Pension Spending Boosts Rural Economies


Retired public employees who live and spend their pension dollars in small towns and rural communities help jumpstart their local economies – especially during troubled times, according to a new study by the National Institute on Retirement Security (NIRS).

Public pension benefit dollars account for significant amounts of total personal income and gross domestic product (GDP) in counties across the 43 states analyzed in the study, “Fortifying Main Street: The Economic Benefit of Public Pension Dollars in Rural America.”

In smaller, less densely populated areas with smaller economies – such as rural communities and smaller towns – pension benefit dollars make up a larger portion of the overall local economy, the study found. This will help to sustain the economies of small towns during the current period of economic transition in rural America, the NIRS researchers said.

“National economic trends coupled with population declines have had a devastating impact on many small towns and rural areas across America,” said Dan Doonan, NIRS executive director. “Often, the largest employer in these smaller towns is a public entity like a school system or municipality that employs teachers, nurses, firefighters, and public safety officials.”

When these public employees retire, they spend their pension income on goods and services in their communities, thus providing a significant and stable source of economic activity, Doonan said.

In addition to rural communities, counties containing a state capital receive the biggest boost from public pensions due to larger numbers of public employees.

In New York state, rural Hamilton County saw the largest impact with public pension benefits amounting to 6.63% of total personal income and 6.34% of GDP.

Pensions also made up a relatively high portion of personal income and GDP in communities dominated by small towns, including the following counties: Clinton, Essex, Franklin, Greene, Rensselaer, Schoharie, St. Lawrence and Wyoming.

For more information on other counties and states, check out the full report in our Pension Education Toolkit or at