Is time running out? Savings and investments of renters nearing retirement age

Russell N. James, Deanna L. Sharpe

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

How do renters approaching retirement respond to their absence of housing equity? Traditional life cycle accumulation theory suggests compensation by increased investment in other asset classes. Behavioral "mental accounting" suggests that there may be no affect on investment in other asset classes. Finally, a model of selfselection based on underlying savings preference predicts lower investment in other asset classes. Double-hurdle and Tobit analyses of data from the 1995-2005 Consumer Expenditure Surveys indicated that, compared with otherwise similar homeowners, renters nearing retirement were (a) less likely to contribute to retirement savings, (b) invested less when they did contribute, and (c) favored investment in short-term convenience accounts over retirement savings. Results imply that housing tenure may result from underlying time preference.

Original languageEnglish
Pages (from-to)61-75
Number of pages15
JournalJournal of Financial Counseling and Planning
Volume18
Issue number2
StatePublished - 2007

Keywords

  • Homeowner
  • Renter
  • Retirement planning
  • Savings

Fingerprint Dive into the research topics of 'Is time running out? Savings and investments of renters nearing retirement age'. Together they form a unique fingerprint.

Cite this