Most Americans Not Using IRAs

Only 22% of Americans say they are saving for retirement by contributing to an individual retirement account (IRA), according to a survey released by TIAA-CREF.

The research, which polled 1,007 adults age s 18 years and older nationwide, found only about four in 10 (38% ) Americans who own an IRA are contributing up to the annual limit, and 55% are investing less than the maximum allowed amount each year. Seventy-six percent of those polled say they are not currently contributing to an IRA.  

The survey also revealed that 62% 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.    

Among those currently contributing to an IRA, women (41%) are more likely than men (34%) to contribute up to the annual maximum for an IRA. At 52%, Baby Boomers of both genders are most likely to fully fund their IRA each year, and 45% of college graduates of all ages report they invest the maximum allowed amount annually.  

Younger Americans (ages 18 to 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 % ) of that group 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.   

Just 8% of Americans earning less than $35,000 a year contribute to an IRA, and 13% of Americans earning $35,000 to $50,000 annually contribute to an IRA.