Most Americans Unprepared for Retirement

March 18th, 2010  |  Published in Retirement  |  5 Comments

You have probably seen several news reports quoting statistics from the 2010 Retirement Confidence Survey by the Employee Benefit Research Institute. Some of the more interesting figures from the survey are that 43% of Americans have less than $10,000 in retirement savings and 27% say they have less than $1000 in savings. Also only 16% have confidence in their ability to save enough for retirement.

These statistics may not be as bad as they seem. The statistics do not include the value of primary homes or defined-benefit pension plans. Also, you need to consider that some of the survey respondents are still in their 20’s and haven’t had much time to accumulate much in savings.

Even taking these factors into account though it is clear that most Americans need to be doing more in preparation for retirement. They survey showed that many people are unaware of how much they need to save for retirement or how to calculate how much they need to save for retirement. I think it is also clear that without the safety net of Social Security there will be millions of Americans that are never able to retire.

Saver’s Credit for Retirement Savings Contributions

February 3rd, 2010  |  Published in Retirement  |  Comments Off on Saver’s Credit for Retirement Savings Contributions

This credit used to be known as the “Retirement Savings Contribution Credit.” If you qualify you can claim a credit of up to $1000 for eligible contributions to qualified IRA, 401k, and certain other retirement plans. Since this credit is not refundable it can’t be larger than the tax amount the taxpayer would have had to pay without the credit.

Currently single filers can get a 50% credit of their eligible contributions if their AGI is up to $16,500; a 20% credit if their income is up $18,000: and a 10% credit if their income is up to $27,750. If the single filer’s AGI is over $27,750 they are not eligible for the credit.

A credit equal to 50% of eligible retirement contributions sounds nice but most people making $16,500 and less are probably not contributing or not contributing much to a retirement plan. My guess is that most people who take the credit are those who are eligible for the 10% rate. Although this credit is a nice perk for some I doubt it is actually enticing people to contribute to their retirement plans.

If your income is under $27,500 though be sure to check if you are eligible for this credit. The Saver’s Credit is probably one of the most overlooked credits.

If you owe a small amount in taxes it might be worthwhile to make an eligible retirement contribution just to take advantage of this credit considering you would get 10-50% of your money back.