Authors
Richard Liu
Research Associate, Institute
When we open the lid on the box of nonwage income for older adults, what do we find inside? The contents look different for households at the top and bottom of the income distribution.
Consider a lower-income couple, Chris and Taylor. At age 55, Chris earned around $6,100 from a house painting business while Taylor received $2,400 in unemployment insurance. They withdrew around $5,300 a year from retirement saving accounts. By 65, they were receiving Social Security payments that came to $14,000 a year and made up half their income. Chris and Taylor’s situation is reflected in Figure 1, which shows the average amounts of nonwage income across households in the bottom third of the income distribution.
For households in the bottom third of the distribution, nonwage income starts around $16,000 at age 55. This increases to around $31,000 at age 70. It’s a big increase, but a small amount to support a household.
Figure 2 shows the average amounts of nonwage income across households in the top third of the income distribution. Consider the high-income household of Alex and Jordan. At 60 they are still running their small tax-preparation company that brings in $38,000 a year. They get another $19,000 in dividends and rent from a second property, plus $6,700 from a legal settlement. Ten years later, they still get $24,000 from consulting for the tax prep firm. Retirement accounts bring in $43,000 and Social Security another $37,000. All told, their nonwage income comes to $130,000 a year.
This article is featured in the Spring 2026 issue of For All, the magazine of the Opportunity & Inclusive Growth Institute
Lisa Camner McKay is a senior writer with the Opportunity & Inclusive Growth Institute at the Minneapolis Fed. In this role, she creates content for diverse audiences in support of the Institute’s policy and research work.
