Investing for Retirement

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 that if a person invests, say, $$12,000$ of his $$100,000$ income in a tax$-$deferred retirement plan, he pays income tax that year on only $$88,000$ 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 file Investing.xlsx lets you investigate this question. It contains data on $194($hypothetical$)$ couples: number of dependent children, combined annual salary of husband and wife, current mortgage on home, average amount of other $($nonmortgage$)$ debt, and percentage of combined income invested in tax$-$deferred retirement plans $($assumed to be limited to $10\%,$ which is

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realistic$).$ What can you conclude about the tendency of this group of people to invest in taxdeferred retirement plans?