The
Internal Revenue Service (IRS) announced an additional webinar discussing
employer shared responsibility and the Patient Protection and Affordable Care
Act (ACA)-required information reporting by employers and providers of minimum
essential coverage.
“Due
to overwhelming interest we are offering another opportunity for those who were
not able to attend the previously scheduled events,” the agency said.
The
“IRS Affordable Care Act Virtual Presentation: Employer Shared Responsibility
and Information Reporting” will be held Wednesday, June 24, at 1 p.m.
Eastern time. Registration for the event is available here.
The
event will be streamed through WebInterpoint. Computer speakers or headphones
are required to listen to the streaming audio, and listeners should complete
the system check before the event begins.
ACA information
resources will be presented to attendees, and there will be a live Q&A
period with IRS presenters about the ACA tax provisions.
The
Federal Reserve Board’s latest survey of the financial and economic conditions
of American households finds, in general, many individuals want to save for
retirement, but also many individuals—especially those with lower incomes—are
failing to do so.
Additionally,
even among those who are saving for retirement, a majority of respondents indicate
that they have no or limited confidence in their ability to manage their retirement
investments.
According
to the 2014 “Survey of Household Economics and Decisionmaking,” only 13% of
respondents who are not currently retired report that they have given “a lot”
of thought to financial planning for their retirement, while an additional 21%
have given it “a fair amount” of thought. Thirty-nine percent of respondents
say that they have thought only “a little” or “none at all” about financial
planning for retirement.
The
proportion of those ages 18 to 29 who say they have given no thought at all to
retirement planning was the highest of any age group, at 31%. In addition,
among those households with less than $40,000 in income, nearly 29% say they
have given no thought at all to retirement planning.
Individuals
also express a range of expectations for their path to retirement. Among those
who have not yet retired and do not indicate that they are out of work due to a
disability, only 22% anticipate they will experience the traditional notion of retirement,
which is working full time until a retirement date and then no longer working
at all. Conversely, for 26% of this population, their “retirement plan” is to
keep working as long as possible. An additional 12% indicate they do not plan
to retire.
Fifty-five
percent of those with a household income less than $40,000 per year—who are
not retired and not out of the labor market due to a disability—indicate that
they either plan to keep working as long as possible or do not plan to retire. Only
27% of the parallel group making $100,000 or more say the same.
NEXT: Lack of Planning Not the Only Problem
Lack of Resources and
Confidence
A
lack of preparedness for retirement is not signaled by a lack of planning
alone. Many respondents, particularly those with limited incomes, indicate that
they simply have few or no financial resources available for retirement. When
asked what types of retirement savings or pension they have, 31% of non-retired
respondents report that they have no retirement savings or pension whatsoever.
Eighty-two
percent of respondents making more than $100,000 per year report having at
least some retirement savings, and 74% of those making between $40,000 and
$100,000 per year have savings. But among respondents making less than $40,000
per year, only 42% have any retirement savings.
Many
respondents also express a lack of knowledge about both the amount they are
contributing to their retirement plan and the level of the 401(k) match provided
by their employer. Twenty-three percent of respondents who have a 401(k)
retirement account say they do not know what portion of their salary they
contribute. Additionally, 41% of respondents whose employer offers a plan say
they do not know the maximum fraction of their salary that their employer will match.
This includes 73% of those who do not have savings in a 401(k) type account,
but also 30% of those who do.
A
number of respondents also indicate that they lack confidence in their ability
to manage their investments. Just more than half of respondents with self-directed
retirement accounts—including 401(k)s, individual retirement accounts (IRAs), and savings outside retirement
accounts—are either “not confident” or only “slightly confident” in their ability
to make the right investment decisions when investing money in these accounts.
Even
when respondents do have established retirement savings accounts, a subset of
non-retired respondents report drawing on these resources. Six percent of those
with retirement savings report that they borrowed money from a retirement
account during the year before the survey. Additionally, 5% of those with such
accounts report that they cashed out, or permanently withdrew, some of their retirement
savings in the prior 12 months; 1% indicate that they both borrowed money
from and cashed out retirement accounts in that time. Additionally, 6% of
non-retirees without retirement savings say that they borrowed from and/or cashed
out their retirement savings, reflecting that some individuals previously had
savings but have depleted the funds in those accounts.
NEXT: Comparing Expectations with Experience
Expected
vs. Actual Retirement Income
There are differences by age in the sources
of funds that respondents expect to use to pay for retirement expenses. This is
especially apparent with respect to Social Security. Only 44% of those younger
than 30 say they anticipate Social Security benefits will be part of their plan
to pay for expenses in retirement. This percentage steadily increases by age cohort,
up to 92% for those older than 60. Similarly, traditional defined benefit (DB) pension
plans are less common as an expected source of retirement funding among younger
respondents. Thirty-six percent of those ages 60 and older are counting on
income from a defined benefit plan, while only 22% of those ages 18 to 29 say
the same.
Many respondents expect continued employment
to be a significant source of retirement income, with 45% of all respondents
expecting to continue working in some capacity to cover their expenses and 26%
expecting their spouse to continue working. Forty-six percent of respondents
plan to rely on savings they hold outside formal retirement accounts to cover
their expenses, while 37% plan to draw on savings in an IRA, and 20% expect to
sell or rent land or real estate to pay for retirement expenses.
Among
current retirees, the common age to retire is 62, with 20% of retirees saying
they stopped work at that age, followed by age 65, when 11% stopped working.
Eighty-one percent of current retirees report that they had stopped working by
age 65. In contrast, among non-retirees who plan to retire and provided an
expected retirement age, only 56% expect to retire by age 65, whereas 28% plan
to work to age 70 or later. More than half of current retirees (51%) say they
followed the traditional model of working full-time until they retired, and
then stopped working altogether.
When
it comes to sources of funds in retirement, 89% of those in retirement are
drawing Social Security benefits, and 62% are drawing a traditional defined
benefit pension. Half draw on savings outside a retirement account, 45% use
savings from an IRA, and nearly one-third draw on a defined contribution (DC) plan.
Twelve percent use income from real estate or the sale of real estate to fund
expenses in retirement, and 8% currently earn wages from a job. Only 4%
indicate they are relying on children, grandchildren or other family members
to pay for their expenses.
The survey was
conducted on behalf of the Federal Reserve Board in October and November 2014.
More than 5,800 respondents completed the survey. The report summarizing the
survey's key findings may be found at http://www.federalreserve.gov/communitydev/shed.htm.