Though not all workers have access to a 401(k), anyone who earns an income is eligible to contribute to an individual retirement account, or IRA. And it pays to fund an IRA for a number of reasons, the most pressing being that without independent savings, you're likely to struggle to pay the bills in retirement. Furthermore, because IRAs offer a number of tax benefits, they're a more efficient means of saving than a traditional bank or brokerage account.

Unfortunately, less than one-third of Americans today are contributing to an IRA, and for a host of reasons that hardly hold water. Such is the result of a TIAA survey, which found that workers are making the following bad excuses for not funding IRAs:

  • Not understanding how IRAs work (28%).
  • Feeling that IRAs are too complicated (17%).
  • Not having enough money to contribute (46%).

So let's debunk these justifications and help countless Americans get back on track, shall we?

A blue and red road sign, in the shape of an interstate marker, labeled IRA, with an arrow pointing toward the right.

IMAGE SOURCE: GETTY IMAGES.

How IRAs work

If you're avoiding an IRA because you don't understand how it works, here's a basic rundown. IRAs come in two main varieties: traditional and Roth. With the former, the money you contribute goes in tax-free, but withdrawals are taxed in retirement. With the latter, contributions don't give you an immediate tax break, but your withdrawals are yours free and clear of taxes during your golden years.

Both accounts have the same annual contribution limit: $5,500 for workers under 50, and $6,500 for those 50 and over. But whereas you can fund a traditional IRA regardless of how much you earn, Roth IRAs impose annual income limits so that if you make too much, you can't fund one directly. You can, however, put money into a traditional IRA and convert that account to a Roth later on.

The simplest way to manage your IRA

Since complexity is a sizable barrier to funding an IRA, let's see if we can clear the air. Managing an IRA is fairly simple. Once you fund your account, you get the option to choose how to invest your money. You can play it safe and stick mostly with bonds, but that will inhibit your account's growth over time. You could go heavy on individual stocks if you're willing to take on that risk, and that'll most likely result in sizable growth -- but perhaps keep you awake at night.

The ideal approach, assuming you're coming from a place of knowing little to nothing about investing, may therefore be to go heavy on index funds, which not only offer some of the lowest fees out there, but are also a good way to diversify your holdings while capitalizing on long-term market growth. This is an especially wise approach if you don't have the time, patience, or capacity to research individual stocks.

Making the most of your contributions

Now let's discuss what appears to be the single greatest excuse for not funding an IRA: not having the money to do so. While it's true that many workers live paycheck to paycheck, and therefore don't have a ton of money to play with, most of those folks do have the option to rethink their budgets and start cutting corners to free up cash. Remember, just because you're allowed to contribute up to $5,500 a year to an IRA doesn't mean you have to start out hitting that limit. In fact, nearly 20% of folks who save in an IRA contribute less than $250 each year. The key is to start saving some amount of money each month and aim to ramp up over time.

Not convinced? Check out the following table, which shows what a mere $200 a month can get you if you start saving early enough:

If You Start Saving $200 a Month at Age:

Here's What You'll Have by Age 65 (Assumes an 8% Average Annual Return):

25

$622,000

30

$413,000

35

$272,000

40

$175,000

45

$110,000

50

$65,000

Data source: author.

The numbers on the right are quite impressive, though less so as we go down that column. That's because the more time you give your money to grow, the more savings you stand to accumulate. The opposite is also true, though -- limit your savings window, and you won't retire with very much.

So there you have it: IRAs aren't all that complicated, can be easy to manage, and can turn relatively modest contributions into sizable sums over time. So if you've been making excuses for why you're not funding yours, it's time to stop talking and start saving. Your retirement depends on it.

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