The current economy has affected how nearly half of Americans approach IRA contributions, according to a Charles Schwab quarterly retirement pulse survey. Eighteen percent of those with an IRA are contributing less to their retirement account so they can cover every day expenses, 6 percent say they can’t afford to contribute to both their 401(k) and their IRA and 10 percent have withdrawn money from their IRA.
It isn’t all bad news. Fifteen percent of people with IRAs said they are now contributing as much as possible for retirement.
“It’s not surprising that people’s continued skepticism about the economy is impacting retirement savings habits,” said Carrie Schwab-Pomerantz, senior vice president at Charles Schwab & Co., Inc. “While we understand the temptation – and sometimes necessity – to sacrifice retirement funds to cover shorter-term expenses, we continue to encourage people to maintain a long-term outlook and reinforce the importance of early and consistent retirement saving and planning.”
Schwab’s survey also highlights that a majority of Americans are confused about what IRAs are or how they work. Fifty-three percent of Americans surveyed are confused about at least some aspect of IRAs, and 35 percent ages 18-34 don’t even know what an IRA is. Among all respondents, the most confusing aspects of IRAs are the advantages of having both a 401(k) and an IRA (28 percent), IRA tax rules and implications (27 percent), the differences between different IRA types (25 percent) and how to open or choose investments in an IRA (23 percent).
The Charles Schwab Retirement Survey was conducted by Koski Research between February 2 and February 6, 2012, using Random Digit Dialing of listed and unlisted numbers, with 20 percent of the sample reached by cellular/mobile phones.
The Charles Schwab Corp. provides financial services, with more than 300 offices and 8.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 787,000 banking accounts, and $1.74 trillion in client assets as of Jan. 31, 2012.