Here’s a shocker; Americans fail at investment due diligence.
Indeed, the recently released annual TIAA IRA survey finds many Americans do not consider the range of benefits an IRA provider can offer when selecting one. Fifty-six percent say there is no difference or do not know if there is a difference among IRAs.
Only 25 percent of respondents look for an IRA with an option to convert their savings into a stream of income in retirement. Thirty-six percent say that access to financial advice is an important factor when they evaluate possible IRAs.
“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,” said Brian Bohaty, EVP 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 survey finds that 33 percent of American adults have an IRA. However, only 41 percent of Americans who are not currently contributing to an IRA would consider one as part of their retirement strategy–a decline from 56 percent in 2015. Their reasons include:
- 51 percent say they are content with their current retirement savings plan.
- 46 percent say they don’t have enough money to save more than they already do.
- 25 percent say they don’t know enough about IRAs.
- 23 percent say they already have a workplace retirement plan and don’t need an IRA.
Interestingly, the number of people who say they don’t know enough about IRAs has dropped from 39 percent in 2015, while the number of people who have IRAs has held steady.
“More people are learning about IRAs, but we aren’t seeing more individuals translate that knowledge into action,” Bohaty added. “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.”
The survey highlights an opportunity for more IRA education with one segment of the population: Gen Y. Thirty-five percent of Gen Y respondents who are not contributing to an IRA say they do not know enough about IRAs to consider using one.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
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