in
transfers and exchanges. Only 16 per­cent
did not participate in assistance
and 13 percent did not participate in
advice interactions. Among those par­ticipating,
single-person households
were more likely than larger households
to give assistance without receiving it.
Regarding advice, single-person house­holds
were more likely than larger
households to both give and receive
advice.
Household Income
Since low-income families have fewer
monetary resources, it might be ex­pected
that they would be more likely
than higher income families to receive
or exchange nonmonetary resources,
but this was not the case. Baby boomers
with a low household income were less
likely to participate in assistance and
advice interactions than those with
higher income.
Types of Nonmonetary
Assistance and Advice Given
or Received
Considering the various types of assis­tance
together with advice, boomers
were most likely to exchange and
transfer advice (80 percent) (table 3,
p. 8). After advice, transportation was
likely to be exchanged and transferred,
followed by baby-sitting or child care,
other household tasks, and home or car
repairs. With each type of assistance,
boomers were more likely to provide or
provide and receive help than receive
only.
• ... boomers with
lower incomes, less
education, and who
were non-White were
not as likely as others
to be involved with
interhousehold
exchanges.
5
Table 1. Nonmonetary assistance provided or received by baby-boomer respondents over a 1-month period
in 1987-88
Provided Received Provided and Neither provided
Characteristic only only received nor received
Total (unweighted) 1,056 412 4,048 947
Percentage
All baby-boomer respondents 17 5 63 15
Householder
Marital status
Married 17 6 64 13
Separated, widowed, divorced 15 6 63 16
Never married 17 6 59 18
Race
Non-Hispanic Black 17 8 55 20
Non-Hispanic White 16 5 66 13
Hispanic 1 origin 18 9 46 27
Other 18 6 58 18
Gender
Male 19 5 60 16
Female 14 7 65 14
Education
Less than high school 17 8 53 22
High school 18 6 62 14
Some college 16 5 65 14
College degree 14 7 66 13
Household
Number of people in household
One 24 6 54 16
Two 21 5 55 19
Three 15 8 64 13
Four or more 14 5 67 14
lncome2
Less than $10,000 17 8 57 18
$10,000-$19,999 16 6 62 16
$20,000-$29,999 19 6 62 13
$30,000- $39,999 17 5 67 11
$40,000-$49,999 15 5 70 10
$50,000+ 17 5 65 13
~Hispanic may be of any race.
Total household income, including income of respondent and spouse from interest, dividends, and other investments.
6 Family Economics Review
·- •-- Table 2. Advice provided or received by baby-boomer respondents over a 1-month period in 1987-88
Provided Received Provided and Neither provided
Characteristic only only received nor received
Total (unweighted) 961 234 4,004 1,264
Percentage
All baby-boomer respondents 15 3 62 20
Householder
Marital status
Married 17 3 61 19
Separated, widowed, divorced 13 5 62 20
Never married 11 4 63 22
Race
Non-Hispanic Black 17 5 52 26
Non-Hispanic White 15 2 66 17
Hispanic 1 origin 17 7 37 39
Other 10 3 63 24
Gender
Male 18 4 53 25
Female 12 3 70 15
Education
Less than high school 16 6 40 38
High school 18 4 55 23
Some college 14 3 68 15
College degree 12 1 75 12
Household
Number of people in household
One 11 3 73 13
Two 15 2 64 19
Three 14 4 62 20
Four or more 17 3 58 22
lncome2
Less than $10,000 13 3 55 29
$10,000 - $19,999 12 4 60 24
$20,000-$29,999 15 4 61 20
$30,000- $39,999 19 3 63 15
$40,000-$49,999 19 3 64 14
$50,000+ 16 71 12
~Hispanic may be of any race.
Total household income, including income of respondent and spouse from interest, dividends, and other investments.
1994 Vol. 7 No.2 7
People With Whom
Nonmonetary Assistance and
Advice Were Given or Received
Over a 1-month period, baby-boomer
respondents participated in exchanges
and transfers of assistance most often
with nonrelatives (friends, neighbors,
and coworkers), then parents, siblings,
other relatives, and children 19 years
old and older who lived independently
(table 4). Baby boomers were more
likely to provide than to receive assis­tance
from each source. Boomers were
more likely to provide advice to non­relatives,
then siblings, parents, other
relatives, and children 19 years old and
older who lived independently. They
were more likely to provide than to re­ceive
advice from most sources except
they were more likely to receive advice
from parents than to advise them.
The source of assistance varies by the
type of assistance as shown in table 5,
but the general pattern of nonrelatives,
then parents, siblings, other relatives,
and children holds except for providing
child care and household tasks. In every
category except receiving child care
from parents, boomers were more likely
to provide assistance than receive it.
However, findings from previous studies
have shown that some respondents are
more likely to overreport providing
compared with receiving help (4,12,13).
Thus, findings from the current study
on exchanges and transfers of support
by boomers may be somewhat biased
in favor of providing help.
Conclusion and Discussion
Results document that 89 percent of
baby-boomer respondents are involved
in nonmonetary exchanges or transfers
of assistance or advice with people in
other households. They have a network
of linkages with people with whom
they provide and receive unpaid non­monetary
assistance and advice. People
with whom boomers transfer and
8
Table 3. Interhousehold support: Types of nonmonetary assistance
and advice provided or received by baby-boomer respondents over a
1-month period in 1987-88
Type
Baby-sitting or child care
Transportation
Home or car repairs
Other household tasks
Advice1
Provided
only
19
31
22
25
15
Neither
Provided provided
Received and nor
only received received
Percentage
11 26 44
8 30 31
10 18 50
9 21 45
3 62 20
1
Consists of advice, encouragement, and moral or emotional support.
Table 4. Interhousehold support: People with whom baby-boomer
respondents provided or received nonmonetary assistance and advice
over a 1-month period in 1987-88
Assistance Advice
Provided Received Provided Received
Source to
Nonrelatives 58
Parents 30
Siblings 27
Other relatives 17
Children1 8
1
Nineteen years old and older who live independently.
exchange assistance for baby-sitting or
child care, transportation, home or car
repairs, other household tasks, and
advice are more likely to be nonrelatives
than parents, siblings, adult children,
or other relatives. These findings are
useful to those who study how families
develop nonmonetary resources to
enhance their well-being.
from to from
Percentage
44 57 44
26 24 29
19 31 21
13 13 10
0 8 0
As has been indicated, "Family
economists are concerned about the
well-being of families that have not
achieved or maintained economic self­sufficiency.
Research on granting
[transfers], which is a component of
the network support system, will pro­vide
valuable information regarding
household economic weU-being by
estimating the level of interhousehold
Family Economics Review
Table 5. Interhousehold support: People with whom baby-boomer respondents provided or received
nonmonetary assistance over a 1-month period in 1987-88, by type of support
Baby-sitting or Home or car Other
child care Transportation repairs household tasks
Source Provided Received Provided Received Provided Received Provided Received
to from
Nonrelatives 29 20
Parents 2 18
Siblings 18 10
Other relatives 8 7
Children1 2
1
Nineteen years old and older who live independently.
grants and the factors associated with
such transfers ... " (8, p. 320). In this
study, it appears that boomers with
lower incomes, less education, and who
were non-White were not as likely as
others to be involved with interhouse­hold
exchanges. For professionals work­ing
with limited-resource families, it is
important that they recognize the limita­tions
these families may face when seek­ing
assistance from friends and family
members who may also have similar
socioeconomic and demographic
characteristics. These professionals
can assist by encouraging families to
become more involved in interhouse­hold
exchanges as a means of substitut­ing
or supplementing monetary income.
Results from this study and another
study of loans between baby-boomer
householders and people in other house­holds
(7) point to the necessity of
differentiating types of help received
and provided. A majority of the boomer
respondents exchanged and transferred
assistance (85 percent) and advice (80
percent). Only one-third of the baby­boomer
householders exchanged and
transferred loans (7).
1994 Vol. 7 No.2
to from to
Percentage
45 27 25
14 11 14
13 8 9
8 5 6
5 1 1
Other fmdings from this study indicate
free transportation and child care may
be exchanged frequently. These are
valuable resources. In 1990, transporta­tion
accounted for 19 percent of total
expenditures for baby boomers (2).
Child-care costs can also create major
demands on a family 's income (9). The
percentage of income spent on child
care is greatest for those with a family
income less than $15,000 (23 percent),
compared with those whose income
is above $50,000 (6 percent). The
National Association for the Education
of Young Children identified relatives
as the source of free or low-cost supple­mental
child care. Having information
on other sources of supplemental care
available through transfers and exchanges
will enhance estimates on the demand
and supply of child care.
from to from
17 22 15
8 23 8
6 9 6
4 6 4
2 3
Providing nonmonetary assistance and
advice is not without costs. Helping
others means that boomers are using
their time (and perhaps other resources)
to provide services. However, receiving
nonmonetary assistance and advice
from others enables baby boomers to
allocate their money income in other
ways--for other fixed or flexible expendi­tures
or for savings and investments.
With so many baby boomers involved
in these private transfers and exchanges,
the value of these activities to their
level of living must not be overlooked.
9
References
1. Cooney, T.A. and Uhlenberg, P. 1992. Support from parents over the life course:
The adult child's perspective. Social Forces 71(1):63-84.
2. Dinkins, J. 1993. Expenditures of younger and older baby boomers. Family
Economics Review 6(2):2-7.
3. Eggebeen, D.J. and Hogan, D.P. 1990. Giving Between the Generations in
American Families. Population Issues Research Center, Working Paper No. 1990-
21, Institute for Policy Research and Evaluation, The Pennsylvania State University.
4. Freedman, V.A., eta!. 1991. Intergenerational transfers: A question of perspective.
The Gerontologist 31(5):640-647.
5. Horowitz, A.V. 1993. Adult siblings as sources of social support for the seriously
mentally ill: A test of the serial model. Journal of Marriage and the Family
55(3):623-632.
6. Jennings, J.T. and Bennefield, R.L. 1992. Who's Helping Out? Support Networks
Among American Families: 1988. Current Population Reports, Household Economic
Studies. Series P-70, No. 28. U.S. Department of Commerce, Bureau of the Census.
7. Johnson, G. and Dinkins, J.M. 1993. Loans between baby-boomer householders
and people in other households. Family Economics Review 6(4):2-8.
8. Puang, T.C. and Metzen, E.J. 1993. Interhousehold grants in peninsular Malaysia:
Impact of grantors' characteristics on amount of grants given. Journal of Family
and Economic Issues 14(4):317-342.
9. Schwenk, N.E. 1993. Child-care trends. Family Economics Review 6(2):8-16.
10. Sweet, J., Bumpass, L., and Call, V. 1988. The Design and Content of the
National Survey of Families and Households. Working Paper NSFH-1, Center for
Demography and Ecology, University of Wisconsin-Madison.
11. Taylor, J.T., Chatters, L.M., and Jackson, J.S. 1993. A profile of familial
relations among three-generation black families. Family Relations 42:332-341.
12. Williams, F.L. 1991. Interfamily economic exchange: A function of culture or
economics. Lifestyles: Family and Economic Issues 12(3):235-252.
13. Williams, F.L. 1988. Value provided by interfamily economic exchange of
goods and services in two cultures. Lifestyles: Family and Economic Issues
9(3):221-239.
10 Family Economics Review
--- 1994 Vol. 7 No.2
•
Rural Southern Elderly:
Housing Characteristics
By Julia M. Dinkins
Consumer Economist
Family Economics Research Group
Using 1987-88 data from the regional research project (RR-4) entitled
"Quality of Well-Being of the Rural Southern Elderly: Food, Clothing,
Shelter," this study examines the relationship between housing charac­teristics
and selected socioeconomic and demographic characteristics of
Southern elders who lived in rural counties. Variables measuring housing
characteristics consisted of tenure, type of housing, household composition,
yearly amount spent on maintenance and upkeep, concern for housing,
degree of difficulty meeting housing costs, repair needs, condition of the
kitchen, and location of the home in relation to neighbors and services.
Elders were likely to own their homes, live in detached single-family units,
live in multiperson households, and spend less than $200 on maintenance.
Elders who believed they had housing problems (costs, repair needs, and
condition of kitchen) were more likely to be in farm/nonfarm areas, Black,
and with income less than $400 per month. Results can help professionals
who must provide housing services to a diverse population of elderly
citizens.
etween 1980 and 1992, the
elderly resident population
65 years old and older in­creased
by 26.4 percent
while the total U.S. resident population
increased by 12.6 percent. The West
( 40.6 percent) and the South (31.4 per­cent)
had larger increases of people 65
years old and older than did the Mid­west
(18.9 percent) and Northeast (17.3
percent) (2,3). Among movers 65 years
old and older, 19 percent each of those
in the South and West, compared with
14 percent in the Northeast and 15
percent in the Midwest believed they
moved to a home that was worse than
their previous home (13).
Although some older Americans move,
most prefer to age in place. Eighty-four
percent of elders (55 years old and older)
surveyed in 1989 did not want to ever
move (1). Of people who moved be­tween
1989 and 1990, only 4 percent
were 65 years old and older, whereas 29
percent were 1-19 years old, 44 percent
were 20-34 years old, 17 percent were
35-49 years old, and 6 percent were
50-64 years old (5). Among preretirees
(40 years old and older) who resided in
Idaho, Michigan, Oregon, and Utah,
53 percent said a decision to move from
their present home to an apartment when
their health declined would be very dif­ficult
to make. Fifteen percent indicated
it would be very difficult for them to
move from their present home to one
that was more suited for retirement. Even
though the decision to move would be
difficult, most would not want to share
their home with others. Eighty-one
percent said the decision to share their
home with someone else would be very
difficult to make (9).
11
•
12
A majority ...
described their
[housing] concerns
as moderate or great.
Aging in place requires long-term
planning. However, it has been esti­mated
that 53 percent of older people
have done little or no planning for their
future housing needs (1). Those who
had not made plans for housing needs
during retirement were likely to be
widowed, divorced, separated, or never
married; be renters; and have many
health limitations. Elders who wanted
to age in place tended to be widowed
and live in "naturally occurring retire­ment
communities"1 (1).
Elders' ability to age in place is influ­enced
by their housing-its condition
and costs associated with day-to-day
operations, maintenance, upkeep, and
adaptations. Housing expenditures for
people 65 years old and older account
for a major share of their total expendi­tures.
In 1990, housing accounted for
32 percent ($5,875) of elderly home­owners'
and 43 percent ($5,112) of
elderly renters' total expenditures.
These percentages were higher for
widows living alone: 41 percent ($4,955)
for homeowners and 47 percent ($4,892)
for apartment renters (11). Other studies
found that 16 percent of older Americans
(55 years old and older) who moved
said they could not afford to stay in
their home (1), and 12 percent of elderly
movers (65 years old and older) did so
in order to lower their rent or mainte­nance
costs (13).
In 1991, 8 percent of all elderly house­holders
resided in units with physical
problems. These older people lived in
homes that had plumbing problems,
followed by problems with heating, up­keep,
and electricity. Of those whose
housing problems were described as
severe, 41 percent lived in the South and
35 percent lived in rural areas. Of those
whose housing problems were charac­terized
as moderate, 73 percent lived in
1Neighborhoods or buildings where the majority
of the residents are age 60 or older.
the South and 37 percent lived in rural
areas. Their homes tended to have
heating problems, followed by problems
with upkeep, the kitchen, and plumbing
(13).
Elders' ability to age in place may be in­fluenced
by their perceptions. Previous
studies indicate that perceptions are
important in determining the adequacy
of resources, the likelihood that families
will change their situation (4), and satis­faction
with financial status (12). Other
findings indicate that older people tend
to have more positive perceptions of
well-being than do younger people (8).
Also, among elders whose housing
problems have been depicted as severe,
39 percent believe their current home is
the best place for them to live as do 33
percent of those with moderate housing
problems (13). Most elders (82 percent)
believe their home meets their needs
(1). Another study found that elders who
are most concerned about housing are
likely to believe their housing situation
is worse than that of others they know
(6).
Wheelock, Bekele, and Cheatham (14)
found that housing, food, electricity
or gas, and medical costs were major
cost-of-living concerns among the rural
Southern elderly. Among those age 55
and older with health problems, pay­ments
were believed to be too high for
utilities (53 percent), property taxes
(52 percent), homeowners' or renters'
insurance (41 percent), mortgage or
rent payments (36 percent), and upkeep
and maintenance (28 percent) (1).
At a time when the home becomes more
and more the center for their day-to-day
activities, some elderly people may not
have the resources necessary to modify
their current housing situation to better
meet their changing needs. This study
examines the relationship between
housing characteristics and selected
Family Economics Review
socioeconomic and demographic charac­teristics
of Southern elders who live in
rural counties. Housing characteristics
include tenure, type of housing, house­hold
composition, the yearly amount
spent on maintenance and upkeep, de­gree
of concern for housing, degree of
difficulty meeting housing costs, repair
needs, condition of the kitchen, and
elders' belief that the location of their
home is an issue. Socioeconomic and
demographic characteristics are the
respondent's race and monthly income.
Another characteristic is locality. In this
study, rural counties are those with no
more than a 30-percent urban population.
Some elders resided in rural farm or
rural nonfarm areas and are reported
as residents of farm/nonfarm areas.
The other elders lived-within a rural
county-in towns with a population of
50,000 or fewer people and are reported
as residents of towns.
Data
The RR-4 regional research project
entitled "Quality of Well-Being of the
Rural Southern Elderly: Food, Clothing,
Shelter" was supported by the Council
of Home Economics Administrators,
Association of Research Directors, and
the U.S. Department of Agriculture's
Cooperative State Research Service
(CSRS) (10). Cooperating States were
Alabama, Arkansas, Georgia, Kentucky,
Maryland, Mississippi, Missouri,
South Carolina, Tennessee, Texas,
and Virginia. The sample for the project
consisted of 3,284 people 65 years old
and older who were noninstitutional
and ambulatory. The purpose of the
overall project was to study actual and
perceived clothing, nutrition, and hous­ing
status of the elderly as influenced by
social, economical, psychological, and
physical factors.
To obtain a representative sample of
elderly people living in Southern rural
counties, that is, those with no more
than 30-percent urban population, the
1980 U.S. Census population tapes were
1994 Vol. 7 No.2
used to determine the total population
and the elderly population by county.
Systematic random sampling procedures
based on the proportion of elderly
population in each county were used to
choose six rural counties in each State
(three counties in South Carolina) (7)
from a list of rural counties. Each State
had 60 sampling units, each containing
five elderly households. Using a list
of the cumulative number of elderly
people in each enumeration district, 60
sampling units in the six counties were
allocated to enumeration districts using
sampling intervals of one-sixtieth of the
total elderly population in each of the
sample counties.
Face-to-face interviews were used to
collect data from June 1987 through
November 1988. In households with
more than one person 65 years old and
older, respondents were chosen based
on the number of people age 65 or older
residing in the household, the age of
each elder, and the number of elderly
men residing in the housing unit. (For
example, in a household with three
elders, one of whom was male, the
youngest elderly female was chosen.)
Characteristics of Elders
A majority of rural Southern elders
lived in a farm/nonfarm area (60 per­cent);
the others lived in towns in rural
counties. Most were non-Black (82 per­cent),
and a majority had a monthly
income less than $7002 (80 percent).
Housing Characteristics
Housing Tenure
Most rural Southern elderly owned their
home (83 percent) (table 1, p. 14). Those
in a farm/nonfarm area (88 percent)
were more likely than those in a town
to own their home (table 2, p. 15). As
expected, elders with an income of $700
or more per month were most likely to
own (92 percent), compared with elders
with lower incomes. Figure 1 shows
that compared with other older people,
those with the lowest income who lived
in a town were least likely to own their
home (66 percent), whereas elders with
the highest income who lived in a farm/
nonfarm area were most likely to be
homeowners (95 percent).
1'his is the respondents' income, not household
income.
Figure 1. Rural Southern elders' housing tenure, by locality and
respondents' monthly income, 1987-88
83%
66%
Farm/ Town
nonfarm
<$400
90%
nonfarm
$400-$699
Farm/ Town
nonfarm
$700+
• Rent
Own
13
..
Table 1. Housing characteristics of rural Southern elders, 1987-88
nl Percent
Variable (unweighted) (weighted)
Housing tenure
Owner 2,499 83
Renter 481 17
Housing type
Detached single family 2,598 86
Mobile home 189 7
Apartment and other 178 7
Household composition
Alone 1,339 47
With others 1,615 53
Yearly amount spent on maintenance and upkeep
<$200 1,604 55
$200-$400 521 18
$401+ 765 27
Degree of concern for housing
Minor 1,005 37
Moderate 875 30
Great 984 33
Degree of difficulty meeting housing costs
None 1,717 60
Some 970 31
Great 285 9
Repair needs
None 713 24
Few 1,265 43
Many 988 33
Condition of kitchen
Poor to fair 795 28
Good 1,695 59
Excellent 429 13
Location of home as an issue
No 2,123 73
Slightly serious 397 13
Moderate to very serious 440 14
1The total n differs for each variable because of missing data.
14
Housing Type
Most rural Southern elderly lived in de­tached,
single-family units (86 percent).
The others were as likely to live in
mobile homes as in apartments. Elders
in a farm/nonfarm area were more
likely than elders in a town to live in
mobile homes and less likely to live in
apartments. Blacks (90 percent) were
more likely than non-Blacks (86 per­cent)
to live in detached, single-family
units.
Household Composition
A majority of the elderly lived with
others3 (53 percent). Those most likely
to live with others were farm/nonfarm
residents, Black, and had a monthly
income less than $400. Figure 2, p. 16,
shows that among those with the lowest
monthly income, 62 percent of Black
elders and 55 percent of non-Black
elders lived with others. A much lower
percentage (31 percent) of Blacks with
income of $700 or more lived with others.
Non-Blacks with monthly income of
$700 or more were as likely to live
with others as those with income less
than $400.
Amount Spent on Household
Maintenance and Upkeep
A majority of rural Southern elderly
(55 percent) spent less than $200 per
year on household maintenance and
upkeep. Those elderly more likely to
spend less than $200 per year were
Black (65 percent) and with income .
below $400 (65 percent). Blacks were
less likely than non-Blacks to report
spending over $400.
Housing Concern
Rural Southern elders were asked if
housing was a concern for them at the
present time. A majority (63 percent)
described their concerns as moderate
or great. Locality had little effect on
this concern. Those more likely to
characterize their concern as moderate
3Living with one's spouse is included.
Family Economics Review
Table 2. Housing characteristics of rural Southern elders by their socioeconomic and demographic
characteristics, 1987-88
Locality Race Monthly income 1
Variable Farm/ Non- $400-
nonfarm Town Black Black <$400 $699 $700+
Housing tenure
Owner 88 75 80 83 76 86 92
Renter 12 25 20 17 24 14 8
Housing type
Detached, single family 89 82 90 86 83 89 91
Mobile home 10 3 6 7 8 6 5
Apartment and other 15 4 7 9 5 4
Household composition
Alone 40 56 40 48 43 52 47
With others 60 44 60 52 57 48 53
Yearly amount spent on maintenance and upkeep
<$200 56 54 65 53 65 49 43
$200-$400 18 19 18 18 17 20 20
$401+ 26 27 17 29 18 31 37
Degree of concern for housing
Minor 37 36 26 39 34 37 42
Moderate 31 30 38 29 35 26 25
Great 32 34 36 32 31 37 33
Degree of difficulty meeting housing costs
None 59 60 42 64 51 59 80
Some 31 31 43 28 37 32 17
Great 10 9 15 8 12 9 3
Repair needs
None 20 29 19 25 23 22 26
Few 44 41 39 44 40 43 48
Many 36 30 42 31 37 35 26
Condition of kitchen
Poor to fair 30 23 38 25 33 28 13
Good 56 62 55 59 59 59 60
Excellent 14 15 7 16 8 13 27
Location of home as an issue
No 68 80 64 75 73 71 76
Slightly serious 15 11 18 12 13 15 10
Moderate to very serious 17 9 18 13 14 14 14
1Respondent's income, not household income.
1994 Vol. 7 No.2 15
•
16
Those more likely
to have many home
repair needs included
Blacks and those
with a monthly income
of $400 or less.
Figure 2. Rural Southern elders' living arrangement, by race and
respondents' monthly income, 1987-88
Black Non-Black
<$400
Black Non-Black
$400-$699
or great were Black and those with a
monthly income under $400. Blacks
who lived with others were more likely
to have moderate or great concerns for
housing than those who lived alone;
non-Blacks who lived alone were more
likely to have such concerns than those
who lived with others (see fig. 3).
Difficulty Meeting Housing Costs
Three-fifths (60 percent) of rural
Southern elders believed they had no
difficulty meeting housing costs. Blacks
were more likely to believe they have at
least some difficulty meeting housing
costs. Nine percent of elderly respon­dents
reported they had great difficulty
meeting housing costs. Elders more
likely to have great difficulty were
Black and had income below $400
per month.
Repair Needs
Most rural Southern elders (76 percent)
believed they needed repairs made on
their home. Those more likely to have
many home repair needs included
Blacks and those with a monthly
income of $400 or less. Elders with no
Black Non-Black
$700+
0 Alone
• With others
home repair needs were likely to live in
a town and have a monthly income of
$700 or more.
Condition of Kitchen
Elders were asked the condition of the
rooms in their home. For this analysis,
the condition of the kitchen was chosen
for two reasons. First, 99.8 percent of
those interviewed indicated they had
access to this room. Second, the food­related
activities of daily living (pre­paring,
cooking, and storing foods)
performed in the kitchen may be
especially intensive and, more than
likely, are performed at least once a
day. Hence, the condition of this room
may have direct bearing on how profi­ciently
elders believe they can perform
necessary tasks that will enable them to
age in place.
Only 28 percent of the rural Southern
elderly considered their kitchen to be
in poor to fair condition. Those more
likely to say their kitchen was in poor
to fair condition included those located
in farm/nonfarm areas, Blacks, and with
monthly income below $400.
Family Economics Review
Figure 3. Rural Southern elders' concern for housing, by living
arrangement, 1987-88
35% 28%
30% 34%
Black Non-Black
Live alone
Home's Location as an Issue
A minority (27 percent) of the rural
Southern elderly believed location (in
relation to neighbors and services) was
an issue. Those more likely to consider
location to be an issue lived in farm/
nonfarm areas and were Black.
Conclusion
This study focused on rural Southern
elders' housing characteristics including
the yearly amount spent on maintenance
and upkeep, degree of concern for
housing, difficulty meeting costs,
extensiveness of repair needs, the
condition of their kitchen, and the
degree to which the location of their
home is an issue. Results indicate that
rural Southern elders' housing charac­teristics
are related to where they live
in rural counties and also to their race
and income. Compared with town
residents, farm/nonfarm residents were
more likely to believe the condition of
their kitchen was poor to fair and say
they were concerned about their home's
location. A higher percentage of Blacks
1994 Vol. 7 No.2
29%
39%
44%
23%
Black Non-Black
Live with others
• Great
0 Moderate
11 Minor
than non-Blacks spent less than $200
per year on maintenance, believed they
had housing concerns, and experienced
difficulty meeting housing costs. They
believed the condition of their kitchen
was poor to fair and were concerned
about their home's location. Also, rural
Southern elders in the lowest income
category ( <$400 per month) spent the
least on home maintenance, had diffi­culty
meeting housing costs, and
believed the condition of their kitchen
was poor to fair.
Helping rural Southern elders who wish
to age in place may mean providing
services to those whose socioeconomic
and demographic characteristics indi­cate
they may be vulnerable. These
elders may need help with home repairs
and costs associated with maintaining
an aging home. Also, public transporta­tion
or alternative means of providing
services (grocery and medical deliveries)
may help alleviate some concerns elders
have about the location of their home.
This study focused on the housing
status of the rural Southern elderly as
they experience it. The housing service
professional must consider not only
objective assessments of the housing
status of the rural Southern elderly but
also elders' subjective evaluation of
their living environment. Elders' percep­tions
of their status may affect whether
they seek assistance, the type of assis­tance
sought, and whether the help
offered is accepted. Additional study
is needed to determine the degree of
similarity between rural Southern
elders' perceptions of their housing
status and their actual housing status.
17
References
1. American Association of Retired Persons. 1990. Understanding Senior Housing
for the 1990s. Washington, DC.
2. Byerly, E.R. 1993. State Population Estimates by Age and Sex: 1980 to 1992.
Current Population Reports, Population Estimates and Projections. P25-11 06.
U.S. Department of Commerce, Bureau of the Census.
3. Byerly, E.R. 1990. State Population and Household Estimates: July 1, 1989.
Current Population Reports, Population Estimates and Projections. Series P-25,
No. 1058. U.S. Department of Commerce, Bureau of the Census.
4. Danes, S.M. and Rettig, K.D. 1993. The role of perception in the intention to
change the family fmancial situation. Journal of Family and Economic Issues
14(4):365-389.
5. DeAre, D. 1991. Geographical Mobility: March 1987 to March 1990. Current
Population Reports, Population Characteristics. Series P-20, No. 456. U.S. Depart­ment
of Commerce, Bureau of the Census.
6. Dinkins, J.M. 1993. Meeting basic needs of rural Southern elders. Journal of
Home Economics 85(1):18-24,63.
7. Fahm, E.G. (ed.). 1991. Quality of Well-Being of the Rural Southern Elderly:
Food, Clothing and Shelter. A Database Book. Alcorn State University,
Lorman, MI.
8. Herzog, A.R. and Rodgers, W. 1986. Satisfaction among older adults. In:
F. Andrews, editor. Research on the Quality of Life. Institute for Social Research,
Survey Research Center, University of Michigan, Ann Arbor.
9. McFadden, J.R. and Brandt, J.A. (eds.). 1991. Housing and Locational
Retirement Decisions: A Study of Preretirees in Four States. Research Report 139.
Western Regional Research-176. Utah Agricultural Experiment Station, Logan, UT.
10. Quality of Well-Being of the Rural Southern Elderly: Food, Clothing, Shelter.
Technical Report. 1990. 1890 Home Economics Regional Research Project (RR-4).
South Carolina State University, Orangeburg, SC.
11. Schwenk, F.N. 1993. Housing expenditures of the elderly: Owners and renters.
Family Economics Review 6(3):2-7.
12. Sumarwan, U. and Hira, T.K. 1993. The effects of perceived locus of control
and perceived income adequacy on satisfaction with fmancial status of rural house­holds.
Journal of Family and Economic Issues 14(4):343-364.
13. U.S. Department of Commerce and U.S. Department of Housing and Urban
Development. 1993. American Housing Survey for. the United States in 1991.
Current Housing Reports, H150/91. Bureau of the Census and Office of Policy
Development and Research.
14. Wheelock, G.C., Bekele, G., and Cheatham, W. 1990. Well-Being of rural
elderly in the South: Factor analysis of 15 concerns. Paper presented at the meeting
of the Rural Sociology Society. [Norfolk, VA, August 1990].
18 Family Economics Review
1994 Vol. 7 No.2
•
Trends in the Economic Status
of Retired People
By Nancy E. Schwenk
Consumer Economist
Family Economics Research Group
Increases in lifespan, coupled with the trend toward retiring early, have
expanded the portion of life spent in retirement. Elderly households (those
with a householder age 65 or older) had a median income of $24,805 in
1991 derived from Social Security; dividends, interest, and rent; pensions
and annuities; and earnings. Social Security provided 30 percent of total
income for the elderly in multiperson families and 44 percent for the elderly
living alone or with nonrelatives. Forty percent of elderly people living alone
and 56 percent of elderly people living with others received pension benefits
in 1991, but these figures are expected to increase because of the large
numbers of women entering the job market. The majority of the elderly
own their own home without a mortgage. Home ownership can be a major
asset, if the house can be sold at a profit or used to provide income through
a home equity conversion plan. Policymakers, financial planners, and educators
need to consider the expanded retirement period, whether planning for
individuals or for national policy.
mericans are living longer
and retiring younger, thus
the. portion.o~ life sp~nt in
retrrement IS mcreasmg.
Over the past 20 years, life expectancy
at age 65 increased 2 full years for both
males and females (15). During the
1980's, the population under age 65
grew by 9 percent, whereas there was
a 16-percent increase in the population
age 65 to 7 4 and a 31-percent increase
in the number of people age 75 and
older (9). With longer lifespans, retirees
need sources of income that will enable
them to keep pace with the cost of
living.
The economic consequences of an aging
population are of concern to our society
and are addressed in this article. For
example, retirement often causes a great
reduction in income. Although Social
Security was never intended to provide
adequate retirement income, many
retired people have no pensions and no
savings. Consequently, they must rely
on Social Security as their primary or
even sole source of income, continue
working, or be supported by family.
Other sources of retirement income,
government and household expenditures
for retirement, and the trend toward
early retirement are presented.
Sources of Retirement Income
In 1991, households with a householder
age 65 and over had a median income of
$24,805 (16). The main sources of their
retirement income were: Social Security;
dividends, interest, and rent; employment­related
pensions, alimony, and annuities;
and earnings (17) (fig. I, p. 19).
There have been changes in the distribu­tion
of income sources of the elderly
over time. Between 1980 and 1991, for
both elderly individuals and elderly
19
multi person families with a householder
age 65 or older, the proportion of income
derived from Social Security decreased
by 2 to 3 percent, and the proportion
derived from earnings decreased by 1
to 3 percent. The biggest increase was
in the proportion derived from employ­ment-
related pensions and annuities, up
7 percent for individuals and 4 percent
for multiperson families during this
period (17).
The American Association of Retired
Persons suggests that postretirement
income should equal65 to 75 percent
of preretirement income in order to
maintain a similar lifestyle. This rule
of thumb will vary according to the
amount of preretirement income, age,
marital status, and intended lifestyle (5).
For example, workers at lower income
levels might need to replace a higher
percentage of preretirement income to
cover basic needs than would those at
higher income levels.
Social Security
The main source of retirement income
for the elderly is Social Security, which
covers nearly all American workers in
the private and public sectors (20).
Social Security provided 30 percent
of total income for elderly multiperson
families and 44 percent for elderly
individuals in 1991 (17) (fig. 2). The
maximum monthly retired-worker
benefit payable to an individual who
retired at age 65 was $1,128.80 in 1993
(17).
Between 1980 and 1991, the average
monthly Old Age, Survivors, and
Disability Insurance (OASDI) benefit
rose from $341.40 to $629.30--an
increase of 84 percent. During this
period, the Consumer Price Index (CPI)
rose 65 percent. The average OASDI
benefit also increased faster than
inflation during the 1970's (15,17).
20
Figure 1. Percentage of elderly families receiving income of
specified type, 1991
Individuals age 65 or older, living alone or with nonrelatives only
Percent
Social Security 92
Dividends, interest, rent 65
Employment-related
pensions, alimony, 40
annuities, etc.
Earnings 13
Other1 17
Multiperson families with householder age 65 or older
Percent
Social Security 93
Dividends, interest, rent 77
Employment-related
pensions, alimony, 56
annuities, etc.
Earnings 43
Other1 24
11ncludes Supplemental Security Income, public assistance, and other programs.
Source: U.S. Department of Health and Human Services, Social Security Administration, 1993,
Annual Statistical Supplement, 1993.
Those people who retire and choose to
begin receiving Social Security benefits
before age 65 (62 is the minimum age)
receive a reduced monthly benefit
(table 1, p. 23). There is a reduction of
five-ninths of 1 percent in benefits for
each month a person receives benefits
before age 65. For example, a person
retiring at age 62 would receive monthly
benefits reduced by 20 percent (5/9 x
36 months). Any future cost-of-living
adjustments would be based on the
reduced benefit (5).
Family Economics Review
·-- ~ - Figure 2. Percent distribution of income by type for elderly
families, 1991
Individuals age 65 or older living
alone or with nonrelatives only
44%
3%
22%
10%
0 Social Security
Multiperson families with
householder age 65 or older
Dividends, interest, rent • Earnings
4%
• Employment-related pensions, • Other1
alimony, annuities, etc.
11ncludes Supplemental Security Income, public assistance, and other programs.
Source: U.S. Department of Health and Human Services, Social Security Administration, 1993,
Annual Statistical Supplement, 1993.
Dividends, Interest, and Rent
In 1991, 65 percent of elderly individuals
living alone or with nonrelatives and 77
percent of elderly multiperson families
received income from dividends, interest,
and rent (17). Examples of this income
source include U.S. Treasury and agency
securities, corporate and municipal bonds,
stocks, mutual funds, certificates of
deposit, real estate holdings, and com­modities.
This source provided between
20 and 22 percent of total income for
the elderly in 1991 (17).
Pension Plans
Not everyone receives retirement bene­fits
from their employer. Between 1980
and 1991, the proportion of the elderly
who received income from employment­related
pensions, alimony, and annuities
rose from only 27 percent to 40 percent
for individuals living alone or with
1994 Vol. 7 No.2
nonrelatives and from 45 percent to 56
percent for those living in multi person
families (17).
The proportion of retirees receiving
pension benefits should continue to rise
over the next 20 to 30 years because of
past growth in coverage and vesting­the
guaranteed right of a pension plan
participant to future benefits (13).
Surveys conducted in 1989-90 show
that 68 percent of current, full-time
employees will receive retirement bene­fits
beyond Social Security from their
employer-62 percent of private sector
employees and 96 percent of State and
local government employees (8). By
2018, the percentage of elderly house­holds
receiving pension benefits is
projected to reach 88 percent. This
growth will reflect the increasing
coverage of women by pension plans
(20).
• ... 68 percent of
current, full-time
employees will
receive retirement
benefits beyond
Social Security from
their employer ...
21
Legislation Related to Pensions
Employee Retirement Income Security Act of 1974 (ERISA)
Establishes individual rights under pension plans, investment rules for plan
officials, funding requirements, and the Federal pension insurance program.
Rules on individual rights went into effect in 1976. Other rules became effective
in 1974 and 1975.
Multiemployer Pension Plan Amendments Act of 1980 (MPPAA)
Establishes financial obligations for companies that withdraw from multi­employer
pension plans and provides Government insurance protection for
fmancially troubled plans. Applies to companies that withdraw from multi­employer
plans after September 25, 1980.
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
Includes provisions requiring "top-heavy" pension plans to provide at least
minimum benefits for secretaries, nurses, paralegals, and others working in
small offices. Applies to benefits earned by employees working under pension
plans in 1984 and after.
Retirement Equity Act of 1984 (REA)
Increases pension protection for widowed and divorced spouses, lowers mini­mum
ages for vesting and participation, and liberalizes break-in-service rules.
Generally helps spouses of workers employed under pension plans as of August
23, 1984. or later; applies to divorce court orders issued in 1985 or later.
Single Employer Pension Plan Amendments Act of 1986 (SEPPAA)
Strengthens the Federal insurance program for single-employer pension plans
that tenninated in 1986 or after.
Tax Reform Act of 1986 (TRA)
Includes provisions to shorten pension vesting, increase coverage, and restrict
integration of pensions with Social Security. Applies to workers on the job in
1989 and after.
Omnibus Budget Reconciliation Act of 1986 (OBRA)
Includes pension provisions requiring plans to give benefits to employees
who work past age 65. Prevents plans from setting a maximum age limit that
excludes older employees from pension plan membership. Applies to workers
on the job in 1988 and after (6).
Older Worker Benefit Protection Act of 1990 (OWBPA)
Amends the 1967 Age Discrimination Employment Act to clarify protection
guaranteed to older individuals in regard to employee benefit plans (14).
22
Among private sector employees,
white-collar workers were more likely
to receive pension benefits than were
blue-collar workers (66 percent versus
58 percent) (8). Also, employer pensions
are more prevalent in goods-producing
industries than in service-producing
industries. Unionization is an additional
factor, with 90 percent of union workers
participating (20). In addition, the likeli­hood
of receiving pension benefits
increases with income (13).
There are two main types of pension
plans. The defined benefit pension,
which covered 50 percent of full-time
employees in 1989-90, typically pays
a monthly benefit at retirement based
on the employee's length of service
and earnings. In most cases, benefits
are wholly financed and determined
by the employer (8,13). The other type,
which covered 34 percent of full-time
employees in 1989-90, is the defined
contribution plan. This plan specifies
the contribution a worker and an
employer must make to the plan, and
benefits are based on the size of the
individual's account (8,13). The number
of active workers covered by defined
contribution plans is increasing, whereas
the number with a defined benefit plan
has remained fairly stable (13).
Companies are not required to offer
a pension plan. In addition, pension
plans do not have to include all workers.
Pension plans that stipulate who can
legally be excluded from a plan are
complicated. As long as they do not
unfairly favor higher paid employees,
plans can be written to exclude certain
jobs and/or certain individuals (2).
Before 1976, pension plans could
require an employee to work a lifetime
for one company before being eligible
for pension benefits. From 1976 until
1989, the usual requirement was 10
years of service. Most current plans
require 5 years of work before an
employee becomes fully vested and
thus eligible for benefits (6).
Family Economics Review
·-- •
Table 1. Average monthly OASDI1 benefit with and without reduction
for early retirement,2 by sex, selected years, 1970-92
Average monthly benefit
Without reduction for With reduction for
Year All early retirement early retirement
Total
1970 $118.10 $130.20 $103.60
1980 341.40 391.80 310.70
1985 478.60 581.20 424.80
1990 602.60 742.80 537.90
1991 629.30 776.50 562.10
1992 652.60 805.40 583.60
Men
1970 130.50 139.10 115.30
1980 380.20 419.60 349.50
1985 538.40 627.50 480.50
1990 679.30 803.60 611.20
1991 709.30 840.50 638.90
1992 735.50 872.50 663.30
Women
1970 101.20 111.70 93.80
1980 296.80 346.50 274.60
1985 412.10 511.00 372.00
1990 518.60 656.80 466.40
1991 541.60 687.00 486.80
1992 561.80 712.90 504.70
10ld Age, Survivors, and Disability Insurance.
2 After age 62 and before age 65.
Source: U.S. Department of Health and Human Services, Social Security Administration, 1993, Annual
Statistical Supplement, 1993.
Women over the age of 65 are much
less likely to have worked outside the
home than are younger women; there­fore,
they are less likely to have access
to pension and Social Security income
in their own names. In 1990, only 12
percent of women age 65 and older,
compared with 33 percent of men,
received a private pension (including
survivors' benefits) (2). This is likely
to change, however, because of the
large increase in the number of women
who have entered the labor force over
1994 Vol. 7 No.2
the last two decades. In the future, it is
more likely that women over age 65
will have earned their own pension
and Social Security benefits (9).
Earnings
The percentage of employed men age
65 and over has declined over the last
several decades. In 1970, 26 percent of
men in this age group were in the labor
force. This figure dropped to 18 percent
by 1980 and to 16 percent by 1990 (1 5).
Nevertheless, there were 3.4 million
• In 1990, only 12
percent of women
age 65 and older,
compared with 33
percent of men,
received a private
pension (including
survivors' benefits).
23
employed people age 65 and over by
the end of 1992 (18) (table 2). These
workers were more likely to be male
and more likely to be age 65 to 69 (1 8).
In 1991, earnings provided 10 percent
of total income for individuals age 65
or over living alone or with nonrelatives
and 28 percent for multiperson families
with a householder age 65 or over (17).
A person who continues to work after
starting to receive Social Security
retirement benefits will lose some or
all benefits if income from earnings ex­ceeds
a certain annual exempt amount.
In 1993, a worker age 62 to 64 could
earn up to $7,680 annually without in­curring
a reduction in Social Security
benefits; any amount earned over that
figure results in a $1 penalty for every
$2 earned. Workers age 65 to 69 could
earn up to $10,560 annually before
benefits are reduced $1 for every $3
earned. For people age 70 or over,
there is currently no earnings limit (17).
Home Ownership
The majority of the elderly own their
own home-82 percent of those age 65
to 74 and 72 percent of those age 75
years and over were homeowners in
1990. Of those who were homeowners,
most owned their home free and clear
(81 percent). This high proportion
of the elderly who have paid off their
mortgages reflects the low interest rates
and home prices of the 1960's and
1970's (9). Among the elderly, men
were more likely than women to own
their own home, and people living with
their spouses were more likely to own
than were people who lived alone (1).
Housing can be a great asset for those
older homeowners who can sell their
homes at a profit or use one of the home
equity conversion (HEC) options avail­able
to provide income. HEC plans are
relatively new in the United States, and
some are not yet available nationwide.
24
Table 2. Employed civilians by age, sex, and class of worker,
December 1992
Source of employment
Total
Nonagricultural industries
Wage and salary workers
Total
Private household workers
Government
Other (private sector)
Self-employed workers
Unpaid family workers
Agriculture
Wage and salary workers
Self-employed workers
Unpaid family workers
Total
3,421
2,559
92
411
2,056
593
7
49
200
13
65 years and over
Men
(In thousands)
1,976
1,357
6
195
1,156
390
4
38
182
5
Women
1,446
1,202
86
217
900
203
4
11
18
8
Source: U.S. Department of Labor, Bureau of Labor Statistics , 1993, Employment and Earnings.
Costs can include application fees,
closing costs, interest charges, sales
commissions, and loss of future appre­ciation
(4). The most common methods
of HEC are reverse mortgages, sale/
leaseback or life tenancy, homeowner
equity accounts, and deferred payment
loans (3).
A reverse mortgage allows a home­owner
to convert some home equity
into spendable cash while retaining
ownership of the home. The money is
paid out to a homeowner in monthly
installments determined by the amount
of home equity borrowed against, the
interest rate, and the length of the loan.
In most cases, no repayment is due until
the homeowner dies, sells the home, or
permanently moves (4).
In a sale/leaseback or life tenancy
arrangement, a homeowner sells the
home to an investor, who then leases
it back to the homeowner. The home­owner
retains the right to live in the
house for life as a renter. The investor
pays the owner in monthly installments
and also is responsible for property
taxes, insurance, maintenance, and
repairs (3).
Homeowner equity accounts allow the
homeowner to establish a line of credit
secured by a lien against the home. The
maximum amount of credit allowed is
70 percent of the accumulated equity in
the home. The loan must be repaid over
a specified period (3).
A deferred payment loan may be pro­vided
to low-income households at no
interest or a low interest rate by a local
government agency for the purpose of
repairing or improving the home. It per­mits
the homeowner to defer payment
until she/he dies, moves, or sells the
home (4).
Family Economics Review
·------ Federal Expenditures for
Retirement Programs
In 1960, the share of the Federal
Government's budget allocated to
programs for the elderly was less than
15 percent. By fiscal year 1991, the
share had risen to 30 percent. This in­crease
resulted from legislation enacted
in the late 1960's and early 1970's to
improve income protection, health
insurance, and other services for the
elderly {1). The poverty rate of the
elderly in 1970 (24.6 percent) was nearly
double the poverty rate for all age groups
(12.6 percent). Twenty years later the
poverty rate for the elderly had been
reduced by half (12.2 percent) and was
lower than that for all age groups (13.5
percent) (1 1) (table 3). Much of this
improvement can be attributed to
increases in Social Security retirement
benefits, as well as better employer­sponsored
retirement plans.
In fiscal year 1991, 64 percent of the
Federal budget for the elderly was allo­cated
to retirement pension programs. 1
Estimates of the costs of pension pro­grams
over the next 50 years indicate
that the portion of the Federal budget
spent on pensions will decline some­what
and remain below current levels
until the baby boomers begin to retire.
Pensions as a percentage of Federal
spending are expected to rise sharply
at that time (1).
Household Retirement
Expenditures
Household expenditures for retirement,
pensions, and Social Securitl grew
from an average of $949 in 1980 to
1Retirement pension programs include Social
Security, Supplemental Security Income (SSI),
veterans compensation-pensions, and other retired,
disabled, and survivor benefits.
2-rhis category includes expenditures and/or
deductions for: Social Security, government
retirement, railroad retirement, private pensions,
and self-employment retirement plans.
1994 Vol. 7 No.2
$2,397 in 1992 (1 8). These amounts
represented 5.7 percent of total house­hold
expenditures in 1980 and 8.0 per­cent
in 1992 (fig. 3, p. 26). In 1992, this
expenditure ranged from $183 for house­holds
in the lowest quintiJe of income
to $7,467 for households in the highest
quintile (18). Those households with
householders approaching retirement
age ( 45 to 54 years old) allocated a
greater portion of their total expendi­tures
for retirement, pensions, and
Social Security than did those who had
already reached retirement age (65 years
and older) (1 8). Social Security taxes
are the largest component of the retire­ment
expenditure category, followed by
Individual Retirement Accounts (IRA's)
and Keogh fund contributions. These
tax-deferred savings plans were intro­duced
into the tax code in 1981 (9).
Early Retirement
The trend toward early retirement is
continuing. The number of men ages
55 to 64 who were in the work force
declined dramatically between 1970,
when 83 percent of this age group were
working or looking for work, and 1991,
when the labor force participation rate
for this age group dropped to 67 per­cent.
The participation rate is expected
to increase slightly by the year 2000 to
68 percent for this group of men (1 5).
Labor force participation rates for
women ages 55 to 64 do not follow a
similar pattern, as women of all ages
have been joining the work force in in­creasing
numbers. In 1970, 43 percent
of women in this age group were in the
labor force. This figure increased to 45
percent in 1991 and is projected to in­crease
further to 52 percent by the year
2000 (15).
Table 3. Poverty status of persons:
1970-90
Age 65
Year All ages and over
1970 12.6 24.6
1971 12.5 21.6
1972 11.9 18.6
1973 11.1 16.3
1974 11.2 14.6
1975 12.3 15.3
1976 11.8 15.0
1977 11.6 14.1
1978 11.4 14.0
1979 11.7 15.2
1980 13.0 15.7
1981 14.0 15.3
1982 15.0 14.6
1983 15.2 13.8
1984 14.4 12.4
1985 14.0 12.6
1986 13.6 12.4
1987 13.4 12.5
1988 13.0 12.0
1989 12.8 11.4
1990 13.5 12.2
1991 14.2
1992
Source: U.S. Department of Commerce, Bureau
of the Census, 1993, Poverty in the United
States: 1992 , Current Population Reports,
Consumer Income, Series P60-l85.
The downsizing of corporate America
over the last decade spurred companies
to encourage older workers into retire­ment.
A 1990 study by Towers, Perrin,
Forster, and Crosby found that 66 per­cent
of companies surveyed had offered
early retirement incentive plans during
the previous 6 years (5). These incen­tive
plans can include additional or en­hanced
pension benefits, retiree health
insurance, lump sum cash benefits, and
25
Figure 3. Percentage of total annual expenditures allocated by
U.S. households (all ages) to pensions, retirement, and Social
Security, 1980-92
% of Expenditures
10,---------------------------------------------.
8
6
4
2
0 1~9780~--~8~2----~8~4----~8~6~----~88~----790~----~92
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Surveys,
1980-92.
"bridges" to Social Security, in which
the employer fills in the income gap
until Social Security benefits begin.
With no end in sight to the mergers,
takeovers, corporate restructurings, and
downsizings taking place, employers
may continue to offer these incentives
(5).
Professional Advice
When planning for retirement, some
people seek help from professionals,
such as lawyers, accountants, and
fmancial planners. These professionals
offer advice on such matters as cash
management and budgeting, tax plan­ning,
investing, estate planning, and
insurance needs.
Professional financial planning is a
relatively new profession, and as yet
there are no State or Federal regulations
for this industry (7). There are nearly a
26
quarter of a million professional fman­cial
planners in the United States today
who hold a variety of degrees, licenses,
and professional memberships (7).
Some have earned credentials such as
CFP (Certified Financial Planner) or
CHFC (Chartered Financial Consultant)
(7).
The cost of financial plans ranges from
about $250 for a basic plan to $4,000
or more for a complex plan (10). Fees
also vary by geographic location and
the particular financial planner or fum
chosen. In general, financial planners
are paid by one of five methods-a
combination of fees and commission
(42 percent), commission only (32 per­cent),
fees only (17 percent), salary only
(6 percent), or a combination of salary
and commission (3 percent) (12). The
most important criterion of quality
fmancial advice is an understanding
and concern for the client's best fman­cial
interests.
Conclusions
Concerns about retirement income will
increase as the U.S. population ages
because Americans are retiring earlier
and living longer. A worker's choice of
employer can affect the availability and
amount of future retirement income and
whether benefits keep pace with the cost
of living. Young people who are able to
save and invest wisely are more likely
to have adequate lifetime income and
not be solely dependent on Social
Security and other government pro­grams
during their retirement. The key
to an enjoyable, financially secure
retirement is thoughtful planning, the
earlier the better.
Family Economics Review
References
1. Aging America: Trends and Projections, 1991 Edition. Prepared by the U.S. Senate
Special Committee on Aging, the American Association of Retired Persons, the Federal
Council on the Aging, and the U.S. Administration on Aging.
2. American Association of Retired Persons. 1992a. A Woman's Guide to Pension
Rights. Washington, DC.
3. American Association of Retired Persons. 1992b. Planning Your Retirement.
Washington, DC.
4. American Association of Retired Persons. 199la. Home-Made Money: Consumer's
Guide to Home Equity Conversion [3d edition]. Washington, DC.
5. American Association of Retired Persons. 1991b. Look Before You Leap: A Guide to
Early Retirement Incentive Programs. Washington, DC.
6. American Association of Retired Persons. 1989. A Guide to Understanding Your
Pension Plan. Washington, DC.
7. American Association of Retired Persons and Federal Trade Commission. 1991.
Money Matters. Washington, DC.
8. Grossman, G.M. 1992. U.S. workers receive a wide range of employee benefits.
Monthly Labor Review 115(9):36-39.
9. Hitschler, P.B. 1993. Spending by older consumers: 1980 and 1990 compared.
Monthly Labor Review 116(5):3-13.
10. International Association for Financial Planning. 1993. How Financial Planners
Are Paid. Consumer Information Series #2. Atlanta, GA.
11. Lamison-White, L. 1992.lncome, Poverty, and Wealth in the United States: A
Chart Book. Current Population Reports, Consumer Income. Series P-60, No. 179.
U.S. Department of Commerce, Bureau of the Census.
12. NEFE Digest. 1993. Survey Points to Bright Future for the Profession. National
Endowment for Financial Education, September issue.
13. Reno, V.P. 1993. The role of pensions in retirement income: Trends and questions.
Social Security Bulletin 56(1):29-43.
14. U.S. Congress, Clerk of the House of Representatives, Office of Legislative
Information and Status, telephone communication.
15. U.S. Department of Commerce, Bureau of the Census. 1992. Statistical Abstract of
the United States, 1992. [112th ed.]
16. U.S. Department of Commerce, Bureau of the Census. 1992. Money Income of
Households, Families, and Persons in the United States: 1991. Current Population
Reports, Consumer Income. Series P-60, No. 180.
17. U.S. Department of Health and Human Services, Social Security Administration,
1993. Annual Statistical Supplement to the Social Security Bulletin, 1982 and 1993.
SSA Pub. No. 13-11700.
18. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Expenditure
Surveys, 1982-1992.
19. U.S. Department of Labor, Bureau of Labor Statistics. 1993. Employment and
Earnings 40(1):37.
20. Wiatrowski, W.J. 1993. Factors affecting retirement income. Monthly Labor Review
116(3):25-35.
1994 Vol. 7 No.2 27
28
Research Summaries •
Can IRA's Raise
the Low National
Savings Rate?
The national savings rate is defined
as national savings divided by the net
national product. The U.S. national
savings rate averaged 2.4 percent
during the last 5 years, compared with
an average rate of 8.8 percent in the
1960's. The average savings rate for
other industrial countries in the 1980's
was much higher-Canadians saved
8.4 percent; Germans, 10.2 percent;
and Japanese, 17.8 percent. The U.S.
national savings rate fell to 0.9 percent
in 1992.
The declining savings rate partly
reflects greater dissaving by Federal,
State, and local governments. The
government savings rate is the govern­ment
sector's budget surplus or deficit
divided by the net national product.
Between 1979 and 1983, the govern­ment
savings rate fell from 0.4 percent
to -4.6 percent as large Federal tax cuts
and back-to-back recessions caused
government deficits to mount. The
government savings rate improved to
-1.7 percent in 1989 but dropped to
-5.4 percent in 1992, reflecting the
effects of sluggish economic growth
on government revenues.
The low national savings rate in America
is believed by many to present a serious
economic problem. Because savings
and investments are major factors in
determining real income growth, a low
national savings rate may hurt future
living standards by reducing domestic
investment and productivity growth.
Various policy changes have been
proposed as possible cures for the low
national savings rate.
Recent debate has centered on policy
options such as Individual Retirement
Accounts (IRA's) to raise the savings
rate. An IRA is a tax-advantaged
account originally created in 1974 to
encourage workers without a pension
to save for retirement. The Economic
Recovery Tax Act of 1981liberalized
the eligibility requirements by increasing
the deduction limit for IRA contributions
and by opening the program to workers
with a pension plan.
Taxpayers can receive tax benefits
by deducting some or all of their IRA
contribution from their taxable income
during the year in which the contribu­tion
is made. Under current tax laws,
the deduction is gradually eliminated
for--or unavailable to--higher income
taxpayers with a pension plan. How­ever,
all IRA contributors benefit by
deferring taxes on their earnings until
the funds are withdrawn from the IRA.
If a taxpayer's income tax rate is lower
in retirement than during the taxpayer's
working years, withdrawals will be
taxed at this lower rate.
The principal drawback to IRA's is that
they cannot be converted into cash with­out
a substantial loss in value. If funds
are withdrawn from an IRA before a
taxpayer reaches age 59-1/2, a 10-percent
withdrawal penalty is charged and the
deferred income tax becomes due.
The withdrawal penalty is designed to
promote the use of IRA's solely for
retirement savings. Taxpayers may
hesitate to put funds into an IRA if
those funds might be needed in the
near future.
Contributions to IRA's dropped sharply
after the passage of the Tax Reform Act
of 1986, as tax reform reduced the
appeal of IRA's by decreasing or elimi­nating
the IRA deduction for higher
income workers with a pension plan.
The cut in personal income tax rates
also lowered the tax benefits of contrib­uting
to an IRA. About 16 million
Family Economics Review
Participation in the IRA program, 1979-89
Number of returns Amount of IRA
claiming IRA deduction deductions claimed
Year (millions) (billions)
1979 2.5 $3.2
1980 2.6 3.4
1981 3.4 4.8
1982 12.0 28.3
1983 13.6 32.1
1984 15.2 35.4
1985 16.2 38.2
1986 15.5 37.8
1987 7.3 14.1
1988 6.4 11.9
1989 5.8 10.8
Source: Joint Tax Committee, U.S. Congress; and Internal Revenue Service, U. S. Department of the
Treasury.
Federal tax returns claimed an IRA
deduction at the height of the program
in 1985, compared with less than 6
million in 1989 (see table).
Empirical research on IRA's from the
1980's gives little reason to believe that
expanding IRA programs would raise
the national savings rate. Increased IRA
participation in 1982-86 did not stop
the downward trend in the aggregate
savings rate. There were three major
reasons why IRA's did not increase
the national savings rate in the 1980's:
• Insensitivity to the rate of return.
Higher after-tax rates of return
did not stimulate savings.
• Weak marginal incentives. The
after-tax rate of return earned on
an additional dollar of savings did
not increase if taxpayers' IRA's
were fully funded.
• Asset switching. IRA's reduced
government savings when house­holds
switched savings from tax­able
non-IRA financial assets into
IRA's to reduce personal tax bills.
1994 Vol. 7 No. 2
A number of reforms to expand IRA
participation and raise the national
savings rate have been proposed,
including the following five options:
Option 1-Raise the income ceiling.
This option would allow higher income
taxpayers with pension plans to make
deductible IRA contributions, while
keeping current dollar limits on the
amount of the contribution. This reform
would reinstate the eligibility require­ments
that existed before 1987.
Option 2---Raise the contribution limit.
This option would raise, or remove,
the dollar limit on IRA contributions,
encouraging high-income households
to save more because they could earn
a higher after-tax return on each addi­tional
dollar of savings.
Option 3-Allow penalty-free with­drawals.
This option would allow
penalty-free withdrawals for certain
reasons, such as buying a first home or
paying for college, thereby appealing to
younger taxpayers and middle-income
households who do not want to tie up
their savings until retirement.
Option 4--Create a "back-loaded"
IRA. In this type of IRA, the initial
contributions are not deductible but
distributions are not taxed. The taxpayer
could be required to keep funds in the
IRA for a certain number of years
before gaining any tax benefits.
Option 5-Create a Premium Savings
Account (PSA). Under this proposal,
each taxpayer would have to save some
fixed amount, based on income, before
being allowed to contribute to a PSA.
For each dollar of savings above the
base amount, the taxpayer could
contribute $1 to the PSA up to some
limit. Properly constructed, the PSA
could maximize the number of house­holds
in each income class that would
experience an increased marginal
incentive to save.
Researchers cannot say with certainty
whether a broader IRA program could
raise the national savings rate in the
1990' s. Despite a substantial flow of
funds into IRA's in the mid-1980's, the
national savings rate declined. Although
some of these reform options might
stimulate more savings than the current
IRA, none would solve all the economic
problems that made IRA's ineffective in
the 1980's.
Negative government savings is a major
reason for the low national savings rate.
Policymakers can improve the govern­ment
balance sheet by reducing the
budget deficit over time. The resulting
increase in government savings should
raise the national savings rate and ulti­mately
improve our standard of living.
Source: Gamer, C.A., 1993, Can IRAs cure the
low national savings rate? Economic Review,
Federal Reserve Bank of Kansas City, Second
Quarter 1993.
29
•
Social Security
and Older Workers
The long-term decline in labor-force
participation by older Americans may
be caused by factors that discourage
work, such as employer discrimination
against older workers, private pension
plans that penalize continued employ­ment,
and the Social Security system.
Since 1961, reduced Social Security
retirement benefits have been available
at age 62, and there has been a gradual,
marked increase in the popularity of
retirement at age 62 over the past three
decades.
There are several negative consequences
associated with early retirement. First,
the economy's pool of experienced
labor is reduced and the Nation's aggre­gate
output is lower. Second, reductions
in labor-force activity by older workers
decrease Social Security revenues and
increase program expenditures. And
third, reduced earnings can harm the
economic well-being of the elderly by
affecting both the size and the distribu­tion
of incomes.
Because the U.S. population and work­force
are projected to continue aging
into the next century, policies have been
enacted (and others proposed) that
would eliminate or lessen employment
barriers for older workers. The 1983
Amendments to the Social Security Act
contained provisions that were intended
to promote work:
30
• A gradual increase in the normal
retirement age to 67. The normal
retirement age will be increased to
66 in 2009 and to 67 in 2027.
• A gradual increase in the penalty
for early retirement concurrent with
increases in the normal retirement
age. By 2027, retirement at age 62
will reduce the benefit amount by
30 percent of the primary insurance
amount (PIA), rather than the
current 20 percent.
• A reduction in the retirement test
reduction rate (the amount by
which earnings over a specified
annual limit are reduced) from one­half
to one-third for beneficiaries
age 65 to 69, effective in 1990.
• A gradual increase in the delayed
retirement credit (DRC), from 3
percent to 8 percent. The DRC is
scheduled to rise by 0.5 percent
every other year, beginning in
1990, until it reaches 8 percent in
2008.
• Continued increases in the annual
exempt amount that can be earned
under the retirement test. The
exempt amount increases each
year at the same rate as the increase
in average wages.
In addition, the following proposals to
encourage work have been suggested:
• Eliminate or liberalize the retire­ment
test by either increasing the
annual exempt amount or lowering
the benefit reduction rate.
• Accelerate the timing of the
scheduled increase in the DRC.
• Further increase the normal
retirement age and/or the early
retirement age.
• Change benefit recomputation
rules to give more weight to
earnings in later years.
• Eliminate the payroll tax for
workers age 65 and older.
• Increase the income threshold
at which benefits are subject to
Federal income taxation.
Social Security is the largest source of
income for retired people and plays an
important role in their economic well­being.
A review of recent empirical
retirement studies was undertaken to
ascertain what is known about the effect
of Social Security on retirement decisions.
Most of these studies used data from the
Retirement History Survey (RHS). This
survey collected data on a nationally
representative sample of over 11,000
men and unmarried women, born be­tween
1905 and 1911, in six biennial
interviews conducted during 1969-79.
Respondents were age 58 to 63 at the
time of the first interview.
Most researchers concluded that retire­ment
is a choice made by workers who
rationally weigh the personal pros and
cons of continued labor-force participa­tion.
In addition to the financial aspects,
other factors that influence the decision
include general economic conditions,
personal characteristics (particularly
age), health status, and individual
attitudes toward work. Findings support
the view that early retirement is largely
voluntary and affordable by more and
more workers.
The monthly amount of the Social
Security benefit influences both the
timing of retirement and the choice of
postretirement work hours. In general,
higher benefits would promote early
retirement, decrease the likelihood of
working among retirees, and decrease
the hours of work by those who remain
in the labor force.
The retirement (or earnings) test is the
most frequently criticized feature of
Social Security's Old-Age and Survivors
Insurance (OASI) program. Under
current law, the retirement test allows
beneficiaries age 62 to 69 to earn
income up to a specified annual limit.
(the annual exempt amount) without
loss of Social Security benefits. When
earnings exceed this level, benefits are
reduced $1 for every $3 earned over the
limit for beneficiaries age 65 to 69 and
$1 for every $2 for beneficiaries age 62
to 64. The dollar amount of the limit
depends on the worker's age-$7,440
for people age 62 to 64 and $10,200
for those age 65 to 69 in 1992. These
amounts are increased annually at the
same rate as the increase in average
wages.
Family Economics Review
Annual earnings patterns among Social
Security beneficiaries were examined
to see whether unusually large numbers
of workers report earnings that are at
or near the annual earnings limit. Data
from the Social Security Administra­tion's
Continuous Work History Sample
(CWHS) indicate that workers tend to
keep earnings at or below the annual
earnings limit. Thus, the retirement
test does depress the earnings of older
workers. Because the earnings limit has
been adjusted upward over the years, its
impact on work has been declining,
however.
Even though a minority of the elderly
population may be quite sensitive to the
retirement test and modify their work
schedules accordingly, most studies con­cluded
that eliminating the retirement
test provision would have little effec~
on the overall retirement picture. Retrre­ment
decisions are more likely influ­enced
by the availability and generosity
of Social Security and private pensions,
health status, job characteristics, wage
offers, family circumstances, and
personal preferences for work versus
leisure time. Other Social Security
provisions, such as the actuarial adjust­ment
for early retirement, the delayed
retirement credit, and the automatic
benefit recomputation feature, signifi­cantly
offset the apparent penalty of
the retirement test. Also, many workers
have limited control over the number of
hours they work and may react slowly
to changes in the retirement test.
Most studies on retirement have focused
on white male wage and salary workers.
Additional research is needed on the
retirement decisions of women,
minorities, self-employed workers,
and married couples.
Source: Leonesio, M.V., 1993, Social security
and older workers, Social Security Bulletin
56(2):47-57.
1994 Vol. 7 No.2
•
Household
Characteristics
Affect Food
Choices
Data from the 1977-78 and 1987-88
Nationwide Food Consumption Surveys
(NFCS) on household food consump­tion,
conducted by USDA's Human
Nutrition Information Service (HNIS),
were used to determine household con­sumption
of foods and beverages from
the home food supply, whether eaten
at home or away from home. Results
were analyzed by USDA's Economic
Research Service for this report.
Food supply data suggest that, overall,
Americans are eating fewer animal
products and more crop products.
Consumption of grains, fruits, and
vegetables has been increasing steadily,
while consumption of whole milk,
eggs, and red meat has been decli~ing.
National trends in food consumptiOn,
however, do not reflect the eating habits
of every American household.
This analysis was undertaken to examine
how food consumption patterns vary
by household characteristics such as
income, composition, and size. Overall
changes in food consumption between
1977-78 and 1987-88 are described
first, followed by differences related
to household income, size, and number
of parents present.
Overall Changes in Per Person
Food Consumption Between
1977-78 and 1987-88
Consumption of red meat declined
dramatically-down 21 percent (see
table). Reports on salmonella in
improperly stored eggs and their rela­tively
high cholesterol level depressed
egg consumption-down 25 percent.
Per person change in food
consumption, 1977-78 to 1987-88
Food group Percent
Dairy (fresh equivalent) -3.6
Fats and oils -12.4
Flour and cereals -12.0
Bakery products -4.3
Red meat -20.8
Poultry, fish, shellfish 19.2
Eggs (fresh equivalent) -24.6
Sugars, sweets -18.3
Potatoes, sweet-potatoes -10.3
Fresh vegetables -15.2
Fresh fruit -2.4
Canned vegetables and fruits -20.4
Frozen vegetables and fruits 18.0
Vegetable and fruit juices 17.1
Dried vegetables and fruits -17.1
Beverages 34.6
Sou s, sauces, gravies -18.0
Nuts, condiments -6.7
Dinner mixtures 68.5
Consumption of flour, cereal, and bakery
products declined 12 percent. With the
exception of cheese, consumption of
most dairy products decreased. There
was a 10-percent decline in consumption
of fresh fruits and vegetables. However,
the consumption of dark green vegetables
increased by 30 percent. Fruits and
vegetables are frequently consumed in
mixtures, such as frozen prepared dinners
and pizza. Consumption of mixtures
increased 68 percent. Consumption of
sugars and sweets was down 18 percent,
whereas beverage consumption was up
35 percent during the period.
31
Differences in Food
Consumption by Income
The biggest decreases in red meat
consumption occurred in the highest
income households (31 percent). The
lowest income households decreased
their red meat consumption by 11 per­cent
but were still consuming 5 percent
more than the national average.
Cheese consumption increased with
income; the lowest income households
ate 26 percent less cheese than the
national average in 1987-88, whereas
the highest income households ate 26
percent more cheese. The highest income
households showed the greatest decrease
in egg consumption-29 percent, com­pared
with a 22-percent decrease in
the poorest households. These poorest
households consumed 8 percent more
eggs than the national average, however.
Lowest income households decreased
their consumption of flour and cereals
by 16 percent, compared with an increase
of 2 percent for the highest income
households. The highest income house­holds
increased their consumption of
breakfast cereals by more than 24
percent, whereas the lowest income
households decreased their consumption
by 9 percent-making them the lowest
per person consumers of breakfast
cereals. This may reflect the relatively
high price of breakfast cereals.
Households generally consumed more
fresh vegetables as income rose. Con­sumption
of fresh fruits declined in all
but the wealthiest households, where it
increased 8 percent. In 1987-88, the
highest income households consumed
about 40 percent more fresh fruits than
the national average, and the lowest
income households consumed 27 per­cent
less. Decreases in sugar consump­tion
were larger in middle- and highest
income households than in lowest
income households.
32
Differences in Food
Consumption by
Household Size
Larger households, containing more
children, consume less food per person
--except for those foods prevalent in
children's diets, such as fresh fluid
milk, flours and cereals, and sugars.
One-person households experienced
a 30-percent decrease in red meat con­sumption.
One-person households had
the highest per-person level of egg
consumption. Consumption of dinner
mixtures increased more for the small­est
household sizes-up 90 percent for
one-person households and 89 percent
for two-person households. One-person
households had the greatest decrease in
their consumption of fats and oils, flour
and cereals, red meat, eggs, and fresh
vegetables during this period.
Differences in Food
Consumption by One- or
Two-Parent Households
Consumption of poultry, fish, and shell­fish
increased by 23 percent in two­parent
households during the reference
period, whereas consumption by female­headed
households was down 3 percent.
Female-headed households decreased
their consumption of dairy products by
nearly 10 percent during the reference
period, possibly because consumption
was also down for breakfast cereal,
which is usually served with milk.
Consumption of fresh fruits (down
20 percent) and vegetables (down 28
percent) declined more sharply among
female-headed households than two­parent
households (fruits down 2 percent
and vegetables down 14 percent). Citrus
fruit consumption was down 49 percent
in female-headed households. Use of
frozen vegetables and fruits dropped by
4 percent in female-headed households
while increasing by 25 percent in two­parent
families. Female-headed house­holds
consumed 10 percent more sugars
and sweets than the national average
even though their consumption was
down 7 percent. Female-headed house­holds
had the greatest increase in
beverage consumption--46 percent;
their consumption of soft drinks
increased 68 percent. Consumption
of fruit and vegetable juices was up
11 percent in female-headed households
and 21 percent in two-parent households.
Implications
Changes in food consumption may
have implications for the nutrition and
health of particular groups of Americans
who may be at a greater risk of chronic
diet-related diseases than is the popula­tion
as a whole. Socioeconomic charac­teristics
of a household, as well as food
prices and cultural eating habits, deter­mine
food choices. Policymakers who
can recognize these influences and
identify the factors affecting food
choices will be able to develop more
effective farm and nutrition programs.
Source: Lutz, Z., Blaylock, J., and Smallwood, D.,
1993, Household characteristics affect food
choices, FoodReview, May-August 1993.
Family Economics Review
•
The Economic
Well-Being of
Farm Operator
Households
This report uses data from USDA's
Farm Costs and Returns Survey
(FCRS) to describe characteristics
of farm operator households and their
farm businesses in 1988-90. Sources
of income received by farm operator
households and measures of their
dependence on income from farming
operations are presented. Both farm
and nonfarm economic conditions affect
farm operator households, as most of
the income of the average farm operator
household is from off-farm wage and
salary jobs.
In 1990, there were 2.1 million farms in
the United States, down from a high of
6.8 million in 1935. Farming accounted
for 2.3 percent of all U.S. jobs and 1.4
percent of the gross domestic product in
1991. About 9 million Americans are
directly associated with farming as farm
operators, hired farm workers, unpaid
workers, or farmland owners. In 1988,
there were about 1.3 million farmland
owners who rented out their land to
farming businesses.
Despite these modest statistics, agricul­ture
is vital to the U.S. economy. The
United States had a trade surplus in
agricultural products of$16.6 billion
in 1990. Also, it is the world's largest
exporter of agricultural commodities,
valued at more than $390 billion in
1990.
The FCRS samples about 12,000 farms
each year to collect cross-sectional data.
Data collected include characteristics of
farms (size, commodity specialization,
legal form of organization, farmland
1994 Vol. 7 No.2
tenure, region, and participation in
government programs), characteristics
of the operator (age, education, and
major occupation), and financial charac­teristics
(total household income, farm
income, off-farm income, poverty and
farm income dependency, and net worth
of farm).
Characteristics of the Farm
When farm size is measured in terms
of economic class, most U.S. farms are
small-nearly 75 percent of farms have
sales of $50,000 or less. Most U.S. farms
are organized as sole proprietorships.
Only 6 percent of the farms are organ­ized
as partnerships and 2 percent as
family corporations.
The most common farm specialty is
beef cattle, hogs, or sheep. Almost half
of all farms specialize in one of these
commodities. In 1990, average farm
income in beef, hog, and sheep farm
households was $504, although these
households earned over $35,000 from
off-farm employment. Seven percent
of farms specialize in other livestock,
8 percent in dairy production, and 39
percent in cash grains and other crops.
Farming counties are identified as those
having at least 20 percent of the labor
and proprietor income of the county
from farm sources. The Midwest had
the most farming counties (293), fol­lowed
by the South (151), the West
(71), and the Northeast (1). About 40
percent of U.S. farm operator house­holds
are in the Midwest, 40 percent
are in the South, 14 percent are in the
West, and 6 percent are in the Northeast.
The South has the highest percentage
of small farms-about 85 percent have
sales of $50,000 or less. Farm operators
in the South are older and have lower
levels of education. Southern farmers
are more likely than all U.S. farmers to
raise livestock and less likely to grow
cash grains.
One-third of all counties in the Midwest
are farming counties, and most cash
grain farms are in the Midwest. While
farm income is significantly higher in
the Midwest than in any other region,
the Midwest has the lowest off-farm
income.
In the West, about 20 percent of the
counties are farm counties. Farm
operator households in the West have
the highest average household income
of all regions, mostly from off-farm
sources. Western farm operators are the
most highly educated of farmers in all
regions and have the highest average
farm business net worth.
The average farm income of farm
operator households in the Northeast in
1990 was less than $2,000--the lowest
of any region. The Northeast had the
largest regional concentration of dairies
in the country. In 1990, 25 percent of
all farms in the Northeast specialized
in milk production, compared with 8
percent nationally.
National agricultural commodity
programs provide direct government
payments to about one-third of all
farms. This percentage is low because
the programs are generally designed for
only selected commodities, namely
corn, grain, sorghum, barley, oats,
wheat, rice, and upland cotton. The
average payment received varies from
year to year because payments are tied
to yields and prices. For example, the
average payment received per farm
recipient in 1988 was over $14,000,
compared with about $10,000 in both
1989 and 1990. Farm operators who
receive the largest payments tend to be
younger and better educated than other
farm operators.
33
Characteristics of the Operator
Compared with the U.S. population,
a large percentage of farm operator
households are elderly or near-elderly.
In 1990, 46 percent of farm operators
were age 55 or older, compared with 35
percent for all householders (see table).
In addition, only 3 percent of all
employed people in the United States
in 1990 were age 65 or older, compared
with 22 percent of farm operators.
Spouses are 3 years younger than
farm operators, on average.
In 1990, 24 percent of farm operators
had not completed high school, 40
percent were high school graduates,
19 percent had attended college, and
16 percent had college degrees. Their
educational attainment was similar to
that of all U.S. householders, except
that they were less likely to have a
college degree and more likely to have
stopped their formal education with
high school. Farm operators who were
college graduates were more likely to
have a nonfarm major occupation than
a farm occupation. In general, as educa­tional
attainment increases, the propor­tion
of operators whose major occupation
is farming decreases. There is also a
clear relationship between educational
level and farm profitability-the greater
the operator's education, the higher the
rates of return to farm assets and farm
equity.
Almost all U.S. farmers are White males.
Six percent are non-White (Black, Asian,
American Indian, or other races) or of
Hispanic origin. White farm operators
have higher average farm and off-farm
income and greater net worth. Six
percent of farm operators are female.
Female farm operators tend to have
smaller farms and are more likely to
specialize in a livestock commodity.
34
Characteristics of farm operator households and all U.S. households,
1990
Farm operator
Item
Number
Age of operator/householder1 (years)
15 to 34
35 to 44
45 to 54
55 to 64
65 or older
Education of operator/householder2
Less than high school
High school graduate
Some college
College and beyond
Household size (people)
1
2
3
4
5 or more
Household income class
Less than $10,000
$10,000-$24,999
$25,000 - $49,999
$50,000 and more
Share below poverty threshold
Average household income
Average household net worth
Average household expenditures
1U.S. householder data are for those age 16 years or older.
2U.S. householder data are for those age 15 years or older.
households U.S. households
1,738,019 94,312,000
Percent
11.7 26.7
20.7 22.6
21.7 15.6
23.5 13.3
22.4 21.8
24.1 23.3
40.5 35.8
19.0 18.3
16.5 22.6
8.9 25.0
40.7 32.0
18.9 17.1
17.2 15.4
14.4 10.5
22.2 14.9
27.2 27.2
28.8 33.3
21.8 24.6
21.9
39,007
411,681
15,049
Dollars
10.7
37,403
92,0173
28,369
3Data are for 1988 because data are not available annually on the net worth of all U.S. households.
Net worth data were collected for 1991 but are not yet available.
Source: Ahearn, M.C., Perry, J .E., and EI-Osta, H.S., 1993, The Economic Well-Being of Farm
Operator Households, l988-90, U.S. Department of Agriculture, Economic Research Service,
Agricultural Economic Report No. 666.
Family Economics Review
Fifty-six percent of U.S. farm operators
and 20 percent of their spouses claim
farming as their major occupation; that
is, they spend more time farming than
in other employment. Nevertheless,
most of these households earn more of
their cash income off the farm than on
the farm. Households of operators with
a nonfarm major occupation lose money
on their farms but earn nearly $50,000
off their farms, on average.
Financial Characteristics
The income definition used is similar
to the one used by the Bureau of the
Census to report the income of all U.S.
households. This income defmition is a
money income concept, except deprecia­tion
is included as an expense for those
who are self-employed, such as farmers.
The average income of farm operator
households in 1990 was $39,007, or
104 percent of the average U.S. income.
About 50 percent of all farms have
negative farm incomes in any given
year, but most have off-farm sources
of income that offset their farm losses.
About 10 percent of all farm operator
households each year have negative
incomes from all sources.
Off-farm income is critical to the fman­cial
well-being of farm operator house­holds.
In 1990, the average off-farm
income of farm operator households
was $33,265, or 85 percent of total
household income. In about 60 percent
of farm households, either or both the
operator and spouse worked off the
farm.
Incomes of farm operator households
are much less equally distributed than
those of all U.S. households. In 1990,
a higher percentage of farm operator
households (21.9 percent) was below
the poverty line compared with all U.S.
families (10.7 percent). In contrast, a
1994 Vol. 7 No.2
higher percentage of farm operator
households was in the highest income
group of $100,000 or more (6.3 percent
for farm operator households versus
4.3 percent for all U.S. households).
The average net worth of farm operator
households was $411,681 in 1990,
compared with $92,017 for all U.S.
households. Over 85 percent of farm
operator households' wealth was rep­resented
by the value of their farming
operation. Even households that earned
negative farm incomes in 1990 had
average household net worth of
$343,170.
Compared with all U.S. households,
farm operator households have lower
household expenditure levels. In 1990,
farm operator households reported that
they spent about $15,000 for household
needs, compared with over $28,000 for
all households. Housing and nonfarm
transportation expenses of farm opera­tor
households were over $8,000 lower
than those of all U.S. households.
Source: Ahearn, M.C., Peny, J.E., and El-Osta,
H.S., 1993, The Economic Well-Being of Farm
Operator Households, 1988-90, U.S. Department
of Agriculture, Economic Research Service,
Agricultural Economic Report No. 666.
35
36
Regular Items •
Recent Legislation Affecting Families
Public Law 103-82 (enacted September
21, 1993}-the National and Community
Service Trust Act amends the National
and Community Service Act of 1990
to establish a Corporation for National
Service, enhance opportunities for
national service, and provide national
service education awards to those who
participate. These education awards
would not exceed $4,725 a year for
2 years and would go to individuals age
17 or older who perform community
service before, during, or after their
postsecondary education. Local programs
would offer stipends of up to $7,400 a
year, with the Federal Government
providing 85 percent of the cost of
health- and child-care benefits. Individ­ual
programs would be run by nonprofit
organizations, including institutions of
higher education, local governments,
school districts, and State or Federal
agencies, with participants working
in such areas as the environment,
education, and human and public
safety. Spending is capped at $300
million in fiscal 1994, $500 million
in fiscal 1995, and $700 million in
fiscal 1996, enabling about 100,000
people to participate.
Public Law 103-120 (enacted October
27, 1993}-the HUD Demonstration
Act of 1993 authorizes the Secretary
of Housing and Urban Development to
develop innovative strategies for assist­ing
homeless individuals and families
through a variety of activities, including
the coordination of efforts and the fill­ing
of gaps in available services and
resources. The Act also enables the
Secretary to develop the capacity of
community development corporations
and community housing development
organizations to undertake affordable
housing projects and programs and to
encourage pension fund investment in
affordable housing.
Public Law 103-159 (enacted November
30, 1993}-The Brady Handgun Vio­lence
Prevention Act, commonly called
the Brady Bill, provides for a waiting
period of 5 business days before the
purchase of a handgun. The 5-day
waiting period would be used by law
enforcement officials to do a personal
background check on the purchaser to
screen out convicted felons and other
ineligible buyers. The Act also provides
for establishment of a national instant
criminal background check system to be
contacted by firearms dealers before the
transfer of any firearm. The Brady Bill
is the first major gun control legislation
to be enacted since 1968. The law
authorizes $200 million per year to help
States computerize their records.
Public Law 103-160 (enacted November
30, 1993}-the National Defense
Authorization Act authorizes $261
billion for fiscal 1994 for military
activities of the Department of Defense
and prescribes military personnel
strengths for fiscal1994. The Act
authorizes $2.55 billion for programs
aimed at helping Government and pri­vate
sector defense workers, defense
contractors, and their communities
adapt to a long-term retrenchment in
defense spending. A ceiling of 1,623,500
active-duty personnel, down from ·
1,727,700 in fiscal 1993, was mandated
for fiscal 1994, as well as a 2.2 percent
military pay raise effective January 1,
1994. The Act appropriates $20 million
to establish a center for medical re­search
related to women in the services.
Another provision expands the definition
of medical services to which women in
the military and female dependents are
entitled, such as mammograms, treat­ment
for pregnancy and infertility, and
other gynecological procedures. The
law also codifies provisions on homo­sexuals
in the military.
1994 Vol. 7 No.2
•
Data Sources
National Medical Expenditure
Survey (NMES)
Sponsoring agency: U.S. Department
of Health and Human Services
Population covered: Civilian noninsti­tutionalized
U.S. population with an
oversampling of low-income families
and Black and Hispanic minorities;
the institutionalized population; and a
special survey of Native Americans
and Alaskan Natives.
Sample size: 36,400 individuals in
15,000 households; and for the
institutionalized population-! ,500
facilities, 7,000 current residents, and
3,500 new admissions.
Geographic distribution: Nationwide
Years data collected: 1987
National Maternal and Infant
Health Survey and Follow-Up
(NMIHS)
Sponsoring agency: U.S. Department
of Health and Human Services
Population covered: Married and
unmarried mothers and their prenatal
care provider and hospital.
Sample size: Original survey: 10,000
women who had live births, 5,300 who
had infant deaths, and 3,300 who had
late fetal deaths in 1988. Follow-up
survey: 8,500 women who had live
births, 900 who had infant deaths, and
900 who had late fetal deaths in 1988.
1994 Vol. 7 No.2
Method of data collection: Personal
and telephone interviews
Future surveys planned: None
Major variables: For households and
individuals: demographic characteristics,
health status, insurance coverage, and
use of (and expenditures on) health care
services. For institutionalized popula­tion:
individual's mental health and
functional status, resident characteristics,
living arrangements, insurance coverage,
next of kin, and the institution. The
surveys permit separate and compara­tive
analyses with other surveys that
pertain to household survey respondents.
Two of these surveys are the Health
Insurance Plans Survey (of employers
and insurers) and the Medical Provider
Survey (of physicians).
Geographic distribution: Nationwide
Years data collected: 1988 and 1991
Method of data collection: Question­naires,
interviews-in person or by
telephone, birth certificates, fetal death
reports, and infant death certificates.
Future surveys planned: 1996
Major variables: Marital status, age,
education, race, occupation-work
patterns, income 1 year before delivery,
weeks pregnant at first prenatal visit and
number of visits, access and barriers to
care, source of payment for prenatal
care, WIC participation, length of
hospital stay, source of payment for
infant care, child care, vaccinations.
Sources for further information
and data: Tapes in SAS or EBCDIC
formats and documentation available
from:
National Technical Information
Service (NTIS)
5285 Port Royal Road
Springfield, VA 22161
(703) 487-4650
A bibliography of literature based on
the survey and previous surveys is
available from:
Agency for Health Care Policy and
Research (AHCPR)
Division of Information and
Publications
1812 Parklawn Building
Rockville, MD 20857
(301) 443-4100
Sources for further information
and data: Data tapes are available
from:
National Technical Information
Service (NTIS)
5285 Port Royal Road
Springfield, VA 22161
(703) 487-4650
Reports are available from:
U.S. Department of Health and
Human Services
National Center for Health Statistics
Division of Vital Statistics
6525 Belcrest Road, Room 840
Hyattsville, MD 20782
(301) 436-7464
37
38
•
Charts From Federal Data Sources
Percentage of the voting-age population who voted in the
Presidential election, 1964-92
Percent
70
60
50
40
30
20
10
0
1964 68 72 76 80 84
Men -Women -
88 92
Jennings, J. T., 1993, Voting and Registration in the Election of November 1992, Current
Population Reports, Population Characteristics, P20-466, U.S. Department of Commerce,
Bureau of the Census.
Median income of people 25 years and over, by educational
attainment, 1992
$thousands
Total 24.0 D Men
11 .9
• Women
Less than 9th grade 10.3
6.3
9th to 12th grade 14.2
7.3
High school graduate 21 .7
10.9
Some college 26.4
14.4
Associate degree 28.8
17.3
Bachelor's degree 36.8
22.4
Master's degree 44.3
30.2
Doctorate degree 51 .8
39.6
U.S. Department of Commerce, Bureau of the Census, 1993, Money Income of Households,
Families, and Persons in the United States: 1992, Current Population Reports, Consumer
Income, Series P60-184.
Family Economics Review
Individuals not covered by health insurance, by State, 1992
• 20.0 and higher .15.0 -19.9 . 10.0 -14.9 0 5.o - 9.9
U.S. Department of Commerce, Bureau of the Census, 1993, Money Income of Households,
Families, and Persons in the United States: 1992, Current Population Reports, Consumer
Income, Series P60-184.
Individuals not covered by health insurance, by age, 1992
Age (years) Percent
65 and older 1.2 I
55 to 64 12.9 ..
45 to 54 14.0 - 35 to 44 15.5 - 25 to 34 20.9 - 18 to 24 28.9 - Under18 12.4 ..
All 14.7 - U.S. Department of Commerce, Bureau of the Census, 1993, Money Income of Households,
Families, and Persons in the United States: 1992, Current Population Reports, Consumer
Income, Series P60-184.
1994 Vol. 7 No.2 39
•
Journal Abstracts and Book Summary
The following abstracts are reprinted verbatim as they appear in the cited source.
Goldscheider, F. and Goldscheider, C.
1993. Whose nest? A two-generational
view of leaving home during the
1980s. Journal of Marriage and the
Family 55(4):851-862.
This article compares the influence of
the expectations of young adults and
their parents on nest leaving in the 1980s.
Using data from the High School and
Beyond surveys, we model the odds of
leaving home to establish a new home
either while still unmarried or in the
context of marriage. Although parents
and young adults each expected earlier
residential independence than actually
occurred, both generations' expecta­tions
strongly influenced later residen­tial
behavior, with parental expectations
having more impact than those of the
young adults themselves. We also con­sider
"who wins" when there are con­flicting
expectations about the path to
residential independence.
Ha, M., Williams, S.E., and Weber,
M.J.1993. Utility averaging policies­Impact
on consumer's energy usage.
The Journal of Consumer Affairs
27(2):284-299.
Average Monthly Payment (AMP)
plan is a utility policy designed to
assist consumers in need such as low
income and elderly. This study examines
whether this utility policy is an advan­tage
to these target customers. Results
indicate that, with a muted price signal,
the AMP plan produces an effect con­trary
to the objective of assisting low
and fixed income consumers. Further,
the study indicates consumers on the
AMP plan consume more energy and
the AMP plan does not appear to sup­port
energy conservation and efficiency.
40
Jacobson, L.S., LaLonde, R.J., and
Sullivan, D.G. 1993. Earnings losses
of displaced workers. The American
Economic Review 83(4):685-709.
We exploit administrative data combin­ing
workers' earnings histories with in­formation
about their firms to estimate
the magnitude and temporal pattern of
displaced workers' earnings losses. We
find that high-tenure workers separating
from distressed firms suffer long-term
losses averaging 25 percent per year.
In addition, we find that displaced
workers' losses: (i) begin mounting
before their separations, (ii) depend
only slightly on their age and sex,
(iii) depend more on local labor-market
conditions and their former industries,
(iv) are not, however, limited to those
in a few sectors, and (v) are large even
for those who find new jobs in similar
firms.
Pirog-Good, M.A. 1993. Child support
guidelines and the economic well­being
of children in the United States.
Family Relations 42(4):453-462.
There is enormous variation in the mag­nitude
of child support awards obtained
by using state child support guidelines.
This variation does not result from cost­of-
living differences across states. In
many states, nominal and inflation­adjusted
support awards declined
between 1988 and 1991. Overall, non­custodial
parents do not pay a fair share
of the costs of raising their children.
The article advocates making larger
awards, expressing awards as a percent­age
of income, and implementing a
child support assurance program.
ZilJ, N. and Daly, M., editors. 1993.
Researching the Family: A Guide
to Survey and Statistical Data on
U.S. Families. Child Trends, Inc.,
Washington, DC.
This book is a guide to major family
databases. It presents descriptions of
over 60 major survey and statistical
databases that contain information
about the characteristics, experiences,
and behaviors of American families.
The guide is intended to increase the
familiarity of the research community
with these existing databases.
For each survey or statistical program
described in the guide, material is pre­sented
on the purpose of the effort,
the sponsoring agency, and the de­sign,
content, and limitations of the
survey or other data gathering proce­dure.
Design information includes who
was covered in the survey universe,
how large the sample was. how often
the survey has been conducted, and
what completion rate was achieved.
The content of the survey instrument
or data collection form is summarized
by listing topics covered, especially
those involving potential causes or
consequences of family behavior.
In the limitations section, gaps and
biases in the data, particularly those
that may cause difficulties or lead to
erroneous conclusions for family­based
studies are outlined. Informa­tion
on where and how to get data
files also is presented.
Family Economics Review
·-- • Cost of Food at Home
Cost of food at home estimated for food plans at four cost levels, February 1994, U.S. average1
Cost for 1 week Cost for 1 month
Sex-age group Thrifty Low-cost Moderate- Liberal Thrifty Low-cost Moderate- Liberal
plan plan cost plan plan plan plan cost plan plan
FAMILIES
Family of 2:2
20 - 50 years ... .. ........... . .. $51 .60 $65.00 $80.00 $99.60 $223.40 $282.00 $346.80 $431 .10
51 years and over . ..... . ...... . . 48.80 62.50 76.90 92.00 211 .60 270.80 333.20 398.40
Family of 4:
Couple, 20 - 50 years
and children-
1 - 2 and 3 - 5 years ... ... ... .. . 75.30 93.80 114.40 140.70 325.90 406.70 496.00 609.40
6 - 8 and 9 - 11 years ..... . •. .. . 86.10 110.20 137.50 165.60 373.20 478.00 596.20 717.50
INDIVIDUALS3
Child:
1 - 2 years ..... . .............. . 13.70 16.60 19.40 23.50 59.20 72.00 84.10 101 .90
3- 5 years ......... . ..... . . .. . . 14.70 18.10 22.30 26.70 63.60 78.30 96.60 115.60
6 - 8 years . ... .. . . ... ... .. ..... 17.90 23.90 29.90 34.80 77.70 103.70 129.60 150.90
9- 11 years ...... . . . . .. ........ 21 .30 27.20 34.90 40.30 92.40 117.90 151.30 174.70
Male:
12 - 14 years .... . . . ... . . . . . . .. . 22.20 30.80 38.40 45.00 96.10 133.60 166.20 195.10
15 - 19 years ...... .. .. . . . . . ... . 23.00 31.80 39.50 45.80 99.60 137.80 171 .20 198.30
20 - 50 years ... . .. . . . . . .. ..• . .. 24.70 31 .50 39.20 47.60 106.80 136.70 170.10 206.00
51 years and over . .. .. . .. ....... 22.40 29.90 36.80 44.10 96.90 129.80 159.40 191 .00
Female:
12 - 19 years . . ... .... .. . . . .. . . . 22.30 26.60 32.30 39.00 96.60 115.40 139.90 169.00
20 - 50 years ..... .... .. . . ...... 22.20 27.60 33.50 42.90 96.30 119.70 145.20 185.90
51 years and over ... .. . . . . . . . .. . 22.00 26.90 33.1{) 39.50 95.50 116.40 143.50 171 .20
1 Assumes that food for all meals and snacks is purchased at the store and prepared at home. Estimates for the thrifty food plan were
computed from quantities of foods published in Family Economics Review 1984( 1). Estimates for the other plans were computed from
quantities of foods published in Family Economics Review 1983(2). The costs of the food plans are estimated by updating prices paid by
households surveyed in 1977-78 in USDA's Nationwide Food Consumption Survey. USDA updates these survey prices using information
from the Bureau of Labor Statistics, CPI Detailed Report, table 4, to estimate the costs for the food plans.
2Ten percent added for family size adjustment. See footnote 3.
3The costs given are for individuals in 4-person families. For individuals in other size families, the following adjustments are suggested:
1-person-add 20 percent; 2-person-add 1 0 percent; 3-person-add 5 percent; 5- or 6-person-subtract 5 percent; 7- or more-person-subtract
1 0 percent.
1994 Vol. 7 No.2 41
• Consumer Prices
Consumer Price Index for all urban consumers [1982-84 = 1 00]
Group
All items .................. .. ......... . .... ...... .
Food .......... . ........ .... ...... .. . ...... . .. .
Food at home ..... ... .. ................ ..... . .
Food away from home ......................... .
Housing .......... . ... .... .... , .......... . .... .
Shelter ... . ...... . ... .... .... .. . . . .. .... . .... .
Renters' costs 1
.. .. . . .• .. .....•........••....
Homeowners' costs 1
.. ..... .• .... ... . • •. ..... .
Household insurance 1
.. .. ..........••.. • ....
Maintenance and repairs ................. ..... .
Maintenance and repair services . ...... ..... .. .
Maintenance and repair commodities .. . .... .. . .
Fuel and other utilities .. .................... .. .. .
Fuel oil and other household fuel commodities ..... .
Gas (piped) and electricity ............ . .. ..... . .
Household furnishings and operation .............. .
Housefurnishings .. . ........ .. ... . ..... . . .. .. .
Housekeeping supplies .............. . ........ .
Housekeeping services .... .. . . . ........... ... .
Apparel and upkeep .............. . .. .... . .... . .. .
Apparel commodities .............. . .. ......... .
Men's and boys' apparel ....... . ... .. . ........ .
Women's and girls' apparel .................... .
Infants' and toddlers' apparel. ............. .. . . . .
Footwear ............. ... . ... .............. .
Apparel services ... . .......................... .
Transportation .. .. .. .......... . ..... ....... . ... .
Private transportation ................. . ....... . .
New vehicles . ... . . .......... .... .. ... . ..... .
Used cars ... . . ...................... . .. . . .. .
Motor fuel. ... . ... ......... . ..... .. ......... .
Automobile maintenance and repair .... .. .... .. . .
Other private transportation ..... .. . ... ......... .
Other private transportation commodities .... .. . .
Other private transportation services ........... .
Public transportation ........ . ................ . . .
Medical care ........ . ..................... .. .. . .
Medical care commodities .............. .. ... . . . .
Medical care services .................. ........ .
Professional medical services ...... . ........... .
Entertainment ..... .......... . ....... . ......