More people are learning about IRAs and how they can help in retirement, says a study by TIAA released Wednesday.
TIAA, a financial services company based in New York City formerly known as TIAA-CREF, found that the number of people who say they do not know enough about IRAs to be able to use them dropped from 39 percent last year to 25 percent this year.
The IRA survey of 1,003 Americans also shows that the number of people with an IRA remained steady at 33 percent. While more people may know about IRAs, the number who do not have them but would consider using them dropped from 56 percent last year to 41 percent this year.
“Financial planning can be complicated, and people often have multiple accounts with retirement savings. In fact, 25 percent have left behind at least one workplace retirement account with a former job,” says Brian Bohaty, executive vice president of individual products and services at TIAA. “An IRA that includes access to professional financial advice can help Americans think about the big picture when planning for a successful retirement.”
The reasons for not using an IRA include being content with their current retirement plan (51 percent), not having enough money to save more (46 percent) or not knowing enough about IRAs (25 percent.
While a minority says they do not know enough about IRAs, 56 percent of respondents say they do not know if there is a difference between traditional and Roth IRAs.
“More people are learning about IRAs, but we aren’t seeing more individuals translate that knowledge into action,” says Bohaty. “For some, this may be a missed opportunity to build financial well-being, as IRAs can be a versatile part of the retirement planning tool box. They can create flexible income options in retirement, and also offer tax savings and allow investments to compound over time.”