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Households’ Propensity to Meet the Capital Accumulation Ratio Over Time: Evidence from the 1992-2007 Surveys of Consumer Finance

Letkiewicz, Jodi Christie
http://rave.ohiolink.edu/etdc/view?acc_num=osu1282056704

Abstract Details

2010, Master of Science, Ohio State University, Human Ecology: Family Resource Management.
With the burden of retirement planning shifting to the individual, individuals are responsible now more than ever to understand the complexities of retirement planning. Financial ratios can help simplify financial analysis and provide basic rule-of-thumb guidelines that can be applied to most households. The capital accumulation ratio (CAR), defined as the proportion of net worth held in investment assets, is intended to identify the share of assets held primarily for future consumption. This thesis explores the time trends of the capital accumulation ratio and considers whether changes in stock indexes relative to housing indexes might have an impact on the percentage of households that meet the 25% CAR threshold. The components that make up the ratio, investment assets and net worth, are discussed. In addition, a logistic regression is used to ascertain which factors are related to whether households will meet the threshold. The percentage of households meeting the 25% CAR threshold varies significantly between most of the survey years. In periods when the stock market increased more than housing prices (1992-1995, 1995-1998 and again from 2004-2007), the percentage of households meeting the 25% CAR threshold increases from the previous year. In periods when housing prices increased more than the stock market (1998-2001 and 2001-2004), the percentage of households meeting the threshold decreases from previous periods. Based on the multivariate regression, the difference between the years is significant for every period except 1995-1998. Education and income are positively related to meeting the guideline. Black, Hispanic and Asian/other households are less likely to meet the guideline than similar white households; unmarried couples and single households (male and female) are less likely to meet the guideline than married households; and households with a child under 19 at home are less likely to meet the guideline than households without a child under 19 at home. The likelihood of meeting the guideline increases with age until age 66.35 and then decreases.
Sherman D Hanna, PhD (Advisor)
Catherine P. Montalto, PhD (Committee Member)
Jonathan J. Fox, PhD (Committee Member)
76 p.
Finance
Financial planning; financial ratios; retirement; time trends

Recommended Citations

Citations

  • Letkiewicz, J. C. (2010). Households’ Propensity to Meet the Capital Accumulation Ratio Over Time: Evidence from the 1992-2007 Surveys of Consumer Finance [Master's thesis, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1282056704

    APA Style (7th edition)

  • Letkiewicz, Jodi. Households’ Propensity to Meet the Capital Accumulation Ratio Over Time: Evidence from the 1992-2007 Surveys of Consumer Finance. 2010. Ohio State University, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1282056704.

    MLA Style (8th edition)

  • Letkiewicz, Jodi. "Households’ Propensity to Meet the Capital Accumulation Ratio Over Time: Evidence from the 1992-2007 Surveys of Consumer Finance." Master's thesis, Ohio State University, 2010. http://rave.ohiolink.edu/etdc/view?acc_num=osu1282056704

    Chicago Manual of Style (17th edition)

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This open access ETD is published by The Ohio State University and OhioLINK.