Almost one-third — 31% — of full-time workers have taken a loan or made an early withdrawal from their 401(k) or IRA account, according to a study from the Transamerica Center for Retirement Studies.
This 'leakage' from tax-advantaged vehicles that encourage savings "can severely inhibit the growth of participants' long-term retirement savings," the study said, adding that from a policy perspective these early withdrawals should be discouraged.
Other survey findings confirm several common sense assumptions about savings and retirement: higher income workers save more, are more prepared for retirement and are more likely to use a financial adviser.
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Still, even among higher earners, savings seem inadequate for the expected longevity of today's workers. Those with an annual household income of $100,000 or more have saved $222,000, compared with the estimated median savings of $50,000 in all household retirement accounts and just $3,000 among those earning less than $50,000. College graduates have saved $160,000, compared with only $23,000 among nongraduates.
The survey found that only 65% of workers are offered a 401(k) or similar plan by their employers, including 71% of full-time workers and just 45% of part-time workers.
The report suggested expanding access to workplace retirement plans and encouraging wider adoption of automatic enrollment by retirement plan sponsors to increase participation rates among workers.
Strategist sees relatively little risk of the university losing its tax-exempt status, which could pose opportunity for investors with a "longer time horizon."
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