Schwab Survey Finds Nearly Half of Americans Are Changing Their IRA Saving Behavior in Current Economic Environment

Tuesday, March 6, 2012 5:30 am PST

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"It’s not surprising that people’s continued skepticism about the economy is impacting retirement savings habits"

SAN FRANCISCO--(BUSINESS WIRE)--The current economic climate has affected the way in which nearly half (49%) of Americans are approaching contributions to their Individual Retirement Accounts (IRA), according to Charles Schwab’s latest quarterly retirement pulse survey released today. Eighteen percent of Americans with an IRA are contributing less in order to cover everyday expenses, six percent say they cannot afford to contribute to both their 401(k) and their IRA and 10 percent have withdrawn money from their IRA.

Not all of the economy’s effects have been negative, however. Continued economic uncertainty has also motivated some Americans to take extra steps to better prepare for their future. Fifteen percent of people with an IRA say they are now contributing as much as possible for retirement.

“It’s not surprising that people’s continued skepticism about the economy is impacting retirement savings habits,” said Carrie Schwab-Pomerantz, senior vice president, Charles Schwab & Co., Inc. “While we understand the temptation – and sometimes necessity – to sacrifice retirement funds to cover shorter-term expenses, we continue to encourage people to maintain a long-term outlook and reinforce the importance of early and consistent retirement saving and planning.”

Schwab’s survey also highlights that a majority of Americans are confused about what IRAs are or how they work. Fifty-three percent of Americans surveyed are confused about at least some aspect of IRAs, and 35 percent ages 18-34 don’t even know what an IRA is. Among all respondents, the most confusing aspects of IRAs are the advantages of having both a 401(k) and an IRA (28%), IRA tax rules and implications (27%), the differences between different IRA types (25%) and how to open or choose investments in an IRA (23%).

To help people sort through some of the most common questions and points of confusion about IRAs, Schwab makes available additional IRA and retirement resources on Schwab.com:

  • Schwab's IRA Center: Schwab’s IRA Center provides information on the various types of IRAs, tools and calculators to help people decide which IRA may be right for them, informational videos, and answers to frequently asked questions about IRAs.
  • Retirement Consultation: Schwab clients have access to a complimentary retirement consultation with an investment professional covering an analysis of savings, income and expenses, personal retirement goals and milestones, and ways to generate income once in retirement.1
  • IRA Analyzer: Schwab’s IRA Analyzer gives people the ability to research and select the retirement account that's right for them.
  • Schwab Real Life Retirement™ Services: Schwab’s Real Life Retirement Services provides a realistic approach to retirement, offering insights into actionable ways to save for and manage retirement savings, guidance on products and services, and access to stories and tips from real people. Watch Schwab client, Michael T. from Atlanta, Georgia, talk about how IRAs have helped shape his retirement.

For additional insights and considerations about IRAs, read the latest “Schwab Talk” blog post with Carrie Schwab-Pomerantz.

Schwab’s IRA Offer

A Schwab IRA makes it easy to open a retirement account online in about 15 minutes. Schwab IRAs offer a number of advantages to investors, including no account service fees2, low minimum balance requirements, automatic deposits, and access to complimentary consultations to help people through the process of opening their account and matching their portfolio to their needs and risk profile. Schwab IRAs also provide access to a wide range of investment choices that make it easy to invest, including ETFs and mutual funds, as well as stocks, bonds, CDs and more. Schwab also offers a wide range of information and resources to help investors find the IRA type that’s right for them, available at www.schwab.com/OpenIRA or by calling 1-800-308-1479.

Rollover IRA

Schwab makes available complimentary 401(k) Rollover Consultants who can work with an individual and their former plan administrator to request a funds transfer, open a new Rollover IRA over the telephone, help complete all the required paperwork, and arrange an appointment with a Schwab Professional to help select investments once the account is opened and funded. For additional information, Schwab encourages investors to visit www.schwab.com/rollover or call 866-855-9095.

Roth IRA

With income restrictions for converting to a Roth IRA lifted as of January 1, 2010, individuals who make more than $100,000 adjusted gross income can now convert assets from a traditional IRA or 401(k) into a Roth IRA.* Investors can review additional online tools and resources at www.schwab.com/Roth.

Additional Information

Schwab encourages investors to visit www.schwab.com/OpenIRA for a full list of resources, or call 1-800-308-1479 or visit a Schwab branch to take advantage of the remaining window for opening a retirement account prior to the April 17 tax deadline.

This information is for general information purposes only and is not intended as a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends you consult with a qualified tax advisor, CPA, financial planner or investment manager.

*Changes to Roth IRA conversion income limit rules may not apply in all states. Certain states may impose penalties on conversions above the current income limits. Consult with a tax advisor for more information.

About the Survey

The Charles Schwab Retirement Survey was conducted by Koski Research between February 2 and February 6, 2012, using Random Digit Dialing of listed and unlisted numbers, with 20 percent of the sample reached by cellular/mobile phones. Quotas are set to ensure reliable and accurate representation of the entire U.S. population ages 18 and over. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the study of the entire U.S. population over age 18, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 787,000 banking accounts, and $1.74 trillion in client assets as of January 31, 2012. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com. (0312-1601)

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Read our blog: Schwab Talk

© 2011 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

1 The consultation is complimentary although the implementation of any recommendations made during the consultation may result in trade commissions or other fees, charges, or expenses.

2 There is no fee to open and maintain your account. Other charges may apply. See the Charles Schwab Pricing Guide for Individual Investors (“the Guide”) and any amendments to the Guide for comprehensive details on fees.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50191246&lang=en

Contact:

Charles Schwab
Dan Mahoney, 415-667-0507
dan.mahoney@schwab.com
or
Edelman
Pablo Rodriguez, 415-486-3267
pablo.rodriguez@edelman.com

Multimedia Files:

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Today's IRA Saving Landscape (Schwab)

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