Learn How To Debunk The Common Myths About Iras
A recent \”Retirement Trends\” survey by Fidelity Investments stated that about 96 percent of Americans saving for retirement don\’t know the current contribution limit for an individual retirement account, with some guessing as low as $1,000. The reality is that IRA contribution limits increase to $4,000 — up from $3,000.
When it comes to knowing the facts about retirement, misperceptions can lead to missed opportunities. Aside from declining pension benefits and a higher cost of living, today\’s workers will face rising health care costs when they retire. That\’s why it\’s important to save as much as possible, and as early as possible, in tax-advantaged accounts like IRAs.
Knowing the facts can help dispel common myths that may keep some investors from making the smart move of saving in an IRA.
First Myth. Are you sure that your 401(k) is enough?
There are 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 and this is according to the Retirement Trends survey. However, Fidelity estimates that retirees will need approximately 80 percent to 100 percent of their pre-retirement income to live comfortably. Using an IRA now to supplement workplace programs can help investors make sure their savings will continue to grow and last throughout retirement.
Second Myth. I have to come up with thousands of dollars all at once to open an IRA.
Opportunities to save even more for retirement may be daunting for the one in four non-IRA owners surveyed who say they can\’t afford the initial investment required to open an IRA. But getting started without an initial lump sum is as easy as setting up automatic monthly payments through a Fidelity SimpleStart IRA.
Third Myth. IRAs are for older people with lots of money to save.
Here\’s the truth: younger investors could benefit the most by starting early in order 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. Since starting to save as early as possible is one of the best ways to prepare for the future, that\’s good news.
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