For Immediate Release

Retiree Spending of Pension Income Fueled $1.5 Trillion In Economic Output, 7.1 Million Jobs, and $224.3 Billion in Tax Revenue Nationwide

Key Sectors Benefiting Most: Food Services, Healthcare, and Retail

Upcoming Webinar to Discuss Findings on January 15 at 2 PM ET

WASHINGTON, D.C., January 6, 2025 – Retiree spending powered by U.S. private and public sector defined benefit pensions contributed significantly to the economy in 2022, according to a new report from the National Institute on Retirement Security (NIRS). Retiree spending of public and private sector pension benefits in 2022 generated $1.5 trillion in total economic output, supporting 7.1 million jobs across the nation.

Pensionomics 2025: Measuring the Economic Impact of Defined Benefit Pension Expenditures calculates the national economic impacts of U.S pension plans, as well as the impact of state and local plans on a state-by-state basis. Read the report. Register for the webinar. Access a map with downloadable state fact sheets regarding the economic impact of state and local pension plans.

In addition to the impact on employment and economic activity, pension spending bolstered public finances in 2022, adding $224.3 billion in tax revenue at the federal, state, and local levels. The report also highlights that key sectors such as food services, healthcare, and retail experienced the most significant benefits from pension income spending, underscoring the critical role of pensions in supporting economic stability and growth.

“Pensions are important to the financial security of retirees, but it doesn’t stop there. Spending of pension income by retirees has a giant-sized economic footprint that benefits virtually every community across the country,” said Dan Doonan, NIRS executive director and report co-author. “Pension benefits remain a major part of our economy today because retirees know they’ll receive reliable pension income every month and aren’t fearful of spending it on basic necessities like housing, food, and healthcare.  That spending supports local economies and creates jobs.”

“Importantly, pensions provide a stable source of tax revenue,” Doonan added. “This revenue comes from taxes paid by retirees on pension benefits and from the sales taxes generated by retiree spending. This revenue is particularly valuable to local communities.”

The economic analysis finds that in 2022:

  • $680.6 billion in pension benefits were paid to 26.3 million retired Americans, including:
    • $371.6 billion paid to 12.0 million retired employees of state and local government and their beneficiaries (typically surviving spouses).
    • $217.4 billion paid to some 11.5 million private sector beneficiaries.
    • $91.5 billion paid to some 2.7 million federal government beneficiaries.
  • Expenditures from those payments collectively supported:
    • 7.1 million American jobs that paid $466.2 billion in labor income.
    • $1.5 trillion in total economic output nationwide.
    • $871.0 billion in value added (GDP).
    • $224.3 billion in federal, state, and local tax revenue.
  • Pension expenditures have large multiplier effects:
    • Each dollar paid out in pension benefits supported $2.28 in total economic output nationally.
    • Each taxpayer dollar contributed to state and local pensions supported $7.79 in total output nationally. This represents the leverage afforded by robust long-term investment returns and shared funding responsibility by employers and employees.
  • The largest economic impacts from pension expenditures were in the food services, health care, and retail trade sectors.

Pensionomics 2025 quantifies the economic impact of private and public sector pension payments in the U.S. It also quantifies the impact of public pensions in each of the 50 states and the District of Columbia. Using the IMPLAN model, the analysis estimates the employment, output, value added, and tax impacts of pension benefit expenditures at the national and state levels.

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 membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline.org.