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Americans Need More Info About IRAs

Many simply do not know enough about them.

By Lee Barney | March 14, 2017
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There are several reasons why many Americans are not investing in individual retirement accounts (IRAs), TIAA found in its 2017 IRA Survey. First of all, 28% do not know enough about them, and 17% think they are too complicated. Additionally, 46% of Americans do not think they could possibly save any more than they currently are saving. In fact, nearly 20% of those who have an IRA contribute less than $250 a year, and only 5% contribute more than $5,000.

Forty-four percent of those surveyed did not know about the tax breaks that IRAs offer.

Those who own an IRA express far more confidence about retirement savings—94% of these folks have this perception, compared to 64% who are not contributing to an IRA.

“With so many competing financial priorities, it’s not surprising to find that Americans focus on their current needs,” says Kathie Andrade, chief executive officer of TIAA’s retail financial services business. “By learning about the tax benefits of contributing to an IRA, they may find they can take the sting out of saving for their long-term goals.”

Those who have an IRA say the three biggest factors that prompted them to open one were help from a financial adviser (40%), education about IRAs (25%), and a simple process to open one (10%).

However, some IRA owners are not using them efficiently, as 37% own more than one IRA and 53% hold IRAs at different financial institutions to balance risk.

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