Tax-Advantaged Accounts Are Critical

The Wells Fargo/Gallup Investor and Retirement Optimism Index survey found 69% of respondents say it is extremely or very important that the president and Congress find ways to financially encourage every company to offer a 401(k) savings option and to financially encourage all Americans to participate in their employer’s 401(k) savings option. 

Sixty-seven percent say it is extremely or very important for leaders to seek ways to enhance the role of the 401(k) as a retirement savings investment. Sixty-six percent say it is extremely or very important that the president and Congress should allow Americans with 401(k) retirement savings to obtain more quality investment advice and should allow Americans more investment flexibility with their 401(k)s.

The survey also found 68% of nonretirees indicate a 401(k), individual retirement account (IRA), Keogh, or other tax-advantaged retirement savings accounts will be a major source of their retirement income—the highest percentage of the five alternatives offered.

At the same time, 27% of nonretirees say Social Security will be a major source of their future retirement income—the lowest percentage of the five options. This contrasts sharply with what current retirees say are their major income sources: More than half of current retirees say Social Security is a major source of their retirement income (54%), while 32% say the same about 401(k) and other tax-advantaged accounts.

Consistent with this anticipated shift away from future dependence on Social Security, 58% of investors think it unlikely that the system will be there for today’s younger Americans when they retire. At the same time, 76% think strengthening Social Security for younger Americans should be a top national priority over the next four years.

Wells Fargo/Gallup conducted the survey November 9 to 17, with a random sample of 1,024 investors.

Survey results are available here.