The number of people not using an individual retirement account for savings increased by 4 percent to 80 percent from last year, according to a survey by TIAA-CREF.
The New York City-based financial services firm surveyed 1,000 adults and found that nearly half were unaware of how IRAs work. Almost two-thirds of respondents said they are unaware of what the maximum contribution limits are.
Of those who have an IRA, more than half are investing less than the annual limit, the survey said. For tax year 2013, the maximum contribution limit is $5,500, or $6,500 for people age 50 or older.
Despite low participation rates and awareness of how IRAs work, 57 percent of those who do not have an IRA say they would consider one, the survey says. This includes 75 percent of people 35 to 44 years of age (Gen Xers), two-thirds of 18- to 34-year-olds (Gen Yers), and half of young baby boomers ages 45 to 54.
TIAA-CREF notes the statistics point out the need for more education and awareness programs, and for more personalized advice to help people make good financial decisions, says Dan Keady, director of financial planning for TIAA-CREF. The firm has $502 billion in assets under management and provides retirement services mostly for nonprofits in the academic, research, medical and cultural fields.
The survey found men are more likely to contribute to an IRA than women, and more likely to contribute the maximum amount.