The Ratio Over 40 %

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ratio over 40% is considered troublesome. Also, compared to the 1995 and 2004 pre-retirees, the 2013 pre-retiree’s debt-to-income ratio exceeds the previous cohorts. However, the mean monthly total debt payment is lower for the 2013 cohort as compared to the 2004 pre-retirees. This may be a direct result of the decline in income for the 2013 cohort. In addition, the mortgage debt-to-income ratio for the 2013 pre-retirees increased over the measurement periods between 1995 and 2013. Moreover, the mortgage debt-to-income ratio for the 2013 pre-retirees increased as compared to the 1995 and 2004 pre-retiree cohorts. This observation provides evidence that the current group of pre-retirees has increased their mortgage debt over time and they…show more content…
Thus, younger households will have lower income and assets, and borrow more in the beginning stages of the life-cycle, while middle-aged households and pre-retirees will increase savings and reduce liabilities when entering the later stages of life. However, as compared to the pre-retirees of 1995 and 2004, the 2013 pre-retiree’s total debt-to-total assets ratio exceeds the 1995 cohort, but is much lower than the 2004 cohort. For every dollar of assets, the 2013 pre-retirees had $0.84 of debt.
Quantitative Analysis & Results
The objective of the study is to evaluate the extent to which secured and unsecured debt impacts the standard of living and the accumulation of financial assets among pre-retirees. To investigate the claim that servicing debt will reduce the standard of living and impact the ability of pre-retirees to adequately accumulate assets for retirement, logistic regression analyses were conducted for pre-retirees servicing debt to estimate the strength of the relationship between the dependent variables and the independent variables. For the initial analysis, natural logs of independent variables within the econometric model were utilized, except for the indicator variables which were not transformed. The dependent variable net worth contained negative values. To handle the log transformation of the negative values, a negative log (neglog) transformation was
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