More than eight in 10 households believe the current tax incentives to encourage retirement saving should be preserved, according to new research by the Investment Company Institute. The research is based on data collected in a survey of 3,000 U.S. households at the end of last year.
The ICI study-America's Commitment to Retirement Security: Investor Attitudes and Actions-found that such agreement was consistently high across various demographic and financial characteristics. Households were asked their views on changing the tax incentives for retirement plans and whether saving incentives for retirement should be a national priority.
It found that households overwhelmingly support maintaining the tax incentives for retirement saving. Eighty-five percent of all U.S. households disagreed when asked whether the tax advantages of defined contribution accounts should be eliminated. Eighty-three percent opposed any reduction in workers' account contribution limits. Among households owning defined contribution accounts or individual retirement accounts, nearly nine in 10 disagreed with eliminating or reducing the tax incentives.
A vast majority of households agree that preserving the current retirement savings incentives should be a national priority. Eighty-eight percent of households owning defined contribution accounts or IRAs agree with this policy priority, while 76 percent of households without defined contribution accounts or IRAs agree.
"It is clear that the current tax incentives to encourage Americans to build a nest egg in retirement accounts are effective and command the overwhelming support of the American public," said Paul Schott Stevens, ICI president and CEO. "Our latest household survey shows that a great majority of U.S. households believe, even in an era of necessary federal budget reforms, that preserving these incentives should be a national priority."
The 2011 household survey also polled respondents about their views on retirement plan saving and their confidence in 401(k) and other DC plan accounts.
The majority of households that have DC plans found that these plans promote retirement saving. Nine in 10 households with DC accounts agreed that these plans helped them think about the long term and made it easier for them to save. More than 80 percent of DC-owning households said the immediate tax savings from their retirement plans were a big incentive to contribute.
Investors greatly value the ability to choose and control their investments. Nearly all households with DC accounts agreed that it was important to have choice in, and control of, the investment options in their DC plans. Seventy-nine percent said their plan offers a good lineup of investment options.
"As in prior years, our 2011 survey confirms that Americans, whether they own retirement accounts or not, have a great deal of confidence in the 401(k) system," said Sarah Holden, ICI senior director of retirement and investor research. "Despite the ups and downs of the stock market and other troubling financial and economic news, favorable attitudes and DC plan investors' retirement savings patterns are holding steady."