As reported by Fidelity Investments in their recent %u201CRetirement Trends%u201D survey, 96 per cent of Americans investing for retirement don%u2019t recognize the latest contribution limit for an individual retirement account, with some even guessing as low as $1,000. In actuality, IRA contribution limits for the tax year 2005 increase to $4000 against $3000 in 2004.

Tax refunds

When it comes to knowing the facts about retirement, misperceptions can lead to missed opportunities. Today's workers will face rising health care costs when they retire, as well as declining pension benefits and a higher cost of living. Thus, it is important to save as early and as much as possible in tax privileged accounts similar to the IRAs.

 

Understanding the facts can help dismiss common delusions that may prevent some investors from making the smart move of saving in an IRA.





Nearly one-third of Americans in their prime savings years who have not yet opened an IRA account think their 401(k) savings will be sufficient for retirement, according to the Retirement Trends survey. On the other hand, Fidelity quotes about 80 percent to 100 percent of income prior to retirement will be needed by retirees in order to live sufficiently. An IRA investment today which serves to complement workplace programs offer investors an assurance that their savings will persist to grow and last throughout retirement.





According to one out of four non-IRA investors surveyed and who say they don%u2019t have the funds for the initial investment, the possibility to save even more for retirement may be overwhelming. However, getting started without an opening lump sum is as simple as setting up automatic monthly payments through a Fidelity SimpleStart IRA.



The fact is that younger investors have time on their sides, which should give them more reasons to start saving early. As gathered by the Retirement Trends survey, practically two-thirds of young adults have set off to save for retirement ahead of age 30. That's good news; starting to save as early as possible is one of the best ways to prepare for the future.




Tax refunds