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Retirement Planning > Saving for Retirement

What Americans really think about IRAs (in 5 charts)

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What most motivates Americans to save for the future? According to a new report, it isn’t building up a nest egg for retirement, but rather things that offer more immediate gratification: money for vacation, buying household appliances and the other big-ticket items.

So reports TIAA-CREF in a 4th annual survey on individual retirement accounts and Americans’ savings habits. Conducted by KRC Research, the survey polled 1,013 adults, age 18 years and older in February of this year.

The report reveals that nearly one-quarter (24 percent) of Americans say that short-term savings is their first priority when deciding how to allocate savings. That’s three times the percentage (8 percent) that identifies contributing to an IRA as their first priority. The result is in parity with the number (25 percent) who say they would prioritize contributing to an employer-sponsored retirement plan, such as a 401(k) or 403(b) plan.

Fewer than 1 in 5 survey respondents (only 18 percent) say they are currently contributing to an IRA. Another 14 percent report owning an IRA, but are not contributing to the savings account.

Of those Americans who don’t have an IRA, more than half (56 percent) say they would consider an IRA as part of their retirement strategy, an increase from 47 percent in 2014.

Doug Chittenden, executive vice president, Individual Business for TIAA-CREF, says that greater education about the value of IRAs as a retirement savings vehicles is needed to boost contributions to the tax-advantaged vehicles.

“Among TIAA-CREF participants, 41 percent are contributing to an IRA, and another 30 percent have an IRA and are not currently making contributions,” says Chittenden. “The data suggests that without some additional information and assistance, the gap between what Americans say and what they do will persist, with serious results when they stop working.”

Among the study’s additional findings:

  • Among Americans who are contributing to an IRA, 40 percent are contributing the maximum amount.
  • Of those who are not contributing to an IRA and would not consider one as part of their retirement strategy, 39 percent say they don’t know enough about IRAs to consider one, up from 29 percent in TIAA-CREF’s 2014 IRA survey.

  • Fewer than half (46 percent) of respondents ages 18 to 34 can correctly identify an IRA, compared to 57 percent overall. These individuals are also the least likely to be contributing to an IRA.

  • College graduates are more likely to be contributing to an IRA at 28 percent, versus 18 percent among all respondents. Sixteen percent of those with some college education are contributing to an IRA, while only 12 percent of those with a high school education or less are contributing.

  • This year, 30 percent of respondents said they have savings in one or more employer-sponsored plans, up from 22 percent in 2014 and 15 percent in 2013. Thirty percent say they did so because they are satisfied with their past employer’s retirement savings option. 

See the charts beginning on the next page for additional highlights from the TIAA-CREF survey. 

As this chart shows, short-term savings takes priority over contributing to an IRA among the survey respondents. But long-term savings and contributing to an employer-sponsored retirement remain the top priority among one-third and one-quarter, respectively, of Americans polled. 

Americans’ familiarity with, and participation in, IRAs correlates with income, as this chart clearly indicates. The most marked differences in both are observed among individuals earning $35,000-$50,000 and $35,000 or less in income. Among individuals earning $100,000-plus annually, the percentage who contribute is nearly 5 times that of the lowest income earners.  

The good news about IRA contributors: A significant majority of them either contribute regularly (44 percent) or contribute after paying into their employer-sponsored retirement plan a sum needed to secure the maximum corporate-matching amount (33 percent). An additional 12 percent of IRA contributors first top out on employer-sponsored plan contributions before funding an IRA.

Fewer than 1 in 10 survey respondents (8 percent) view opening an IRA or rolling funds into one as their most time-consuming activity. This compares with nearly 4 in 10 (37 percent) and 1 in 5 (22 percent) who characterize closing a home and renewing a driver’s license, respectively, as the most time-consuming.


As this chart shows, majorities of survey respondents plan to use their IRA either in tandem with other retirement vehicles (70 percent) or as a final income source (53 percent) after drawing down other taxable accounts. Fewer than half of the Americans polled (40 percent) say their IRAs will be a main source of income in retirement.


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