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Case Study - Investing for Retirement

Case description

Financial advisors offer many types of advice to customers, but they generally agree that one of the best things people can do is invest as much as possible in tax-deferred retirement plans. Not only are the earnings from these investments exempt from income tax (until retirement) but the investment itself is tax-exempt. This means if a person invests, say, $10,000 of his $100,000 income in a tax-deferred retirement plan, he pays income tax that year on only $90,000 of his income. This is probably the best method available to most people for avoiding tax payments. However, which group takes advantage of this attractive investment opportunity: everyone, people with low salaries, people with high salaries, or who?

The data file contains data on 194 couples with the following information:

Couple: Serial number of couple

Children: Number of dependent children

Salary: Combined salary of husband and wife

Mortgage: Current mortgage on home

Debt: Amount of non-mortgage debt

Invested: Percentage of combined income invested in tax-deferred plan (limited to max 15%). The data is in % unit.

Couple

Children

Salary

Mortgage

Debt

Invested

1

2

95920

87340

6230

6.0

2

3

99850

105320

15240

9.9

.

.

.

.

.

.

.

.

.

.

.

.

5

1

77430

55640

5270

15.0

6

4

55090

130020

11260

0.0

7

2

89730

99600

11520

4.8

.

.

.

.

.

.

.

.

.

.

.

.

194

3

65760

114050

19380

9.5

Question:

Using correlation, scatterplots, and regression analysis, what can you conclude about the tendency of this group of people to invest in tax-deferred retirement plan?

Case Study Investing for Retirement Case description Financial advisors offer many types of advice to customers, but they generally agree that one of the best things people can do is invest as much as possible in tax-deferred retirement plans. Not only are the earnings from these investments exempt from income tax (until retirement} but the investment itself is tax-exempt. This means if a person invests. say, $10,000 of his $100,000 income in a tax-deferred retirement plan, he pays income tax that year on only $90,000 of his income. This is probably the host method available to most people for avoiding tax payments. However, which group takes advantage of this attractive investment opportunity: everyone, people with low salaries, people with high salaries, or who? The data le contains data on 194 couples with the following information: Couple: Serial number of couple Children: Number of dependent children Salary: Combined salary of husband and wife Mortgage: Current mortgage on home Debt: Arnount of non-mortgage debt Invested: Percentage of combined income invested in tax-deferred plan {limited to max 15%). The data is in % unit. M \"mmm Elm-mm \"mmmun "\"m Question: Using correlation, scatterplots, and regression analysis, what can you conclude about the tendency of this group of people to invest in tax-deferred retirement plan