What Americans Think About Their Retirement Will Shock You

In saving for retirement, Americans have access to IRAs, 401(k) plans, and other tax-advantaged savings vehicles. Yet shockingly, according to a recent study from the Employee Benefits Research Institute, those tax benefits might not actually have a huge impact on how people save.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the EBRI study, which found that 65% of those surveyed would keep saving for retirement the way they do now even if the tax breaks for traditional IRA and 401(k) contributions were taken away. Dan notes the irony of the finding, especially given how many people open IRAs specifically to get the last-minute tax deduction at tax time. But he also points out that many people would be better off using Roth IRAs that don't give current tax breaks to taxpayers, instead reaping the rewards of long-term tax-free treatment. Dan concludes that as policymakers realize that IRA and 401(k) deductions aren't critical to saving behavior, new laws reducing or eliminating those tax benefits might become more common.

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  • Report this Comment On March 23, 2014, at 10:50 AM, Mathman6577 wrote:

    Let's hope that the government doesn't also hold this belief and try to eliminate the tax deduction. I have seen other studies that have concluded the opposite -- that the tax breaks are important.

  • Report this Comment On March 23, 2014, at 11:28 AM, carlytx wrote:

    One of the problems is education. The lack of it. Retirement planning should be taught in every school. Retirement planning and saving/investing has to become a priority for everyone. The key is to start saving/investing early in life, be consistent, take advantage of any employer matching plan, max out contributions when possible, eliminate debt, avoid risks with your nest egg and plan for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.). There is a great deal of information about retirement available on the web. I use several sites including the site Retirement And Good Living which provides information on finances, health, retirement locations, part time work and also has a great blog of guest posts about a variety of retirement topics.

  • Report this Comment On March 23, 2014, at 6:16 PM, margor57 wrote:

    I majored in Finance with a minor in Economics initially until I changed careers after the first big crash in the markets back in the 90's. I believe that everyone needs a class in Finance/Economics in their Sr Year of High School so that they can begin to grasp the importance of being self reliant in the investment world. Total reliance on Social Security is something to be avoided at ALL COSTS.

    I am not a believer in the ROTH concept because they'll wait till those that take that route to retire than change the law and TAX their income anyway. I'd rather deduct and save now as I know that I won't earn anywhere near as much once work stops and my tax burden will lessen as a result. That was the theory behind the original IRA concept and I prefer that over the ROTH idea.

  • Report this Comment On March 24, 2014, at 1:37 AM, KimChang1986 wrote:

    Americans just don't know how to plan for retirement. Here's what everyone SHOULD do:


    My taxes and insurance per month are less than a 1 bedroom apartment and you have to live somewhere


    Maybe a car payment but that should be it.


    You can get pretty solid life insurance for $30/month (from Life Ant) even when ur at or near retirement age.


    If you know you need new windows, roof, furnace, etc. Get them done while you still have good cash flow.


    Most cities have a senior center of some sort and can help with what is available to retired people


    Part time work, grandchildren, volunteerism, social clubs, hobbies, sports, etc to fill your time with meaningful activity that is free or inexpensive to help maintain yourself physically and emotionally

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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