Even as the April 15 tax deadline looms for individual retirement account contributions, American adults still spend more time selecting a restaurant for a special occasion than they allocate to planning their IRAs important investments.
TIAA-CREFs annual IRA survey, released this month, highlights that only 15% of the more 1,000 adults surveyed have allotted two or more hours to planning an IRA investment. Twenty-five percent of the sample said theyd instead spend that amount of time selecting a restaurant, 21% allocate this to buying a flat screen TV and 16% report buying a tablet took up this time.
A financial services organization with over $564 billion in assets under management, TIAA-CREF finds that only one in five Americans currently contribute to an IRA. Also, less than half of the cohort report they would consider an IRA as part of their retirement strategy. While this number has fallen from 2013s 57% high, retirement confidence progressed depending on who you ask.
According to the Employee Benefit Research Institutes annual Retirement Confidence Survey, there was a 5% point jump in Americans workers who reported they were very confident, at 18%. The organization stated previously that there was a 10% jump in worker confidence with a retirement plan who report being very confident at 24%.
An IRA can be an incredibly powerful savings tool that can boost retirement security and offer immediate tax and savings benefits, says Doug Chittenden, executive vice president of TIAA-CREFs individual business.
However, those with an IRA approximately 66% - note that they also have an employer-sponsored 401(k) or 403(b) plan. Fifty-three percent of those enrolled in company retirement plans list that they continue to contribute to their IRA despite reaching contribution or match limits, indicating a loss opportunity for employees who are depositing money in the IRA rather than contributing enough to qualify for their employers retirement match.
While admitting that retirement planning can be confusing for individuals and that help can be found from advisers and online tools, Chittenden adds that employers who sponsor retirement plans also play a critical role in helping educate employees about their retirement options.
Calls for this education can be seen in the annual report, which tracked responses in February. More than one-third of respondents do not understand the difference between an IRA and an employer-sponsored plan. For the Gen Y population, the lack of comprehension reached 45% of the sample, according to TIAA-CREFs March survey.
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