Research and Analysis by Chris E. Anguelov
This article discusses the importance of 401(k)-type defined contribution plans and individual retirement accounts in providing retirement income for current and future retirees. The rising prevalence and importance of this type of income creates measurement errors in the Current Population Survey and other sources of data on the income of the aged because those sources substantially underreport the distributions from such retirement plans.
This research note uses 2007 Survey of Consumer Finances (SCF) data to update work reported in an earlier article, "Retiring in Debt? Differences between the 1995 and 2004 Near-Retiree Cohorts." The analysis documents whether there have been changes in the debt holdings of near-retirees in 2007, a point in time reflecting the start of the recent financial and economic crisis, relative to 2004. Results show that near-retirees' debt levels in 2007 were modestly higher than in 2004, overall and across a number of subgroups. The results do not capture the full impact of the financial crisis, which manifested at the end of 2007 and in 2008.
This article uses the U.S. Federal Reserve Board's Survey of Consumer Finances to examine near retirees' (aged 50 to 61) debt holdings in 1995 and 2004. Employing a variety of measures on household borrowing, our results show that near retirees in 2004—the leading edge of the baby-boom cohort—had more consumer and housing debt than their counterparts in 1995. We observe a modest increase in the median debt service and debt-to-assets ratios between the two cohorts, but no statistical difference in their respective average. Analysis of several demographic and socioeconomic subgroups reveals certain population segments, such as single female households, with significantly higher debt service ratios in 2004.