A recent study commissioned by Greene IRA found just 15 percent of Americans contribute regularly to an individual retirement account, reaching a new record low.
The study showed only 38 percent of working Americans own an IRA, marking the fourth drop in this figure since 2008. Similar to a life insurance policy, annuity or other savings product, IRAs help consumers plan for retirement while offering a unique set of tax benefits. However, 24 percent of Americans who own an IRA will not make a single contribution for the 2011 tax year.
The study also highlighted another decline in wise retirement planning, as more Americans are finding they did not save enough for retirement and are outliving their nest egg. This shortfall is forcing older Americans to stay in the workforce longer, with 26 percent of workers postponing their planned retirement age, up from 18 percent in 2010.
In an interview with NPR host Michel Martin, financial expert Julia Valentine said there are other mistakes consumers can make that will hurt their retirement plans. Speaking from personal experience, Valentine recommends consumers not only calculate how much money they will need for retirement, but also plan out specific arrangements so there is less confusion during an emotional emergency or decision. It is hard to predict how a consumer will feel at age 80 when they are planning in their 40s. Thus, financial products and plans can help protect from unexpected changes that can lead to an emotional situation later in life.