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FAQs About Benefits—Retirement Issues

What about personal saving for retirement?

While it is hard to determine how much people are saving for retirement, an indicator is money saved in tax-sheltered retirement accounts, such as individual retirement accounts (IRAs) and Keogh plans (for the self-employed). In 2001, nearly 3.5 million taxpayers made contributions totaling more than $7.4 billion to IRAs. Currently, IRAs are the largest single repository of tax-deferred retirement assets, generated primarily from funds "rolled over" from other tax-advantaged accounts such as a 401(k) plan from a former employer. Relatively little money in IRAs comes from new contributions.

Both the number of people contributing and the amounts contributed to IRAs has been declining since 1990, perhaps partially because of the creation of Roth IRAs, which are not reported on tax returns. In 2001, nearly 1.3 million taxpayers made contributions to Keogh plans for the self-employed. The Keogh number has grown consistently since 1990 and recently eclipsed IRA contributions for the first time. About one adult American in five has either an IRA or Keogh account.

In 2002, IRAs held more than $2.3 trillion, after peaking at more than $2.65 trillion in 1999. The subsequent decline largely reflects falling stock prices. In 1999, 46% of IRA assets were in mutual funds and more than 35% were in self-directed brokerage accounts.

While there is widespread concern that today's workers aren't saving enough to finance a comfortable retirement, it is difficult to distinguish between total savings and those exclusively directed at future retirement.

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