According to the survey, 85 percent of working Americans have an Individual Retirement Account or a 401(k)/403(b) plan. More than a third have both. But it’s the younger generation of workers who are more diligently saving: 25 percent of Gen Y and 23 percent of Gen X are funding both their 401(k)/403(b) plans and their IRAs, compared to 16 percent of Boomers and 9 percent of Matures. The survey also found that 74 percent of Boomers are not completely confident that they will reach their savings goal by the time they retire. “The good news is that many working Americans, especially those who are young, are taking advantage of saving for retirement in a tax-free environment through options like an IRA, despite a tough economy,” said Carrie Braxdale, managing director of investor services for TD Ameritrade, Inc., a broker dealer subsidiary of TD Ameritrade Holding Corp. “But funding these accounts on a regular basis is the key – even if it’s a small amount. Every year that you don’t fund your IRA is lost opportunity for tax deferral to help with growth.”
Many individuals over age 50 also are missing out on the catch-up contribution, which allows them to contribute an additional $5,500 to an employer-sponsored retirement plan. The survey found that 68 percent are not taking advantage of the opportunity. Half of them are skipping out because they can’t afford it and 21 percent said they never heard of it.
This is very encouraging for the future of America. Perhaps the benefits of the ‘Great Recession’ are that the younger generation will save more for themselves relying less on the government.
Please comment or call to discuss how this affects the plan you provide for your employees.
- Four-in-five not ready for retirement (401kplanadvisors.com)
- Your boss is worried about your retirement, too (dontmesswithtaxes.typepad.com)
- Younger Investors Not Shy About Stocks in 401(k)s (401kplanadvisors.com)