Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Americans Don’t Contribute Enough to Retirement Funds, MU Researcher Finds

01.10.2013
Americans should contribute at higher levels during economic downturn

As the oldest of the baby boomers begin to reach retirement age, a large percentage of Americans are thinking more and more about how much money they must save to be able to retire comfortably.

Also, more and more employers are changing retirement benefits from defined-benefit plans, which guarantee some level of retirement income, to defined-contribution plans, which require employees to invest on their own for retirement. All of these changes, plus the recent economic recession, have created a difficult financial environment for future retirees.

Now, University of Missouri researchers have found that more than 90 percent of future retirees are contributing only a minimal amount of their salaries to their retirement funds. Rui Yao, an associate professor of personal financial planning in the College of Human Environmental Sciences at MU, says this number is quite concerning.

“With the future of social security benefits in America very much up in the air, it is crucial that people save and invest for their inevitable future retirement,” Yao said. “We studied how Americans invested for retirement before and after the recent economic recession, and our findings were alarming. Americans, especially those who are middle-aged, should be saving much more than they currently are for retirement, not only for their own financial security, but for the country’s sake as well.”

Each year, the Internal Revenue Service (IRS) sets the amount of income a person can set aside for retirement with tax benefits, depending on whether they are younger or older than 50. For her study, Yao examined how much income people invested in retirement funds as compared to the IRS limits. She looked at data from 2004, 2007, and 2010 to get a sense of how behaviors changed before and after the economic recession. In 2004, 43 percent of adults ages 21-70 contributed 20 percent or less of the IRS maximum amount to their retirement funds. In 2007, that number grew to nearly 51 percent and by 2010, more than 90 percent of working Americans were contributing less than 20 percent of the IRS maximum to their retirement funds. Yao also found that in 2010, only 3 percent of working Americans reached the IRS maximum contribution level. Yao says this behavior is very counterproductive.

“Common sense economic theory tells us we should buy when the market is low and sell when the market is high,” Yao said. “But Americans are doing the opposite of that and actually contributing less when the market is low, such as during the recent recession. If Americans truly want to maximize their retirement funds, it is critical that they contribute more during a weak economy while they can ease up a little when the markets are higher. They should also take advantage of the IRS maximum levels of contribution as much as possible.”

Yao says it is important for financial advisors and employers to educate their clients and employees on the importance of contributing higher amounts during poor economic times. Yao’s study was published in the Family and Consumer Sciences Research Journal. She also won the AARP Public Policy Institute’s Financial Services and the Older Consumer Award for her work on this study.

Nathan Hurst | EurekAlert!
Further information:
http://www.missouri.edu

More articles from Studies and Analyses:

nachricht Europe’s Demographic Future. Where the Regions Are Heading after a Decade of Crises
10.08.2017 | Berlin-Institut für Bevölkerung und Entwicklung

nachricht Scientists reveal source of human heartbeat in 3-D
07.08.2017 | University of Manchester

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Fizzy soda water could be key to clean manufacture of flat wonder material: Graphene

Whether you call it effervescent, fizzy, or sparkling, carbonated water is making a comeback as a beverage. Aside from quenching thirst, researchers at the University of Illinois at Urbana-Champaign have discovered a new use for these "bubbly" concoctions that will have major impact on the manufacturer of the world's thinnest, flattest, and one most useful materials -- graphene.

As graphene's popularity grows as an advanced "wonder" material, the speed and quality at which it can be manufactured will be paramount. With that in mind,...

Im Focus: Exotic quantum states made from light: Physicists create optical “wells” for a super-photon

Physicists at the University of Bonn have managed to create optical hollows and more complex patterns into which the light of a Bose-Einstein condensate flows. The creation of such highly low-loss structures for light is a prerequisite for complex light circuits, such as for quantum information processing for a new generation of computers. The researchers are now presenting their results in the journal Nature Photonics.

Light particles (photons) occur as tiny, indivisible portions. Many thousands of these light portions can be merged to form a single super-photon if they are...

Im Focus: Circular RNA linked to brain function

For the first time, scientists have shown that circular RNA is linked to brain function. When a RNA molecule called Cdr1as was deleted from the genome of mice, the animals had problems filtering out unnecessary information – like patients suffering from neuropsychiatric disorders.

While hundreds of circular RNAs (circRNAs) are abundant in mammalian brains, one big question has remained unanswered: What are they actually good for? In the...

Im Focus: RAVAN CubeSat measures Earth's outgoing energy

An experimental small satellite has successfully collected and delivered data on a key measurement for predicting changes in Earth's climate.

The Radiometer Assessment using Vertically Aligned Nanotubes (RAVAN) CubeSat was launched into low-Earth orbit on Nov. 11, 2016, in order to test new...

Im Focus: Scientists shine new light on the “other high temperature superconductor”

A study led by scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg presents evidence of the coexistence of superconductivity and “charge-density-waves” in compounds of the poorly-studied family of bismuthates. This observation opens up new perspectives for a deeper understanding of the phenomenon of high-temperature superconductivity, a topic which is at the core of condensed matter research since more than 30 years. The paper by Nicoletti et al has been published in the PNAS.

Since the beginning of the 20th century, superconductivity had been observed in some metals at temperatures only a few degrees above the absolute zero (minus...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Call for Papers – ICNFT 2018, 5th International Conference on New Forming Technology

16.08.2017 | Event News

Sustainability is the business model of tomorrow

04.08.2017 | Event News

Clash of Realities 2017: Registration now open. International Conference at TH Köln

26.07.2017 | Event News

 
Latest News

A Map of the Cell’s Power Station

18.08.2017 | Life Sciences

Engineering team images tiny quasicrystals as they form

18.08.2017 | Physics and Astronomy

Researchers printed graphene-like materials with inkjet

18.08.2017 | Materials Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>