Three times as many Americans put short-term savings for such goals as vacations or household appliances at the top of their priority list as those who save in an IRA for retirement.
That's according to the fourth annual TIAA-CREF IRA survey, which also found that those short-term savers (24 percent of respondents) nearly equal the number of respondents (25 percent) who said they make saving in an employer-sponsored retirement plan like a 401(k) a top priority. And those folks who rate saving in an IRA at the top of the list? Just 8 percent of respondents.
Only 18 percent of respondents said that they contribute at all to an IRA, although 56 percent of those who don't have one said they'd consider it.
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What's at the bottom of this disconnect? Poor understanding of what an IRA is and does, according to TIAA-CREF, which said that 43 percent of respondents couldn't correctly identify a description of an IRA.
And 42 percent not only are not contributing to one, but wouldn't even consider it as part of their retirement planning.
The more money people make, however, the more they know about IRAs. Among those with incomes of $100,000 or more, 81 percent understand what they are, while among those with incomes of just $35,000, only 42 percent understand them.
Education helps, too; 28 percent of college grads are likely to be contributing to an IRA, compared with 18 percent overall.
Many also fail to understand that they can have both a 401(k) and an IRA. Of those who said they wouldn't consider contributing to an IRA, 28 percent gave as their reason the fact that they already have a 401(k) or a 403(b) and don't need one.
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