Stop Thinking About Retirement

Last month a study by published by the Investment Company Institute revealed that IRA participation has steadily grown. The study found that IRAs now account for 25.4 percent of U.S. retirement wealth and at year-end 2008 IRA made up 8.5 percent of total U.S. household financial assets. This news illustrates a steady incline in IRA participation, but before we proponents of savings get all excited let me throw a negative at the statistics. Twenty-four percent means that just a quarter of our savings goes into a tax-advantage account. Only 8.5% of household wealth? We can do better and here’s how.

Stop thinking about retirement! The attitude that IRAs are for our golden years is the biggest deterrent to IRA participation. For most people in their 20’s paying this month’s rent and having some money for fun is a greater priority than saving for retirement. And for people in their 30’s supporting their family now is at the forefront of their financial plan. That’s why we don’t really start thinking about IRAs until we get older.

By age these are the stats:1
Ages 61-69—16% contribute to an IRA
Ages 51-60—10% contribute
Ages 31-40—participation is just 7%
Ages 21-30—a mere 3% contribute to an IRA

Saving for retirement is like preparing for death. No one wants to think about and we’ll do nearly anything to avoid it. So that’s what we do—avoid.

I propose that if you aren’t participating in a tax-advantage savings program (like an IRA) that you get a new attitude. Start thinking about wealth building. The maximum IRA contribution in 2009 is 5,000 dollars. That’s $5,000 tax-advantage dollars. The type of advantage depends on which IRA you choose. BTW you can still open and contribute to a 2009 IRA. The contribution amount can be limited by your Modified Adjusted Gross Income (affectionately known as MAGI). If you are over 50 years old, you get to add up to $6,000 to your IRA wealth building account.

I’m not going to bore you with the details on contributions and differences in the IRA plans during this posting. To find out more do the following, and start building your wealth and stop thinking about retirement…

• Call the Coors Credit Union and ask to talk with the Investment and Retirement Team. They’ll take a look at your situation and help you decide which wealth building tools will work best for you.
• Go to IRS.gov this site will give you the most accurate information and help you understand your choices. I know, I know it’s a government site, but there is a lot to be said for going to the source.
  
  1 Data released by Federal Retirement Thrift Investment Board, Analysis of 1997 Thrift Savings Plan Participant Demographics, December 1998; and Employee Benefit Research Institute, EBRI Databook on Employee Benefits, 4th ed., 1997.