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IRI Survey: More than Four in Ten Boomers Attach High Importance to Tax-Deferral

By Warren S. Hersch

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Three in four boomers (74%) attach some importance to tax-deferral in selecting a retirement investment. And of this group, 44% consider tax-deferral very important, new research reveals.

The Insured Retirement Institute, Washington, D.C., published this finding in a new study, “Tax Policy and Middle-Income Boomers: The Importance of Tax deferral in Attaining Retirement Security.” The new report, based on a preliminary sample of 503 Americans between the ages of 50 and 66, presents IRI research on the importance that boomers place on tax-deferral and taxation, and the consequences of potential changes in taxation on middle income boomers’ likelihood to save for retirement.

The report notes that nearly half of boomers (48%) between the ages 50 and 54 consider tax-deferral a very important feature of a retirement investment product. another 29% of respondents rate tax-deferral as somewhat important. And nearly one-quarter of investors (23%) cite tax-deferred growth as the primary reason for purchasing annuities.

Of respondents between the ages of 55 and 59 and between 60 and 66, 46% and 40%, respectively, rate tax-deferral s very important. An additional 32% and 31% of respectively, of boomers in these age groups rate tax-deferral as somewhat important.

The importance that boomers attach to tax-deferral rises in tandem with household income. Nearly half (48%) of those with household incomes exceeding $75,000 annually rate tax-deferral in a retirement investment product as very important. This compares with 44% and 36%, respectively, for households with incomes of $30,000-$74,000 and below $30,000.

More than half boomers (54%) say they would be less likely to save if they were to experience an increase in income tax. Smaller percentages say that a tax increase would not affect their likelihood to save (32%); and that they would be more likely to save (10%).

Additionally, 37% of boomers say they would be less likely to save for retirement if they have to pay a Social Security payroll tax. And 24% would be less likely to save if tax incentives for retirement savings were to be reduced or eliminated.

Read the full report here.

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