Across the board, Americans could be doing better when it comes to saving for retirement. Much better, actually.
According to a study from Edward Jones, only 49 percent of U.S. workers are actively participating in employer-sponsored 401k plans. Just 37 percent are contributing to an individual retirement account.
“They may also be overlooking other popular retirement savings tools,” Scott Thoma, principal and investment strategist for Edward Jones, said in a statement. “Individuals seem to understand the key risks they will face in retirement, so it is important to design a comprehensive strategy, considering all…retirement savings vehicles, to ensure they can prepare for these risks.”
The study, conducted in early February, indicated that Americans are particularly concerned about healthcare costs in retirement—a topic being discussed ad nauseam as of late. In fact, a little over half of respondents believe it will be the biggest expense in retirement.
Even so, a mere 18 percent are contributing to a health savings account. The other biggest worries were outliving savings (22 percent are concerned) and inflation (15 percent are concerned).
Somewhat counterintuitively, survey results showed a correlation between higher household incomes and greater expectations that healthcare would be the most significant drain on retirement savings. Of households with an annual income less than $35,000, 37 percent of respondents felt healthcare would be the biggest expense. Meanwhile, fifty-five percent of those surveyed who earn between $50,000 and $75,000, and 62 percent of those who earn $100,000 or more, ranked healthcare as their utmost concern when considering expenses during retirement.
“It’s no surprise that healthcare is a top concern for Americans preparing for retirement,” said Thoma. “Qualifying individuals with high deductible health plans, can benefit as these [retirement savings] tools offer tax-advantages to help save for various healthcare costs, and these accounts can be a very valuable source to pay for health care expenses in retirement.”