Article is here
http://www.tiaa-crefinstitute.org/Publications/resdiags/issue77.pdf
Now we get into the problems with 'study building' and combining/extrapolating results that the built studies did not intend to produce.
These figures are based on the "Consumer Finance Study" which is done by the "national organization of research at the university of chicago". It is a study done every three years, last done in 2001, funded by the federal reserves board of governors.
It should come as no surprise that the reports produced generally support that what the federal reserve is doing has been effective, and predictively supports future movements and directions of the fed. Re-read this paragraph one more time if your eyes didnt just narrow and you didnt just say "heyyyyy!".
This particular chart is a derivative of the 2001 report, drawn from US census data in 2000, and then focused on 4500 families drawn at random for interview purposes. Should a family decide to not participate, they are not replaced. The actual sample group may have been reported somewhere, but I couldnt find it.
The author of this TIAA-CREF report subsequently used data from the 1998 study and the 2001 study and extrapolated what 2003 numbers would be. I did not see anywhere what methods of extrapolation were used, but I'll wild guess that they did some kind of linear or logarithmic progression from two extremely favorable data points during the bull market.
Further, with the small and voluntary group of interviewees who are described as "families", I'm going to go out on a limb and say that families who will agree to do a financial survey are probably doing pretty good and happy about their financial strength.
Given also that if the full 4500 family sample was used, this would represent (off the top of my head) about 2 one thousands of one percent of the total US population.
I'm also guessing that single individuals arent included?
In other words, its a statistically insignificant slice of overly optimistic data from a non representative group from the strongest financial period in US history extrapolated in a manner that is unrealistic.
I think Cut-Throats intuition is a good one. I know a HELL of a lot of people who took the 30-40% equity uptick as a 4% variable loan and blew it on toys, cars and vacations. Who are all going to get absolutely killed when rates go up or the value of their home drops.
So heres the big question...why would an organization that manages retirement money want to produce a report with washed information that appears designed to make people feel like they arent contributing enough to their retirement accounts? :
