By Cyril Tuohy
Middle-income baby boomers would be less likely to save for retirement if taxes are increased or if tax incentives for retirement savings are reduced or eliminated, a new study has found. The study also found that tax deferral is among the most important considerations when baby boomers, particularly boomers at middle-income levels, evaluate a retirement investment.
"Middle-income boomers, who make up the majority of annuity owners, overwhelmingly show that they value and utilize tax-deferred retirement savings vehicles," Cathy Weatherford, president and chief executive officer of the Insured Retirement Institute (IRI), said in a statement. "Our consumer research found that tax policy changes would have negative consequences for retirement savings, with about a quarter of middle-income boomers likely to curtail their retirement savings if tax deferral is reduced or eliminated.”
With deficits projected to increase after 2015, the federal government could seek to raise revenue in the form of higher taxes and changes to tax deferral treatment of retirement savings like annuities. Such a move would discourage investing for retirement.
Retirement policies adopted in Washington must “encourage retirement savings, not discourage it,” Weatherford said, adding “now is the time to protect the incentives that are helping Americans attain financial security during their later years."
Earlier this year, a survey of Americans aged 50 to 66 found that as many as 58 percent of middle-income baby boomers would be likely to cut back on retirement savings if income taxes are increased, 40 percent said they would be likely to cut back if Social Security payroll taxes are increased and 29 percent said they would likely trim back if capital gains taxes are increased.
In addition, 74 percent of all boomers consider tax deferral to be an important feature when selecting a retirement investment, the IRI found, and about one in five consumers cited tax-deferred growth as the primary reason for owning an annuity. Among middle-income boomers, 77 percent said that tax deferral is an important consideration when selecting a retirement product.
Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at email@example.com.
© Entire contents copyright 2013 by InsuranceNewsNet.com, Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.