Retirement Preparedness of Generation X Compared to Other Cohorts in the United States
Abstract
:1. Introduction
2. Literature Review
3. Theoretical Framework
4. Materials and Methods
4.1. Data
4.2. Variable Construction
4.2.1. Wage Replacement Ratio (WPR)
4.2.2. Retirement Age
4.2.3. Inflation Rate
4.2.4. Four-Percent Rule
4.2.5. Portfolio Return
- Avg.(SPR) = Average return of the S&P 500 index from 1928–2016
- Avg.(TR) = Average return of 10-year Treasuries from 1926–2016
4.2.6. Social Security
4.2.7. Dependent Variable
- Remaining Work Life Expectancy (RWLE) = 67 − Current age
- i is the indicator of portfolio strategy, i = 1, 2, 3
- j is the respondent, j = 1, 2, …, n
4.2.8. Independent Variables of Interest
4.2.9. Other Control Variables
4.3. Hypotheses
4.4. Empirical Models
5. Results
5.1. Descriptive Statistics
5.2. ANOVA Model
5.3. OLS Model
5.4. Limitations
6. Discussions and Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Appendix A
Variable Name | Description | Type |
---|---|---|
Age Generational Cohorts (Ref: Generation X) | 22 to 67 | Continuous |
Baby Boomers | 1 = Yes; 0 = No | Binary |
Generation X | 1 = Yes; 0 = No | Binary |
Millennials | 1 = Yes; 0 = No | Binary |
Household Size | 1 to 12 | Continuous |
Female | 1 = Yes; 0 = No | Binary |
Marital Status | ||
Married | 1 = Yes; 0 = No | Binary |
Remaining Life Expectancy (RLE) | 0 to 121 | Continuous |
Remaining Work Life Expectancy (RWLE) | 0 to 45 | Continuous |
Income | 1018 to 676,000,000 | Continuous |
Financial Literacy (Big 3) 1 | 0 = None correct to 3 = All Correct | Continuous |
Risk Tolerance | 0 = Low to 10 = High | Continuous |
Race/Ethnicity (Ref: Other race) | ||
White | 1 = Yes; 0 = No | Binary |
Black | 1 = Yes; 0 = No | Binary |
Hispanic | 1 = Yes; 0 = No | Binary |
Other race | 1 = Yes; 0 = No | Binary |
Edu Attain. (Ref: High Schl or less) | ||
College | 1 = Yes; 0 = No | Binary |
Some Col | 1 = Yes; 0 = No | Binary |
High Schl or less | 1 = Yes; 0 = No | Binary |
Health (Ref: Poor) | ||
Excellent | 1 = Yes; 0 = No | Binary |
Good | 1 = Yes; 0 = No | Binary |
Fair | 1 = Yes; 0 = No | Binary |
Poor | 1 = Yes; 0 = No | Binary |
- More than $102
- Exactly $102
- Less than $102
- Do not know
- Refused
- More than today
- Exactly the same as today
- Less than today
- Do not know
- Refused
- True
- False
- Do not know
- Refused
Variables | Mean | Std. Dev. | Min | Max |
---|---|---|---|---|
Age | 43.881 | 12.192 | 22 | 67 |
Generational Cohorts (Ref: Generation X) | ||||
Baby Boomers | 39.31% | 0 | 1 | |
Generation X | 36.34% | 0 | 1 | |
Millennials | 24.35% | 0 | 1 | |
HHSize | 2.772 | 1.474 | 1 | 12 |
Female | 26% | 0 | 1 | |
Married | 56% | 0 | 1 | |
Remaining Life Expectancy (RLE) | 38.089 | 15.623 | 0 | 121 |
Remaining Work Life Expectancy (RWLE) | 20.459 | 12.009 | 0 | 45 |
Income | $106,428.50 | $455,399.500 | $1018 | $676,000,000.00 |
Fin_Lit | 2.168 | 0.859 | 0 | 3 |
Risk tolerance | 5.01 | 2.219 | 1 | 10 |
Race/Ethnicity (Ref: Other race) | ||||
White | 68.75% | 0 | 1 | |
Black | 13.37% | 0 | 1 | |
Hispanic | 11.40% | 0 | 1 | |
Other race | 6.47% | 0 | 1 | |
Edu Attain. (Ref: High Schl or less) | ||||
College | 47.99% | 0 | 1 | |
Some Col | 24.32% | 0 | 1 | |
High Schl or less | 27.69% | 0 | 1 | |
Health (Ref: Poor) | ||||
Excellent | 30.28% | 0 | 1 | |
Good | 51.50% | 0 | 1 | |
Fair | 16.66% | 0 | 1 | |
Poor | 1.56% | 0 | 1 | |
N = 3709 |
Baby Boomers (N = 1458) | Gen X (N = 1348) | Millennials (N = 903) | ||||
---|---|---|---|---|---|---|
Variable | Mean | Std. Dev. | Mean | Std. Dev. | Mean | Std. Dev. |
Preparedness | 0.349 | 0.666 | 0.294 | 0.562 | 0.205 | 0.341 |
Baseline | 2,407,838.00 | 13,300,000 | 1,541,343.00 | 4,043,114.00 | 628,914.20 | 880,549.30 |
Educ | 2.975 | 0.981 | 3.005 | 1.003 | 3.011 | 0.961 |
Fin_Lit | 2.346 | 0.798 | 2.204 | 0.860 | 2.043 | 0.878 |
Health | 2.007 | 0.699 | 1.969 | 0.713 | 1.877 | 0.724 |
Meet | 0.076 | 0.265 | 0.054 | 0.225 | 0.025 | 0.157 |
Preparedness | ||||
---|---|---|---|---|
Cohort | Mean | St. Dev | Frequency | |
BabyBoomers | 0.349 | 0.666 | 1458 | |
GenerationX | 0.294 | 0.562 | 1348 | |
Millennials | 0.205 | 0.341 | 903 | |
0.282 | 0.541 | 3709 | ||
Between Group Variance | ||||
F-Stat: 21.91; p < 0.000 | ||||
Within Group variance (Bartlett) | ||||
Chi(2) = 169.355; p < 0.000 | ||||
Tukey Pairwise Comparisons of Means with Equal Variances | ||||
Contrast | St. Err | Tukey | p-Value | |
Gen X vs. BB | −0.121 | 0.016 | −7.68 | <0.000 |
Mill vs. BB | −0.331 | 0.018 | −18.75 | <0.000 |
Mill vs. Gen X | −0.210 | 0.018 | −11.72 | <0.000 |
Variables | Coef. | Std. Err. | Sig |
---|---|---|---|
Millennials | −0.045 | 0.020 | ** |
BabyBoomers | 0.057 | 0.036 | |
logIncome | 0.035 | 0.011 | *** |
HHSize | −0.006 | 0.007 | |
RLE | 0.000 | 0.001 | |
RiskTol | 0.010 | 0.005 | ** |
Fin_Lit | 0.006 | 0.004 | |
Married | 0.025 | 0.027 | |
Female | −0.021 | 0.032 | |
White | 0.013 | 0.041 | |
Black | −0.055 | 0.043 | |
Hispanic | −0.043 | 0.045 | |
College | 0.090 | 0.020 | *** |
SomeCollege | 0.006 | 0.019 | |
Excellent | 0.076 | 0.061 | |
Good | 0.058 | 0.060 | |
Fair | 0.032 | 0.058 | |
Intercept | −0.432 | 0.127 | *** |
R-squared = 0.2139 | |||
N = 3442 |
Variables | Coef. | Std. Err. | Sig |
---|---|---|---|
Millennials | −0.042 | 0.022 | * |
BabyBoomers | 0.043 | 0.038 | |
Log Income | 0.038 | 0.012 | *** |
HHSize | −0.007 | 0.008 | |
RLE | 0.000 | 0.001 | |
Risktol | 0.011 | 0.005 | ** |
Fin_Lit | 0.007 | 0.004 | |
Married | 0.031 | 0.029 | |
Female | −0.027 | 0.034 | |
White | 0.011 | 0.044 | |
Black | −0.066 | 0.047 | |
Hispanic | −0.054 | 0.049 | |
College | 0.103 | 0.021 | *** |
SomeCollege | 0.007 | 0.020 | |
Excellent | 0.086 | 0.066 | |
Good | 0.066 | 0.065 | |
Fair | 0.037 | 0.063 | |
Intercept | −0.478 | 0.135 | *** |
R-Squared = 0.2031 | |||
N = 3442 |
Variables | Coef. | Std. Err. | Sig |
---|---|---|---|
Millennials | −0.035 | 0.026 | |
BabyBoomers | 0.026 | 0.040 | |
logIncome | 0.042 | 0.012 | *** |
HHSize | −0.007 | 0.009 | |
RLE | 0.000 | 0.001 | |
risktol | 0.012 | 0.005 | * |
Fin_Lit | 0.008 | 0.005 | * |
married | 0.038 | 0.031 | |
Female | −0.034 | 0.036 | |
White | 0.009 | 0.047 | |
Black | −0.080 | 0.051 | |
Hispanic | −0.067 | 0.053 | |
College | 0.119 | 0.023 | *** |
SomeCollege | 0.008 | 0.022 | |
Excellent | 0.098 | 0.071 | |
Good | 0.075 | 0.070 | |
Fair | 0.044 | 0.068 | |
_cons | −0.528 | 0.145 | *** |
R-Squared = 0.1945 | |||
N = 3442 |
1 | The remaining work-life expectancy (RWLE) is constructed using 67 (full-retirement age) minus the respondents’ current ages. The remaining life expectancy (RLE) used in this study is constructed by subtracting the respondents’ current ages from their self-reported life expectancy in years. |
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Qi, J.; Chatterjee, S.; Liu, Y. Retirement Preparedness of Generation X Compared to Other Cohorts in the United States. Int. J. Financial Stud. 2022, 10, 45. https://doi.org/10.3390/ijfs10020045
Qi J, Chatterjee S, Liu Y. Retirement Preparedness of Generation X Compared to Other Cohorts in the United States. International Journal of Financial Studies. 2022; 10(2):45. https://doi.org/10.3390/ijfs10020045
Chicago/Turabian StyleQi, Jia, Swarn Chatterjee, and Yingyi Liu. 2022. "Retirement Preparedness of Generation X Compared to Other Cohorts in the United States" International Journal of Financial Studies 10, no. 2: 45. https://doi.org/10.3390/ijfs10020045
APA StyleQi, J., Chatterjee, S., & Liu, Y. (2022). Retirement Preparedness of Generation X Compared to Other Cohorts in the United States. International Journal of Financial Studies, 10(2), 45. https://doi.org/10.3390/ijfs10020045