News Column

People of all ages put more into their IRAs

July 23, 2014

By Kaitlyn, Krasselt, USA TODAY

People of all ages -- even young people -- are saving more for retirement by making bigger contributions than ever to Individual Retirement Accounts, a Fidelity Investments study out Wednesday shows.

Average IRA contributions for tax year 2013 increased 5.7% over the previous year and reached $4,150, an all-time high. Average balances are up almost 10% over last year to $89,100.

Overall, average IRA contributions for investors in their 20s, 30s and 40s are up 3.9%, 6.7% and 6.2%, respectively.

To reach these conclusions, Fidelity analyzed the responses of 2,027 adults 18 and older who participated in a national survey in November. Saving more, paying off debt and spending less were the top three New Year's financial resolutions in a recent Fidelity study, says Ken Hevert, vice president for Fidelity Investments.

This survey indicates people are taking their resolutions seriously, he says.

"The overarching reality is that more Americans understand that saving for retirement is their own responsibility," he says.

Despite this increase in how much people are saving, Hevert says many face the challenge of prioritizing more immediate needs and wants. Things such as purchasing a home, saving for college and starting a family can impede retirement savings.

But, he says, IRAs are desirable investments because of the ease of saving with automatic contributions and tax benefits.

"The other behavioral economic and emotional challenge is that people like instant gratification, and retirement is far away," Hevert says. "You've got people trying to balance their priorities, and that's a challenge."

Another study, by TIAA-CREF, shows 78% of Americans get matching employer contributions when they contribute to employer-sponsored retirement plans.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: USA Today

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