IRI: Eliminating Incentives and Increasing Taxes Would Cut Savings of Middle-Income Boomers

By Cathy Weatherford

Insured Retirement Institute (IRI)

Washington, D.C. – March 7, 2013 – The Insured Retirement Institute (IRI) today released a new research report that found 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. The study also found that tax deferral is among the most important considerations when Baby Boomers, and 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,” IRI President and CEO Cathy Weatherford said. “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. Policy coming out of Washington must seek to encourage retirement savings—not discourage it. As saving for retirement is becoming more and more challenging, now is the time to protect the incentives that are helping Americans attain financial security during their later years.”

When it comes to tax policy changes, according to the January survey of Americans aged 50 to 66, 58 percent of middle-income Boomers are likely to cut back on retirement savings if income taxes are increased, 40 percent if Social Security payroll taxes are increased, and 29 percent if capital gains taxes are increased.

The IRI report found that 74 percent of all Boomers consider tax deferral to be an important feature when selecting a retirement investment, 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.

The full report is available here.

About the Insured Retirement Institute:

The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry. Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: Our members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella.

IRI’s mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and advocate before public policy makers on critical issues affecting insured retirement strategies and the consumers that rely on their guarantees. Visit today to experience the vast resources of the Insured Retirement Institute for yourself.

Andrew Simonelli