Changes in family finances from 1983 to 1989: evidence from the Survey of Consumer Finances

Federal Reserve Bulletin, Jan, 1992 by Arthur Kennickell, Janice Shack-Marquez

The proportion of families owning money market accounts, including money market mutual funds and money market deposit accounts not used as a checking account, rose. With the increasing ownership of money market accounts, the median size of account declined from $1 1,000 to $5,000, whereas the overall mean rose slightly from 27,400 to $28,300. The decrease in the median amount held in these accounts, with the increase in the rate of ownership, indicates that the number of small money market accounts increased.

The proportion of families owning retirement accounts rose; these accounts include individual retirement and Keogh accounts as well as employer-sponsored pension accounts from which withdrawals could be made. The median size of retirement accounts doubled. In part, this growth reflected the overall shift in employer-provided pensions from defined-benefit plans, in which the employer pays a regular benefit beginning at retirement, to defined-contribution and 401(k)-type plans, in which employees have rights to a specific pool of funds at retirement.(6) While the median retirement account grew in all categories shown, the increase for families with incomes of 50,000 and more was particularly dramatic. The ownership of other financial assets, which include savings bonds and the cash value of life insurance, also grew.

The financial assets discussed thus far were held in insured depository institutions-which include banks, savings banks, savings and loans, and credit unions - or in uninsured institutions. The percentage of families owning any type of account at a depository institution changed little over the period (not shown in table). The holdings of any account in an insured depository institution fell slightly; those of families with income of less than $ 1 0,000 showed large declines. Nevertheless, for families maintaining accounts, the median value of holdings at depository institutions increased for virtually all groups.

Stock ownership, which includes holdings of publicly traded corporate stock and of equity mutual funds, declined slightly. The median value of holdings of stocks rose overall, with a noticeable drop both in ownership and in median holdings for families with incomes of 50,000 and more. Median stock holdings also declined for families headed by persons between 35 and 44 years of age. Aggregate mean holdings of stock fell sharply from $75,600 to $57,200. For all families, mean holdings of both taxable and nontaxable bonds, which include bonds held directly and bonds held through mutual funds, fell. However, median holdings of taxable bonds increased, and median holdings of tax-exempt bonds decreased. These changes in median holdings may reflect changes in the tax code that have lessened the relative advantage of nontaxable bonds.

Overall, the proportion of families owning any type of financial asset fell slightly. Nevertheless, for families still holding financial assets, median holdings more than doubled, whereas mean holdings increased only about 40 percent. These changes suggest a decline in concentration of financial assets.