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On retirement, too many of us are fools

Retirement Education“More than half of people under 50 did not make retirement contributions last year, according to a recent report. There’s only one excuse for not contributing — and most people can’t use it.” This was the introduction to a revealing article written by Joshua Brown which highlights a concerning issue with our eagerness to plan for retirement. In it, a survey by T. Rowe Price that looks at the investing habits of Generation X and Y found that only 45% of people between 21 and 50 will be making IRA contributions for fiscal 2011. This rate is down considerably from 2010 which revealed that 71% of those surveyed make contributions to their retirement plans.

The only acceptable excuse that individuals can use for not contributing is financial hardship for which tax-deferred investing will not be a priority. Although many been faced with financial hardships due to the lackluster economy, it should not necessarily result in such a large decrease of individuals who contribute to retirement plans. Rather, a more appropriate response would be to lessen the contribution amount during an off year instead of contributing nothing. Time will tell if this is merely a temporary issue or if it is an early indication of a generation or two who will not be ready for retirement as their time comes. Hopefully the 2012 survey will reveal an increased participation rate.

For the full article, click here.

Annuity Education

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