Housing Finance Policy Center Lunchtime Data Talk Federal ......Jan 21, 2016 · Housing Finance Policy Center Lunchtime Data Talk Federal Reserve Surveys of the Economic Well-Being

Housing Finance Policy Center Lunchtime Data Talk Federal Reserve Surveys of the Economic Well-Being of US Households: SCF and SHED Dave Buchholz, Federal Reserve Board- Division of Consumer and Community Affairs Jeff Larrimore, Federal Reserve Board- Division of Consumer and Community Affairs Jeff Thompson, Federal Reserve Board- Division of Research and Statistics January 21, 2016

A Overview of the Survey of Consumer Finances

January 21, 2016

The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors of the Federal Reserve System.

Overview

• Overview of the Survey of Consumer Finances (SCF) • Recap of main findings from 2013

• 2016 SCF Redesign Highlights • The Racial Wealth Gap – Highlights of Recent

Research

3

SCF Background • Survey of households sponsored by the Federal Reserve

Board • In cooperation with Department of Treasury • Survey contractor = NORC since 1992

• SCF triennial cross-sectional surveys, 1983-2013 • Consistent Methodology since 1989 • Sample sizes 4,000 to 6,500 • SCF panel surveys in 1983-1989 and 2007-2009

• Survey design • Area probability and List samples • In person or phone interview using CAPI • Sample weights for population estimates • Missing values and multiple imputation

4

Survey content

• Collects information on: • Assets and liabilities • Relationships with financial institutions • Employment and Pensions • Income • Demographics • Attitudinal questions

• Most data collect at the household level

• Employment, pensions, demographics for head and spouse/partner

5

Household Balance Sheet

• Assets • Financial assets

• Transaction accounts • CDs • Stocks and bonds • Mutual funds • Retirement accounts • Trusts and annuities

• Nonfinancial assets • Vehicles • Houses / other property • Businesses

• Liabilities • Mortgages • Installment loans

• Car loans • Student loans • Other loans

• Credit card balances • Lines of credit

6

Main results • Income gains over 2010-13 very limited • Wealth levels stabilized over 2010-13, with small

gains for some • Increased concentration of income and wealth • Ownership of retirement accounts and equities

declined for most groups over 2010-13; mean values increased

• Homeownership rates fell for most groups over 2010-13; mean net housing wealth stabilized

7

Main results • Business ownership rates fell for most groups over

2010-13, some increases in the mean value of business equity

• Education debt continued to increase over 2010-13. The majority of debt is held by higher income families or families with a college degree

• Payment to income ratios continued to decline, and fewer families had high ratios

• Credit conditions are still an issue for many families, some improvement in fraction with late payments

8

The evolution of family income

9

Shaded areas indicate recessions

30

40

50

60

70

80

90

100

1989 1992 1995 1998 2001 2004 2007 2010 2013

Thou

sand

s of 2

013

$

Year

Mean Income

Median Income

90% gap

60% gap

Income recovers at the top

10

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Bottom 50 Next 40 Top 10

($27,000) ($85,000) ($398,000)

Perc

ent

Usual income group (2013 Mean)

2007-10 Change 2010-13 Change

Trend in Top Income Shares

11

The evolution of family wealth

12

Shaded areas indicate recessions

60

160

260

360

460

560

660

1989 1992 1995 1998 2001 2004 2007 2010 2013

Thou

sand

s of 2

013

$

Year

Mean Wealth

Median Wealth

660% gap

400% gap

Continued wealth declines for low incomes, little recovery at the top

13

-25%

-20%

-15%

-10%

-5%

0%

5%

Bottom 50 Next 40 Top 10

($99,000) ($381,000) ($3.3 Million)

Perc

ent

Usual income group (2013 Mean)

2007-10 Change 2010-13 Change

Sources of wealth changes, 2010-13

Usual Income Group

Balance Sheet Item Bottom 50 Next 40 Top 10

Housing -15% -3% -2%

(Less) Mortgages 5% 3% 1%

Business Plus Corporate Equity -5% 2% 4%

Other Assets -1% -1% -1%

(Less) Non-Mortgage Debt 0% 0% 0%

Total -15% 2% 2%

14

Trend in Top Wealth Shares

15

SCF Missing Some of the Wealth Gains?

• Financial Accounts (FA) aggregates show stronger gains in household sector net worth o FA (‘10 Q1 to ‘13 Q1) +21% aggregate nominal o SCF shows about +12% for 2010-2013

• SCF respondents may not have fully built in recovery in housing and stock prices oNational house price indexes disagree on timing o Some correction for prior survey over-valuations?

• Also, continued strong growth since survey

16

150

175

200

225

250

275

30020

04-0

1-01

2004

-04-

01

2004

-07-

01

2004

-10-

01

2005

-01-

01

2005

-04-

01

2005

-07-

01

2005

-10-

01

2006

-01-

01

2006

-04-

01

2006

-07-

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2006

-10-

01

2007

-01-

01

2007

-04-

01

2007

-07-

01

2007

-10-

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2008

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01

2008

-04-

01

2008

-07-

01

2008

-10-

01

2009

-01-

01

2009

-04-

01

2009

-07-

01

2009

-10-

01

2010

-01-

01

2010

-04-

01

2010

-07-

01

2010

-10-

01

2011

-01-

01

2011

-04-

01

2011

-07-

01

2011

-10-

01

2012

-01-

01

2012

-04-

01

2012

-07-

01

2012

-10-

01

2013

-01-

01

2013

-04-

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2013

-07-

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2013

-10-

01

2014

-01-

01

2014

-04-

01

Inde

x 19

89 Q

1 =

100

FHFA, Case-Shiller, and CoreLogic Nominal House Price Indexes and SCF House Values

FHFACase-ShillerCoreLogic

2010 SCF

Field Period

SCF

Average House= $316K

(nominal)

$339K (2013 $)

2013 SCF

Field Period

SCF

Average House= $319K

(nominal)

The small nominal change in SCF average house values between 2010 and 2013 is in line with FHFA, and below the increase reported by Case-Shiller and CoreLogic.

17

0

5000

10000

15000

20000

2500020

04-0

7-01

2004

-10-

0120

05-0

1-01

2005

-04-

0120

05-0

7-01

2005

-10-

0120

06-0

1-01

2006

-04-

0120

06-0

7-01

2006

-10-

0120

07-0

1-01

2007

-04-

0120

07-0

7-01

2007

-10-

0120

08-0

1-01

2008

-04-

0120

08-0

7-01

2008

-10-

0120

09-0

1-01

2009

-04-

0120

09-0

7-01

2009

-10-

0120

10-0

1-01

2010

-04-

0120

10-0

7-01

2010

-10-

0120

11-0

1-01

2011

-04-

0120

11-0

7-01

2011

-10-

0120

12-0

1-01

2012

-04-

0120

12-0

7-01

2012

-10-

0120

13-0

1-01

2013

-04-

0120

13-0

7-01

2013

-10-

0120

14-0

1-01

2014

-04-

0120

14-0

7-01

Aggr

egat

e St

ock

Mar

ket V

alua

tion

Wilshire 5000 Stock Value Index and SCF Mean Equity Holdings

2010 SCF

Field Period

SCF Average Equity

Holdings= $213k

(nominal)

$228K (2013 $)

2013 SCF

Field Period

SCF Average Equity

Holdings= $270K

(nominal) The Wilshire index increased 36% between 2010 Q1 to 2013 Q1, while SCF aggregate nominal holdings rose 29% between the 2010 and 2013 surveys.

18

Financial Assets

• Ownership of any financial asset stable at 94% • Conditional median declined 8% to $21,200 in 2013 • Conditional mean increased 5% to $270,100 in

2013

19

Nonfinancial Assets

• Ownership of any nonfinancial asset stable at 91% • Conditional median declined 10% to $148,400 in

2013 • Conditional mean declined 6% to $407,200 in 2013 • Focus on housing

• Net housing wealth – house value minus all home-secured debt

20

Homeownership and housing wealth continued to decline for most families

• Homeownership rates • Conditional means - net housing wealth

21

0%10%20%30%40%50%60%70%80%90%

100%

All Bottom 50 Next 40 Top 10

Perc

ent

Usual income group

2007

2010

2013

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0


Thou

sand

s of 2

013

$

Usual income group

2007

2010

2013

Homeownership decline driven by families under 65

• Homeownership rates • Conditional means - net housing wealth

22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

0

50

100

150

200

250

300

350

< 35 35 to 64 65 +

Thou

sand

s of 2

013

$

Age of family head

2007

2010

2013

Debt

• Ownership of any debt stable at 75% • Conditional median declined 2% to $115,000 in

2013 • Conditional mean declined 5% to $156,700 in 2013 • Focus on one specific type of debt

• Education loans – strong growth over the last decade • Examine families with heads age < 40

23

Education loan growth: 2001-2013 SCF (family heads less than 40 years old)

• The basics • Distribution of education debt (2013 $)

24

2001 2013

Percent with education debt

22.4 38.8

Mean value (thousands of 2013 $)

16.9 29.8

Median value (thousands of 2013 $)

10.5 16.8

78%

16%

6% 1%

2001 Less than 25thousand

between 25 and50 thousand

between 50 and100 thousand

more than 100thousand

64% 17%

13%

6%

2013

Concentration of debt by income changed; concentration of debt by degree unchanged

• Share of education debt by usual income

• Share of education debt by degree level

25

0%

10%

20%

30%

40%

50%

60%

Less than 30thousand

30 to 60thousand

More than 60thousand

Perc

ent

Usual income group

2001

2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

Bachelor'sDegree or

Higher

Associate'sDegree

No Degree

Perc

ent

Degree level

2001

2013

Incremental payment burden of education loans

• Composition of average payment to average income ratios in 2013

26

15.6% 14.5% 10.3%

3.8% 3.7%

2.3%

2.7% 1.5%

3.5%

0%

5%

10%

15%

20%

25%

Bachelor's Degree orHigher

Associate's Degree No Degree

Perc

ent

Degree level

Including deferred educationloan payments

Including education loanpayments

Excluding education loanpayments

19.7%

16.1%

22.1%

2016 SCF Redesign • Focus on how microeconomic heterogeneity affects

macroeconomic outcomes, especially for high-wealth

• Reduce respondent burden; less threatening questions

• Improve coordination and integration with other household surveys and administrative data sources

• Adopt emerging technologies in fieldwork and post-survey statistical linking of external information

• Release same high-quality data faster, make SCF data more accessible, improve documentation and resources

• Adapt to changing use of financial products and services

27

Prepaid Accounts

Problem

• Approximately 10% of the population report being “unbanked”

• See respondents with debit cards, direct deposits, or auto withdrawals, who then say “no” to checking account

• Increasing use of pre-paid cards with no associated account?

Solution

• Add questions on ownership of reloadable prepaid debit card and government benefit card (e.g. EBT, DirectExpress)

• Ask about prepaid debit card balances

1/20

/201

6

28

Education Loans Problem

• Missing crucial details about education loans

Solution

• Added question(s) about who within the family had their education funded by the particular loan

• Added question(s) about whether it is a federal government loan (Stafford, Parent Plus, etc.)

• Added question(s) about whether the education program was completed (Yes/No/Still enrolled)

• Restructure and modify repayment questions to better identify (for example) respondents participating in grace period, income-based repayment, loan forgiveness, or other programs

1/20

/201

6

29

Response to Financial Shocks Problem

• Household borrowing and spending responses to financial constraints is not well understood

Solution:

• Two-part “hypothetical” debt repayment decision:

1. Assuming you experience a financial emergency and are unable to pay your bills, your primary response would be? • Borrow (or borrow more) • Cut spending • Postpone/be late on payments • Withdraw from existing accounts/sell assets?

2. What sources/accounts/assets/spending categories would those be? (prioritized list of two items) • Follow-up tailored to the primary response category

1/20

/201

6

30

David Buchholz and Jeff Larrimore Consumer & Community Development Research, Division of Consumer & Community Affairs January 21, 2016 Urban Institute The analysis and conclusions set forth in this presentation are our own and do not indicate concurrence of the Federal Reserve Board of Governors, the Federal Reserve System, or their staff.

Survey of Household Economics and Decisionmaking

32 Board of Governors of the Federal Reserve System

• Cast light on current issues affecting consumer financial well-being and monitor recovery from the financial crisis

• Help monitor trends in consumer behavior and sentiment as they relate to household finances and the broader economy

• Fill data gaps and provide insights into questions for which there may not be other reliable data sources

Motivation for Survey

INTRODUCTION


• Nationally representative survey of U.S. adults age 18 and older

• Conducted annually by the Federal Reserve Board since 2013

• Data presented today is from the Fall 2014 survey

• Focus on consumer finance issues, particularly with respect to reasons behind decisions

• Summary report published as Report on the Economic Well-Being of U.S. Households

• Data is publicly available at http://www.federalreserve.gov/communitydev/shed.htm

What is the SHED? SHED OVERVIEW

http://www.federalreserve.gov/communitydev/shed.htm


Table of Contents

Banking and Credit

6

Education and Student Loans

7


Retirement

8

Additional Research

9

SECTION

SECTION

SECTION

SECTION

Introduction

1

Economic Well-Being

2 Housing and Living Arrangements

3 Economic Fragility and Emergency Savings

4 5

SECTION

Savings and Spending

SECTION

SECTION

SECTION

SECTION


Survey Methods: GfK KnowledgePanel® Random selection of U.S. Households into KnowledgePanel®

using Address Based Sampling

Accept invitation into panel and complete profile survey Offered computer and internet if none in household

(about 55,000 adults)

Invited to take SHED survey (8,975 adults)

Complete SHED survey (5,896 adults – 65.7%)

SHED OVERVIEW


SHED Sample Overview

1,710 adults Re-interviewed

respondents from 2013 SHED survey

2,552 adults New respondents randomly selected

1,634 adults Oversample of adults

with household income under $40,000

SHED sample is made up of three components

SHED OVERVIEW


Data Validity: 401(k) account SHED OVERVIEW

Source: Larrimore, Schmeiser, Devlin-Foltz (2015)


Data Validity: Health Insurance SHED OVERVIEW



Data Validity: Homeownership SHED OVERVIEW



TOP TAKEAWAYS

Economic Well-Being

say they are “doing OK” or “living comfortably,” but many still face some financial stress.

expect their income to be higher in the coming year.

of part-time workers would prefer to work more hours at their current wage.

65% 29% 49% TOP TAKEAWAYS


ECONOMIC WELL-BEING

Which one of the following best describes how well you are managing financially these days?

Finding it difficult to

get by Just

getting by Doing okay

Living comfortably

Measuring Financial Health

Asked of all respondents. n = 5,896


ECONOMIC WELL-BEING


Higher

Lower

The Same

Expectations for future income Next year, do you think your income will be higher, lower, or about the same as it was this year?


Desire for Additional Employment At your current wage, would you prefer to work more, less, or about the same amount as you currently work?

Asked of employed respondents. n = 2,846

The Same Number of Hours

More Hours

Less Hours

36% 5%

58%

49%

3%

48%

Among Part-time Workers

Among All

Workers

ECONOMIC WELL-BEING


TOP TAKEAWAYS

Housing and Living Arrangements

of renters would prefer to own their home if they could afford to do so.

of homeowners believe the value of their home increased since 2013...

of homeowners think that they owe more on their home than it is worth.

81% 43% …but 14% TOP TAKEAWAYS


LIVING ARRANGEMENTS

Why Do You Live with Others? 20% of adults are living with individuals not in their immediate family

64% are doing so to save money or to provide financial assistance to someone living with them

Of those living with others:

14% are doing so to provide or receive assistance with caregiving activities


LIVING ARRANGEMENTS

Which one of the following best describes your housing arrangement?

What Is Your Living Arrangement?

61% own their homes

28% pay rent



LIVING ARRANGEMENTS

Why People Rent

Asked of renters. n = 1,769

81% Of renters would prefer to own their home if they could afford to do s0

Please select all the reasons below for why you rent rather than own your home:


LIVING ARRANGEMENTS

Household Income

Renters who make under $40,000 are more likely to say:

“I can’t afford down payment”

or “I can’t qualify for

a mortgage”

Renters who make over $100,000 are more likely to say:

“It’s more convenient to

rent” or

“I plan on moving in the near future”

Why People Rent

Asked of renters. n = 1,769


LIVING ARRANGEMENTS

Why People Own

Asked of homeowners. n = 3,638


Perceived Home Values Increasing

LIVING ARRANGEMENTS

Compared to 12 months ago, do you think the value of your home today is higher, lower or stayed the same?

Asked of homeowners who owned since 2012. n=3,402


Expectations for Further Increases

LIVING ARRANGEMENTS

In the next 12 months, how do you think that home prices in your neighborhood will change?

Asked of all homeowners. n = 3,638


Underwater on Mortgage Balance

Asked of homeowners with a mortgage. n = 2,016

LIVING ARRANGEMENTS

Does the total amount of money you currently owe on your primary home exceed the current value of your home?

11%

15%

14%

17%


TOP TAKEAWAYS

Economic Fragility and Emergency Savings

experienced some form of financial hardship in the past year

could not pay a $400 emergency expense or would borrow / sell something to do so

went without needed medical care because they couldn’t afford it



ECONOMIC FRAGILITY & EMERGENCY SAVINGS


Experienced an Economic Hardship Over the past year, have you or your family living with you experienced any financial hardship such as a job loss, drop in income, health emergency, divorce, or loss of your home?

75% No

24% Yes

Asked of respondents who experienced a hardship. n = 1,527


Saving for Major Emergencies


(1) Have you set aside emergency or rainy day funds that would cover your expenses for 3 months in case of sickness, job loss, economic downturn, or other emergencies?

Set Aside Emergency Funds

Has Not Set aside Emergency Funds



Saving for Major Emergencies


(1) Have you set aside emergency or rainy day funds that would cover your expenses for 3 months in case of sickness, job loss, economic downturn, or other emergencies?

(2) If you were to lose your main source of income, could you cover your expenses for 3 months by borrowing money, using savings, or selling assets?

Set Aside Emergency Funds

Cover Expense by borrowing or selling assets

Could not cover expenses



Suppose that you have an emergency expense that costs $400. Based on your current financial situation how would you pay for this expense?

Covering Smaller Emergency Expense


53% Pay using cash or

credit card paid in full

33% Pay using debt

or by selling something

14% Could not

pay




75% No

24% Yes

During the past 12 months, have you had any unexpected major medical expenses that you had to pay out of pocket (that were not completely paid for by insurance)?

Out of Pocket Medical Expenses



Avoiding Medical Treatment


During the past 12 months, was there a time when you needed any of the following, but didn’t get it because you couldn’t afford it?

31% went without at least one form of medical treatment in the last year



Avoiding Medical Treatment


During the past 12 months, was there a time when you needed any of the following, but didn’t get it because you couldn’t afford it?


Insured Uninsured


TOP TAKEAWAYS

Savings and Spending

of respondents spent more than their income in the past year

of non-retirees saved nothing in the past year

20% 30% TOP TAKEAWAYS


Do Households Spend More than They Earn?

SAVINGS & SPENDING

In the past 12 months, would you say that your household’s total spending was more, the same or less than your income?


Spending less than income 41%

Spending equals Income 37%

Spending exceeded Income 20%


Are People Saving? In the past 12 months, what percent of your household’s total gross income (before taxes and deductions) did you set aside as savings?

Asked of non-retired respondents. n = 4,561

Did not save any portion of

income Saved at least

some of income Did

not state

SAVINGS & SPENDING

30% of non-retirees said they saved nothing in the past year

Income less than $40,000

Income $40,000 To $100,000

Income greater than $100,000


Asked of non-retirees who reported saving a positive portion of their income. n=2,587

Which of the following categories, if any, are you saving money for?

What Are People Saving For? SAVINGS & SPENDING


Asked of non-retirees who reported saving a positive portion of their income. n=2,587

Which of the following categories, if any, are you saving money for? Most popular answers

What Are People Saving For? SAVINGS & SPENDING


TOP TAKEAWAYS

Banking and Credit

of those who applied for credit were turned down or given less credit than they applied for

of respondents with a credit card always paid their bill in full in the past year

of lower-income respondents do not have a checking or savings account



Unbanked and Underbanked Unbanked: Do you currently have a checking, savings, or money market account? Underbanked: In the past 12 months, have you used a check cashing service, money order, pawn shop loan, auto title loan, paycheck advance, or payday loan?


Unbanked Underbanked

BANKING AND CREDIT


Frequency of Credit Applications

Asked of respondents who reported having applied for credit in the past 12 months. n = 2,054

Please select all of the types of credit below that you have applied for in the past 12 months

37% applied for some form of credit in the past 12 months

BANKING AND CREDIT


Outcome of Credit Application

Denied Outright

Not denied, but offered less

credit than desired Approved

In the past 12 months, did any of the following happen to you: You were you turned down for credit You were approved, but not given as much credit as you applied for

Asked of respondents who reported having applied for credit in the past 12 months. n = 2,054

BANKING AND CREDIT


7% Obtained money some other way

9% Other/refused

Additional Demand for Credit?

Asked of respondents who desired credit but did not apply. n = 460

12% of adults desired credit in the past 12 months but did not submit an application

Why did you choose not to submit a credit application when you desired credit in the past 12 months?

BANKING AND CREDIT


How Confident Do Consumers Feel? If you applied for a mortgage today, how confident are you that your application would be approved?


Very confident

Somewhat confident

Not confident

Don’t know

41%

20%

26%

13%

BANKING AND CREDIT


Are People Paying Credit Card Bills? In the past 12 months have you always paid your credit card bills in full each month?

Among those with at least one credit card. n = 3,263

BANKING AND CREDIT


Among those who do not pay off credit cards in full each month:

Among those with at least one credit card who do not pay bill in full each month. n = 1,366

Are People Paying Credit Card Bills?

BANKING AND CREDIT


TOP TAKEAWAYS

Education and Student Loans

of the population currently has outstanding education debt

of borrowers without a degree are behind on their student loan payments

of non-graduates say that family responsibilities contributed to not finishing their degree



Education Debt Burden


Do you currently owe any money or have any loans that you used to pay for the education of anyone below: (respondents could choose all that apply)

EDUCATION


Form of Education Debt

Asked of respondents who owe money for education. n = 1,272

Is the money you owe for education a student loan, a home equity loan, credit card debt, or some other type of loan: (respondents could choose all that apply)

EDUCATION


Did you borrow for your education?


Use of student loans to finance own education, including loans which have been fully repaid

EDUCATION


Repayment status by race/ethnicity

Among respondents who borrowed to pay for their own education. n = 1,249

Behind on payments

Paid off loan

Current on payments

EDUCATION


Does Loan Status Vary by Degree Completion? Percent of borrowers (including those who completely repaid loan) behind on payments on one or more loans for their own education

Asked of those who took out student loans for their education and report the institution attended. n=1,249

EDUCATION


Does Loan Status Vary by Institution? Percent of borrowers (including those who completely repaid loan) behind on payments on one or more loans for their own education

Asked of those who took out student loans for their education and report the institution attended. n=1,249

EDUCATION


Is College Worth the Cost? How would you say the lifetime financial benefits of your bachelor’s or associate degree program or your most recent educational program compares to its financial costs?

Asked of respondents who completed at least some college and reported the institution attended. N=3,080

Benefits higher

Costs higher

About the same

For-profit

Nonprofit

Public

EDUCATION


Why don’t people complete degree after starting college?

Asked of those not currently enrolled who started college but did not complete degree. n=866

EDUCATION


Asked of those not currently enrolled who started college but did not complete degree. n=1,059

Percent of respondents who cite “family responsibilities” as a reason for not completing a college degree:

Why don’t people complete degree? EDUCATION


TOP TAKEAWAYS

Retirement

had given little or no thought to financial planning for their retirement

having no retirement savings or pension whatsoever

are not confident or are slightly confident in their ability to manage their retirement savings



How much thought have you given to the financial planning for your retirement?

17% None at all

22% A little

25% Some

21% A fair

amount

13% A lot

Asked of those not currently retired. n=4,414

Are You Planning for Retirement?

RETIREMENT


Who Is Planning for Retirement?

Asked of those not currently retired. n=4,414

None at all A fair amount A lot A little Some

RETIREMENT


What Is Your Retirement Plan? Which one of the following best describes your plan for retirement? Most popular answers:

Less than $40,000 $40,000-$100,000 Greater than $100,000

Among respondents who are not currently retired or out of work due to a disability. n=3,894

RETIREMENT


Among respondents who are not currently retired. n=4,414

Retirement Savings Differ by Income Do you have the following type of retirement savings?

IRA 401(k), 403(b), Thrift Employer pension Outside savings Any retirement savings

RETIREMENT



Lack of Retirement Savings By Age Percent of respondents with no retirement savings

RETIREMENT



Why not invest in a 401(k)? Please select all the reasons below for why you do not currently invest in a 401(k), 403(b), thrift, or other defined contribution plan from work.

RETIREMENT


Investment Confidence & Knowledge How confident are you in your ability to make the right investment decisions when managing and investing the money in your retirement accounts?

12% Very confident

41% of respondents whose employer offers a 401(k) type plan say they do not know how much their employer will match

Asked of non-retired respondents with savings in a 401(k), IRA, or other self-directed retirement account. n = 2,566

Among employed respondents with a 401(k) type account or whose employer offers a plan. n = 2,122

RETIREMENT


Asked of those not currently retired (n=3,163) and current retirees (n=1,482)

Retirement Strategies Differ by Age How are you planning to pay (or are you paying) expenses during retirement? Most popular answers:

RETIREMENT

45–59 60+ Retired PLANNING ACTUAL

30–44


Additional Research


• General research projects

• SHED data validity

• Intergenerational mobility of well-being and expectations for future generations

• Projects using geographic identifiers for respondents

• Zip code (2013-2015 data), census tract (2015)

• Well-being of respondents in concentrated poverty areas

• Relationship between self-stated reasons for housing and local housing market conditions

• Relationship between self-assessed local housing price trends / predictions and actual trends in local area

Internal Research ADDITIONAL RESEARCH


• SHED data is publicly available

• http://www.federalreserve.gov/communitydev/shed.htm

• Additional profile variables available for purchase from firm that administers the panel from which respondents are drawn (GfK)

• Encourage use of the data by external researchers, including potential collaboration for internal variables such as local-level geographies

External Research ADDITIONAL RESEARCH

http://www.federalreserve.gov/communitydev/shed.htm


TOP TAKEAWAYS

An Example of Recent Research using the SCF • “Exploring the Racial Wealth Gap Using the Survey

of Consumer Finances” • Gustavo Suarez and Jeffrey Thompson (2015)

97

Average Networth of White Families Relative to Black and Hispanic Families

0%

100%

200%

300%

400%

500%

600%

700%

800%

1989 1992 1995 1998 2001 2004 2007 2010 2013

Ratio

white relative to black white relative to Hispanic

Decomposing the Racial Wealth Gap • How much of the gap is due to factors related to

the accumulation of wealth? • Aging • Education • Inheritance • Saving/Investing Outlook

• How much of the gap is due to factors we cannot account for in the data?

• We explore these gaps between white, African American, and Hispanic families using the Survey of Consumer Finances, 1989 to 2013.

Age Profile (for household head) by Race (2013)

Average Age

%Distribution

Under 35 35 to 49 50 to 64 65+

White 53 18% 24% 30% 27%

Black 49 23% 29% 29% 18%

Hispanic 44 32% 36% 22% 11%

Education and Income for "Prime" Working-Age Household Heads (30to59) by Race Group

"Usual" Income Highest Degree Obtained

Mean Median

Less than High

School High School

Only Some College,

No Degree BA only Advanced

Degree

White $118,259 $75,371 6% 29% 26% 24% 15%

Black $54,107 $40,581 9% 33% 34% 17% 8%

Hispanic $55,770 $40,581 31% 36% 21% 7% 4%

Total $99,162 $60,872 9.7% 30.8% 26.5% 20.8% 12.2%

Inheritance by Major Race Group - Household Head Ages 30 to 59

Ever Received

Inheritance

Conditional Mean Value of Total Inheritances

Received*

Conditional Median Value of Total

Inheritances Received*

Expect to Receive an (another)

inheritance

White 23% $236,000 $55,000 19%

Black 11% $83,000 $49,000 6%

Hispanic 6% $86,000 $29,000 4%

Attitudes toward Saving and Investing (family heads ages 35 to 59)

Risk Tolerant Long Horizon Luxury

Borrower

white 23% 71% 18%

Black 15% 53% 21%

Hispanic 15% 52% 17%

Total 21% 67% 18%

Decomposing the White/Non-White Wealth Gap (Oaxaca-Blinder)

Controls Include Demographic, Labor Force, Inheritance, Health

Status, Investment Attitudes, Parental Longevity, and Regional

Real Estate Variables

Controls Also Include Usual

Income

Covariates Also Include Usual

Income and Home Ownership

(1) (2) (3) Percent of Black/White Networth Difference Explained 0.60 0.67 0.80 Percent of Hispanic/White Networth Difference Explained 0.82 0.89 1.06

Decomposing Wealth Gaps using Nonparametric Reweighting Techniques (DFL)

Panel A. Black/White Wealth Differences

Observables Explain:

No Income or

Housing With

Income With Income and Housing

Mean 59% 67% 79%

ptile of wealth dist.

10 96% 97% 100%

25 44% 52% 63%

50 57% 63% 81%

75 57% 64% 73%

90 59% 64% 68%

95 58% 62% 65%

Panel B. Hispanic/White Wealth Differences

Observables Explain:

No Income or

Housing With

Income With Income and Housing

Mean 88% 97% 112%

ptile of wealth dist.

10 106% 105% 109%

25 85% 102% 125%

50 70% 76% 96%

75 72% 79% 88%

90 72% 78% 81%

95 71% 76% 79%

• The full report can be found online: • http://www.federalreserve.gov/econresdata/feds/2

015/files/2015076pap.pdf

Thank you

Questions? [email protected]

SCF Website www.federalreserve.gov/econresdata/scf/scfindex.htm

107

mailto:[email protected]

http://www.federalreserve.gov/econresdata/scf/scfindex.htm

Additional results

108

Median Income: CPS,SCF

109

35

40

45

50

55

60

1988 1991 1994 1997 2000 2003 2006 2009 2012

SCF Primary Economic Unit (PEU) CPS Household

Top 1% Share in IRS & SCF

0.050

0.075

0.100

0.125

0.150

0.175

0.200

0.225

0.250

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Top1_IRS Top1_scf

110

Top 10% Share in IRS & SCF

0.300

0.325

0.350

0.375

0.400

0.425

0.450

0.475

0.500

0.525

0.550

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Top10_IRS Top10_scf

111

Retirement account ownership fell for all but the highest income, values rose across groups

• Ownership rates • Conditional means

112

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0


Thou

sand

s of 2

013

$

Usual income group

2007

2010

2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Perc

ent

Usual income group

2007

2010

2013

Retirement accounts grew for older families, and remained stable for younger families


113

0%

10%

20%

30%

40%

50%

60%

70%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

0

50

100

150

200

250

300

350

400

< 35 35 to 64 65 +

Thou

sand

s of 2

013

$

Age of family head

2007

2010

2013

Corporate equity ownership fell for all but the top income group, values rebounded for all


114

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Perc

ent

Usual income group

2007

2010

2013

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0


Thou

sand

s of 2

013

$

Usual income group

2007

2010

2013

Business ownership declined across income groups


115

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Perc

ent

Usual income group

2007

2010

2013

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0


Thou

sand

s of 2

013

$

Usual income group

2007

2010

2013

Debt Burden and Credit Markets

• Payment-to-income ratio (PIR) • All required debt payments divided by income • PIR > 40% – usually an indicator of financial distress

• Credit market experiences

• Turned down or fear denial of credit • 60 days late on any payment in the last 12 months

116

Lower debt payment ratios

117

0%

5%

10%

15%

20%

25%


Perc

ent

Usual income group

2007

2010

2013

0%

5%

10%

15%

20%

25%

< 35 35 to 64 65 +Pe

rcen

t

Age of family head

2007

2010

2013

Median PIR for debtors

Fewer households with high payment burdens

118

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%


Perc

ent

Usual income group

2007

2010

2013

0%

2%

4%

6%

8%

10%

12%

14%

16%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

PIR > 40%

Modest changes in credit constraints

119

0%

5%

10%

15%

20%

25%

30%

35%

40%


Perc

ent

Usual income group

2007

2010

2013

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

Turned down or feared denial of credit

Fewer households are delinquent

120

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%


Perc

ent

Usual income group

2007

2010

2013

0%

2%

4%

6%

8%

10%

12%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

60 days past due on a payment over the past year

Adjusted Net Worth Changes, 2010-14 (Adds Subsequent House & Equity Gains)

Usual Income Group

Balance Sheet Item Bottom 50 Next 40 Top 10

Housing -10% 2% 0%


Business Plus Corporate Equity -3% 6% 7%

Other Assets -1% -1% -1%

(Less) Non-Mortgage Debt 0% 0% 0%

Total -9% 11% 7%

121

Sources of wealth changes, 2010-13

Age of Family Head

Balance Sheet Item < 35 35 to 64 65 +

Housing -11% -5% -2%


Business Plus Corporate Equity 3% 0% 5%

Other Assets 0% -3% 2%

(Less) Non-Mortgage Debt -1% 0% 0%

Total 8% -5% 6%

122

Corporate equity ownership fell, values rose for age groups; older families saw larger gains


123

0%

10%

20%

30%

40%

50%

60%

70%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

0

100

200

300

400

500

600

< 35 35 to 64 65 +

Thou

sand

s of 2

013

$

Age of family head

2007

2010

2013

Business ownership declined across age groups


124

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

< 35 35 to 64 65 +

Perc

ent

Age of family head

2007

2010

2013

0

500

1000

1500

2000

2500

< 35 35 to 64 65 +

Thou

sand

s of 2

013

$

Age of family head

2007

2010

2013


Response Rate Summary Metrics

CONCLUSION AND APPENDIX

A. Study-Specific Average Panel Recruitment Rate (RECR) 13.9% B. Study-Specific Average Household Profile Rate (PROR) 64.1% C. Study-Specific Average Household Retention Rate (RETR) 33.8% D. Study Completion Rate (COMPR) 65.7% E. Study Breakoff Rate (BOR) 2.8% F. Study Qualification Rate (QUALR) 100.0% G. Cumulative Response Rate 1 (CUMRR1) 5.8% H. Cumulative Response Rate 2 (CUMRR2) 2.0%

Callegaro, Mario & DiSogra, Charles (2008). Computing response metrics for online panels. Public Opinion Quarterly 72(5). pp. 1008-1032.


CONCLUSION AND APPENDIX

RDD Phone Response Rates

Documents

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