Study: Better Educated Risk Takers Most Likely to have Retirement Savings

January 28, 2005 ( - Better educated people who are more likely to take on risk are most likely to have a hefty retirement savings account, according to a new study.

The study by two Purdue University researchers that was released by the US Department of Labor’s Bureau of Labor Statistics found people born between 1946 and 1954 are more likely than the other three age groups studied to hold a retirement account. Some 45% of the respondents born between 1965 and 1987 held retirement accounts, while 73% of those born between 1928 and 1945 held retirement accounts. The 1928 to 1945 group holds the largest amount of retirement funds – $14,000 more than the next highest group.

The factors that the researchers found statistically significant for determining whether someone held a retirement account included risk tolerance, being a saver, planning horizon, age cohort, race, marital status, education, self-employment, spending behavior, and being a homeowner. Savers and heads of household with more risk tolerance were more likely to hold a retirement account.

Those who preferred longer planning horizons, such as five to 10 years and more than 10 years, also were more likely to hold an account. By age cohort, generation X and Y respondents were less likely to hold accounts than the Older Boomers.

The Purdue researchers found that each succeeding group was more likely than the previous one to hold some type of retirement account. Although there was at least one retirement account in 57% of the households surveyed, there was a wide variation in the amounts held. The average amount held in retirement savings was $49,944, but the median amount was only $2,000. Households in the swing group had the largest retirement nest egg , while the older boomers had on average twice as much as younger boomers.

The study by Sharon DeVaney and Sophia Chiremba examined the retirement savings patterns of four groups:

  • the Swing cohort (1928-1945)
  • older Baby Boomers (1946-1954)
  • younger Baby Boomers (1955-1964)
  • Generations X and Y (1965-1987).

The data used in this study were drawn from the 2001 Survey of Consumer Finances (SCF), which was sponsored by the Federal Reserve Board of Governors and conducted by the National Organization for Research (NORC) at the University of Chicago.

The report is at .