TIAA-CREF survey reveals individuals are missing out on savings and tax benefits of IRAs

Close to half surveyed don’t understand IRAs
Low awareness underscores importance of financial education, advice
New York, March 27, 2013 — Many individuals continue to overlook IRAs as part of their retirement savings plan, according to a study released today by TIAA-CREF, a leading financial services provider. Eighty percent of those surveyed said they are not contributing to an IRA, up 4 percent from last year. Close to half also lack basic understanding of what IRAs are and how they are used.1
The annual survey was conducted by an independent research firm and polled a random sample of more than 1,000 adults nationwide on their attitudes, preferences and behaviors regarding Individual Retirement Accounts or IRAs.
An IRA can provide a tax-advantaged way to save for retirement. For the 2013 tax year, investors can contribute up to $5,500 — or up to $6,500 for those age 50 or older — to a traditional IRA or a Roth IRA. The survey found that almost two-thirds of respondents are not aware of what the maximum contribution amounts are. In addition, more than half of those surveyed who own an IRA reported they are investing less than the annual limit and, as a result, are missing an opportunity to maximize potential tax and savings benefits.
“Many individuals are still missing out on the long-term savings benefits of IRAs, simply because they don’t understand what they are and how they work,” says Dan Keady, CFP® and director of financial planning for TIAA-CREF. “By allowing savings to grow on a tax-deferred basis, an IRA can help give your current retirement savings a boost no matter what stage of life you’re in. Even if you’re on a tight budget or just starting to save, if you start small and invest wisely, that amount should grow over time.”
Despite low participation and awareness of how IRAs work, the study shows people are open to the potential benefits that come with an IRA, with 57 percent of those who did not have an IRA saying they would consider one. This includes almost three-quarters of Gen X (ages 35-44), two-thirds of Gen Y (ages 18-34) and half of late baby boomer (ages 45-54) respondents who currently don’t have an IRA.
“We are all responsible for our own financial future, so the fact that individuals see the value in having an IRA – even if they don’t have one yet – is encouraging,” Keady added. “Through financial education and increased awareness, people can take the next step toward reaching their long-term financial goals.”
In addition to education and awareness programs, the survey results also highlight the need for personalized advice to help individuals make the best financial decisions at all life stages. For example, the findings show individuals are missing out on opportunities to use an IRA to help save for other financial goals. Among those who currently have an IRA, only 11 percent of respondents said they plan to use it to help pay for higher education, and only five percent plan to use one to help with a down payment on a new home.
Gen Y respondents, in particular, demonstrated a clear need for advice and education, with 67 percent saying they would consider opening an IRA. However, of those who are disregarding IRAs, nearly half said the reason is they don’t know enough about them.
The survey also found differences based on gender. Men are more likely to contribute to an IRA than women, and men who have an IRA are also more likely to contribute up to the maximum amount.
“When it comes to making decisions such as how to maximize your tax benefit through an IRA, individuals need to find the right advisor to help them navigate through vast amounts of information. What works for one person won’t necessarily work for another,” Keady said.
TIAA-CREF offers a variety of educational resources on IRAs. In addition, the company provides workshops across the country on the advantages of having an IRA as part of a long-term retirement savings plan.

Survey Methodology

The 2013 TIAA-CREF IRA survey polled 1,008 adults age 18 years and older between February 21 and 24, 2013. The nationally representative telephone survey was conducted by KRC Research, a third-party research firm, over a landline and cell phone sample. The margin of error for the entire sample is plus or minus 3.1 percentage points at the 95 percent confidence level.


TIAA-CREF ( is a national financial services organization with $502 billion in assets under management (as of Dec. 31, 2012) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

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1 Statement based on 43 percent of survey respondents who could not correctly identify the definition of an IRA when asked “Which of the following most closely matches your understanding of what an IRA is?”
TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. Past performance does not guarantee future results.
Please note that investing through IRAs may be subject to market risk and other risk factors.
Withdrawals from a Traditional IRA are subject to ordinary income tax and a Federal 10% penalty may apply prior to age 59½.