Despite tax benefits and a generation of strenuous marketing efforts, over half of U.S. households do not have Individual Retirement Accounts (IRAs).

In fact, 29% of U.S. households have neither IRAs or employer-sponsored retirement plans. This is according to the Investment Company Institute’s “Research Fundamentals”, issued in January 2006.

This 12-page report was available in PDF format, without charge, on the Investment Company Institute website in March 2006..

	IRA Report

The ICI report indicates that IRAs owners are typically middle-aged, married, college educated, and employed — and with much higher incomes than people that don’t have IRA savings.

The study also indicates that Americans between 50 and 64 years without formal retirement savings have median total financial assets of only $2,500.

In twenty years, the U.S. may face a situation in which for every unionized public employee, with a generous ‘defined benefits’ retirement plan, there will be another older American, not so fortunate, living in poverty.

(See: “Why ‘Defined Benefits’ Pension Managers Support Stock Buybacks“.)

The inability of American political leaders to engage in constructive, honest dialogue to resolve retirement issues will have unpleasant consequences.

Until then, it is, as the Brazilians say, “Salve-se quem puder!”

Over the decade 1995 - 2004, the market value of residential real estate increased, on average, about 10% a year. (See: Federal Reserve Flow of Funds Table B100.)

The same table shows that the replacement cost of America’s homes, rose, on average, only about 7.6% a year.

If these estimates are reasonably correct, we can deduce that the value of the land on which American homes are built increased, on average, about 15.6% a year, over the decade.

The graph, drawn from this data, shows how overall residential real estate values changed over the period 1995 - 2004.

	American Homes: Land vs. Buildings

Over the decade, the imputed value of land as a percentage of total residential property values, rose from 25% to 38%. (Note: The imputed value of land is the market value of residential real estate less the cost of replacement of structures.)

Taking into consideration home equity values (market value less mortgages), land values increased from a 43% share to a 64% share, on average, of home equity values.

Since these figures represent averages for the entire nation, we may conclude that in some sections, land values are still around 20% of residential property values, whereas in other areas, land values may be higher than 60% of property values.

More »