Women and baby boomers are more likely to contribute up to the maximum, while younger Americans unaware of the benefits of IRAs
An IRA can provide a tax-advantaged way to save for retirement. For the 2011 and 2012 tax years, investors can contribute up to
Yet the research – which polled 1,007 adults age 18 years and older nationwide – found that only about four in 10 (38 percent) Americans who own an IRA are contributing up to the annual limit, and 55 percent are investing less than the maximum allowed amount each year – missing out on the opportunity to maximize their tax and savings benefits. Seventy-six percent of those polled say they are not currently contributing to an IRA.
The survey also revealed that 62 percent of investors were unaware of two noteworthy IRA features: catch-up contributions that allow investors age 50 and older to contribute more than the annual maximum, and Roth IRA withdrawal guidelines that allow contributors to withdraw money without paying taxes or penalties.
Other notable survey findings include:
- Women and baby boomers most likely to contribute to the maximum
Among those currently contributing to an IRA, the survey found that women (41 percent) are more likely than men (34 percent) to contribute up to the annual maximum for an IRA. At 52 percent, baby boomers of both genders are most likely to fully fund their IRA each year, and 45 percent of college graduates of all ages report they invest the maximum allowed amount annually.
- Younger Americans unaware of the benefits of an IRA
Younger Americans (ages 18-34) who responded to the survey knew the least about the benefits of using an IRA as a retirement investment tool. Nearly three-fourths (73 percent) of those age 18-34 were unaware of the maximum amount of money you can contribute to an IRA annually – which was 12 percentage points higher than the average of all adults who participated in the survey. Fifty-eight percent of those in this age range did not know that IRA contributions grow on a tax-deferred basis.
- Income levels also play a significant role in saving for retirement
Just 8 percent of Americans earning less than
The 2012 TIAA-CREF IRA survey polled 1,007 adults age 18 years and older
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|Source:||Business Wire, Inc.|