As reported by Fidelity Investments in their recent “Retirement Trends” survey, 96 per cent of Americans investing for retirement don’t recognize the latest contribution limit for an individual retirement account, with some even guessing as low as $1,000. The truth is that for tax year 2005, the IRA contribution limits swell to $5,000 compared to $3,000 in 2004.
When it comes to knowing the facts about retirement, misperceptions can lead to missed opportunities. Today’s workers will face rising health care costs when they retire, as well as declining pension benefits and a higher cost of living. That’s why it’s important to save as much as possible, and as early as possible, in tax-advantaged accounts like IRAs.
Familiarizing with the facts can held discard widespread fabrications that may drive away some investors from making a wise decision of saving in the IRA.
Nearly one-third of Americans in their prime savings years who have not yet opened an IRA account think their 401(k) savings will be sufficient for retirement, according to the Retirement Trends survey. However, Fidelity gives a calculated guess that if retirees wish to live comfortably they will need roughly about 80 percent to 100 percent of their pre-retirement income. Investing in an IRA today to augment workplace programs can help investors to ensure their savings will grow continuously and last throughout retirement.
Non IRA owners surveyed who say they can’t manage the initial investment; one in four implied that opportunities to save even more for retirement are perhaps frightening. But getting started devoid of an initial lump sum is as fundamental as setting up automatic monthly payments through a Fidelity SimpleStart IRA.
The truth is that younger investors could benefit the most by starting to save early because they have time on their side. Nearly two-thirds of young adults have started to save for retirement before age 30, according to the Retirement Trends survey. That’s good news; starting to save as early as possible is one of the best ways to prepare for the future.
