Pension Spending Supports 7.1 Million Jobs, $1.2 Trillion in Economic Output across the U.S.

Food Services, Healthcare, Real Estate and Retail Industries See
Biggest Employment Impacts

Webcast on September 14th at 11 AM ET to
Review Findings

WASHINGTON–(BUSINESS WIRE)–#economy–A new report finds that economic gains attributable to defined benefit
(DB) pensions in the U.S. are substantial. Retiree spending of pension
benefits in 2014 generated $1.2 trillion in total economic output,
supporting some 7.1 million jobs across the U.S. Pension spending also
filled government coffers with retirees paying a total of $190 billion
in federal, state and local taxes on their pension benefits and spending

Download the report here.
Register for the webcast here.

2016: Measuring the Economic Impact of Defined Benefit Pension
released today by the National Institute on
Retirement Security includes the story of Linda, a newly-retired,
single woman with pension income living in California.

Linda spends nearly all of her $3,300 monthly pension income on housing
costs – including her mortgage payment, interest, home maintenance,
taxes, insurance and utilities. Her pension spending creates a direct
and positive economic benefit on the California economy. The aggregate
economic impact of housing spending by 24 million retired Americans with
pensions plays an important role in the real estate sector. In 2014,
pension expenditures supported nearly 383,000 real estate industry jobs

“Household spending drives the U.S. economy, accounting for more than
two-thirds of U.S. economic output. In fact, American retirees’ pension
spending supported one-tenth of such economic output nationwide,” said
Diane Oakley, NIRS executive director. “So it’s clear that the growing
number of retired Americans must have adequate income for consumer
spending that continues to drive our economy.”

Pensionomics 2016 comes at a time when economists are predicting
dramatic drops in economic growth in the coming decades. A recent
McKinsey Global Institute study
indicates that factors including an aging workforce and declines in
population growth could reduce
economic growth
by one-third in the U.S. and 40 percent globally.

“A stable and secure pension benefit that won’t run out enables retirees
to pay for their basic needs like housing, food, medicine and clothing.
It’s good for the economy when retirees are self-sufficient and
regularly spend their pension income. Retirees with inadequate 401(k)
savings and fearful of running out of savings tend to hold back on
spending. This reduced spending stunts economic growth, which already is
predicted to drop by one-third as the U.S. population ages,” Oakley

Pensionomics 2016 reports the national economic impacts of public
and private pension plans, as well as the impact of state and local
plans on a state-by-state basis. A map with each state fact sheet is
available here.

The study finds that in 2014:

  • Nearly $519.7 billion in pension benefits were paid to 24.3 million
    retired Americans including:

    • $253 billion paid to some 9.6 million retired employees of state
      and local governments and their beneficiaries (typically surviving
    • $78.8 billion paid to some 2.6 million federal government retirees
      and beneficiaries; and
    • $187.9 billion paid to some 12.1 million private sector retirees
      and beneficiaries.
  • Expenditures from these payments collectively supported:

    • 7.1 million American jobs that paid $354.8 billion in labor income;
    • $1.2 trillion in total economic output nationwide;
    • $627.4 billion in value added (GDP); and
    • $189.7 billion in federal, state, and local tax revenue.
  • Pension expenditures have large multiplier effects:

    • Each dollar paid out in pension benefits supported $2.21 in total
      economic output nationally.
    • Each taxpayer dollar contributed to state and local pensions
      supported $9.19 in total output nationally. This represents the
      financial value of long- term investment returns and the shared
      funding responsibility by employers and employees.

The study is authored by Jennifer Brown, NIRS manager of research. It
was conducted using the most current data available from the U.S. Census
Bureau and IMPLAN, an input-output modeling software widely used by
industry and governments analysts.

The National Institute on Retirement Security is a non-profit,
non-partisan organization established to contribute to informed
policymaking by fostering a deep understanding of the value of
retirement security to employees, employers, and the economy as a whole.
Located in Washington, D.C., NIRS’ diverse membership includes financial
services firms, employee benefit plans, trade associations, and other
retirement service providers.


National Institute on Retirement Security
Kelly Kenneally,