Boomers Face $475K Retirement Shortfall, on Average

  Boomers Face $475K Retirement Shortfall, on Average

    TD Ameritrade explains how tax season could be a good time to catch up

Business Wire

OMAHA, Neb. -- April 1, 2013

Baby Boomers have saved, on average, $275,000 for retirement, but they believe
they’ll need a median of $750,000 in order to live comfortably, according to a
recent Investor Index Survey released by TD Ameritrade, Inc. (“TD
Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation
(NYSE:AMTD).

Faced with this shortfall, many Americans over the age of 50 may want to
consider an important opportunity that could help their retirement planning –
catch-up contributions. A catch-up contribution allows investors over age 50
(by the end of the calendar year) to make additional contributions to their
IRA or employer-sponsored retirement plans. These catch-up contributions are
in addition to regular contribution limits.

And remember, investors have until tax day to make their 2012 IRA
contributions. So, those who have not contributed (or fully contributed) for
2012 can do so until April 15^th – and they can also contribute (or start to
contribute) for 2013.

For 2012:

  *IRA contribution limits are $5,000 with an additional $1,000 catch-up
    contribution (for a total contribution of $6,000).

For 2013:

  *401(k) contribution limits are $17,500 with an additional $5,500 catch-up
    contribution (for a total contribution of $23,000)
  *IRA contribution limits are $5,500 with an additional $1,000 catch-up
    contribution (for a total contribution of $6,500)

When planning for retirement, every dollar counts, especially when saving in a
tax-deferred vehicle. And, with nearly half (47%) of Americans expecting to
receive an income tax refund this tax season, according to a separate survey
by TD Ameritrade, Inc., eligible investors might consider putting those refund
dollars towards a catch-up contribution.

“Baby Boomers should consider different opportunities, like catch-up
contributions, that might make sense for their retirement investing plans,”
said Lule Demmissie, managing director, retirement, TD Ameritrade. “By not
taking advantage of these catch-up contributions, they could potentially miss
out on thousands, perhaps even hundreds of thousands of dollars that could be
available in retirement.”

An additional $1,000/year contribution into an IRA starting at age 50 until
age 70 (which is the last year to contribute to a Traditional IRA) could mean
an additional $34,719 towards retirement ($1,000 a year, 20 years, 5% rate of
return).

If the client fully funds an IRA with $6,500 a year at age 50 until age 70,
that could mean an additional $225,675 for retirement at age 70 ($6,500 a
year, 20 years, 5% rate of return).

“One thing for investors to remember is that it is never too late to start
with plans to prepare for retirement. It may just mean they have to adjust
their retirement expectations, work a little longer or think of other means of
support that they had never considered before. But it’s never too late to get
started,” continued Demmissie.

AMTD-G

TD Ameritrade does not provide tax advice. We suggest investors consult with a
tax-planning professional with regard to personal circumstances.

About TDAmeritrade Holding Corporation

Millions of investors and independent registered investment advisors (RIAs)
have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education
to help make investing and trading easier to understand and do. Online or over
the phone. In a branch or with an independent RIA. First-timer or
sophisticated trader. Our clients want to take control, and we help them
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Ameritrade has time and again been recognized as a leader in investment
services. Please visit TD Ameritrade’s newsroom or www.amtd.com for more
information.

Brokerage services provided by TDAmeritrade, Inc., member FINRA
(www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org)

About Head Research

Head Research is a division of Head Solutions Group (U.S.) Inc., a leading
market research partner for Financial Services companies in North America.
With offices in New York, Toronto, and Montreal, Head delivers the deep
customer insights that increase institutional knowledge and propel business
action. Head Research is separate from and not affiliated with TD Ameritrade,
which is not responsible for its policies and services.

Baby Boomer Survey Method

An online survey was conducted with N = 2,000 U.S. Baby Boomers between
October 10 and 12, 2012, by Head Research on behalf of TD Ameritrade, Inc.
Sample was drawn from major regions in proportion to the U.S. Census,
including New England (5%), Mid-Atlantic (16%), South (25%), Midwest (22%),
Southwest (12%), West (20%). Approximately 50% of respondents in each region
were male and 50% female. All respondents were required to be: 1) Baby Boomers
(i.e., born between 1946 and 1964) and 2) Shared or sole household
decision-makers concerning saving for retirement. Two primary groups were
defined based on financial preparedness for retirement: 1) Prepared:
“Somewhat” or “very prepared” financially for retirement (n = 1,430) and 2)
Unprepared: “Somewhat “or “very unprepared” financially for retirement (n =
570). The survey took each participant 16 minutes to complete, on average. The
statistical margin of error for overall results in this study is +/- 2.2%.
This means that, in 19 out of 20 cases, survey results for questions based on
all Baby Boomers (i.e., N = 2,000) will differ by no more than 2.2% in either
direction from what would have been obtained by measuring the opinions of all
Baby Boomers in the USA.

Tax Survey Methodology

An online survey was conducted among N=1,000 Americans 18+ years old from
November 16-17, 2012, by Head Research on behalf of TD Ameritrade, Inc. Sample
was drawn from major regions in proportion to the U.S. Census. The statistical
margin of error for overall survey results in this study is +/- 3% (assumes
panelists do not differ from non-panelists, and respondents do not differ from
non-respondents). This means that, in 19 out of 20 cases, survey results for
questions based on all survey respondents (N=1,000) will differ by no more
than 3% in either direction from what would have been obtained by measuring
the opinions of all adult Americans. Baby Boomers = born 1946 to 1964; Gen X =
born 1965 to 1976; Gen Y = born 1977 to 1989.

TD Ameritrade and Head Research are separate, unaffiliated companies and are
not responsible for one another’s services or policies.

Contact:

TD Ameritrade Holding Corporation
For Media:
Christina Goethe, 201-369-8541
Communications & Public Affairs
christina.goethe@tdameritrade.com
On Twitter @TDAmeritradePR
or
For Investors:
Jeff Goeser, 402-597-8464
Investor Relations & Finance
jeffrey.goeser@tdameritrade.com
 
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