Financial
Counseling and Planning
The Journal of the
Association for Financial
Counseling and
Planning Education
VolumeĀ 15(1),
2004
Evidence from the Survey of Consumer Finances
David Bernstein
This study analyzes the relationship between household debt and the
incidence of Individual Retirement Account (IRA) ownership using data
from the Survey of Consumer Finance. In general, households who depend
on credit card debt or consumer loans are less likely to establish an
IRA than households who borrow in order to purchase real estate. For
many households, establishing IRA savings appears to be a lower
financial priority than other financial objectives such as credit card
debt reduction or mortgage refinancing. Tradeoffs between IRA ownership
and other financial objectives can reduce the effectiveness of the tax
advantage of IRAs in simulating retirement savings.
Keywords: Saving, Low income households, Survey of Consumer Finances