It’s a problem, and an indication that despite positive strides there is still a long way to go in investor knowledge and education of even the most basic information about retirement saving.
TD Ameritrade released a new survey of 1,006 Americans, titled Retirement Savings Pop Quiz: Exploring Americans’ understanding of 401k and IRA accounts which examines their understanding of 401k and IRA accounts.
401ks
Sadly, just one in five Americans (19%) know the 401k-contribution limit for 2019 ($19,000), and in some sort of means-testing misunderstanding, the majority believes that the contribution limit depends on their income (27%).
Only a third (33%) of Americans know how much they’re paying in fees for their 401k account, and just half of Americans (52%) are aware they can contribute to both a 401k and traditional IRA account.
IRAs
Traditional IRAs don’t fare much better. Just a third of Americans (35%) know the 2019 contribution limit for a traditional IRA ($6,000), with 25% saying it depends on your income.
Only a quarter of Americans (26%) are aware that a nonworking (or low income-earning) spouse can contribute to a traditional IRA, and a majority of Americans (60%) mistakenly believe that you need to be in a certain tax bracket to qualify for contributing to a traditional IRA.
The survey was conducted online within the United States by The Harris Poll on behalf of TD Ameritrade from February 13-20, 2019, among 1,006 U.S. adults aged 22 and older with at least $10,000 in investable assets.
The findings follow the results of a similar survey released in February from The American College New York Life Center for Retirement Income. Only 26 percent of older Americans with investable assets of at least $100,000 were able to pass that retirement income literacy quiz, which asked 38 questions over a variety of topics such as taxes, Medicare, Social Security and retirement plans like 401ks.