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February 1990, Vol. 113, No. 2
Supplementing retirement until Social Security begins
William Wiatrowski
The term "three-legged stool" is commonly used to emphasize that retirement income derives from three primary sources: Social Security, employer-sponsored retirement plans, and workers' savings. If workers retire before age 62, however, the first leg of the stool, Social Security payments, is missing. To compensate, some private pension plans provide extra payments until a retired worker is eligible for this Government benefit.
According to the Bureau of Labor Statistics 1988 Employee Benefits Survey of medium and large firms in private industry, 1 in 8 defined benefit pension plan participants was in a plan that provided such supplemental payments. These special benefits usually continued until the retiree reached age 62, the earliest age at which regular Social Security benefits may commence.1 Benefit payments ranged widely, but most commonly were a uniform dollar amount for all plan participants regardless of salary or length of service.
The 1988 survey studied full-time employees in a sample of 2,500 establishments, which represented approximately 107,000 establishments employing 31 million full-time workers. Separate data were developed for three broad occupational groups: professional and administrative, technical and clerical, and production and service workers. The fare referred to collectively as white-collar workers, the third as blue-collar workers.2
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Footnotes
1 Although age 62 is currently the
earliest age at which Social Security may be received by workers who retire because of
advancing age, other benefits, such as those for disabled employees and survivors, may be
received at earlier ages.
2 The Employee benefits Survey is an annual study of the incidence and characteristics of employee benefits. In addition to retirement plans, the survey provides data on health care, life and disability insurance, paid and unpaid leave, and a variety of additional benefits. Results of the most recent survey may be found in Employee benefits in Medium and Large Firms, 1998, Bulletin 2336 (Bureau of Labor Statistics, August 1989).
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