A new study from Investment Company Research to examine the role of IRAs in Americans’ retirement preparedness.
The study is the first comprehensive survey of it’s kind to be completed since 2008. We wanted to share this information with readers of IRAcontributionlimits.com because it shows an alarming and continued drop in adoption of Individual Retirement Accounts as an investment vehicle. It show that number of middle-class Americans who contributed to any form of retirement account for the 2010 tax year dropped to astonishing low of 15% – a number never before seen since IRAs were first introduced.
Additionally, the report demonstrates an increasing large gap between what the majority of elderly US citizens has saved through IRAs for their golden years and what they actually need for retirement living. This ever expanding shortage is causing many aging Americans, many in need of medical care, to extend their working years before retiring.
The number of US citizens who counts an IRA in their investment portfolio has dipped to only 38%. This marks four years in a row of straight drops.
IRAs became instantly popular when they were first introduced in 1974 by ERISA, or the Employee Retirement Income Security Act. At the time, most Americans could contribute up to $1500 to their retirement savings in a tax free account. Today, contribution limits have increased to as much as $7,000 for most US workers.
Despite these increased limits, our study indicates that most workers who own IRAs aren’t taking advantage of full contributions. Consider that 24% of working Americans own an IRA, but won’t make a single contribution for the 2011 tax year. Only 9% of US workers will make the maximum contribution to their IRA as allowed by law. For most US workers, this tops out at around $7,000 for the 2019 tax year.
The news isn’t all negative. US workers who did own IRAs and made a contribution in the past year had average IRA assets of over $148,000.