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Debunking Common Myths About IRAs

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					Title:
Debunking Common Myths About IRAs

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356

Summary:
According to a recent "Retirement Trends" survey by Fidelity Investments,
96 percent of Americans saving for retirement don't know the current
contribution limit for an individual retirement account, with some
guessing as low as $1,000. The reality is that for tax year 2005, IRA
contribution limits increase to $4,000 -- up from $3,000 in 2004.


Keywords:
Debunking Common Myths About IRAs


Article Body:
According to a recent "Retirement Trends" survey by Fidelity Investments,
96 percent of Americans saving for retirement don't know the current
contribution limit for an individual retirement account, with some
guessing as low as $1,000. The reality is that for tax year 2005, IRA
contribution limits increase to $4,000 -- up from $3,000 in 2004.

When it comes to knowing the facts about retirement, misperceptions can
lead to missed opportunities. Today's workers will face rising health
care costs when they retire, as well as declining pension benefits and a
higher cost of living. That's why it's important to save as much as
possible, and as early as possible, in tax-advantaged accounts like IRAs.

Knowing the facts can help dispel common myths that may keep some
investors from making the smart move of saving in an IRA.

* Myth No. 1: My 401(k) savings should be enough.

Nearly one-third of Americans in their prime savings years who have not
yet opened an IRA account think their 401(k) savings will be sufficient
for retirement, according to the Retirement Trends survey. However,
Fidelity estimates that retirees will need approximately 80 percent to
100 percent of their pre-retirement income to live comfortably. Using an
IRA now to supplement workplace programs can help investors make sure
their savings will continue to grow and last throughout retirement.

* Myth No. 2: I have to come up with thousands of dollars all at once to
open an IRA.

For the one in four non-IRA owners surveyed who say they can't afford the
initial investment required to open an IRA, opportunities to save even
more for retirement may be daunting. But getting started without an
initial lump sum is as easy as setting up automatic monthly payments
through a Fidelity SimpleStart IRA.

* Myth No. 3: IRAs are for older people with lots of money to save.
The truth is that younger investors could benefit the most by starting to
save early because they have time on their side. Nearly two-thirds of
young adults have started to save for retirement before age 30, according
to the Retirement Trends survey. That's good news; starting to save as
early as possible is one of the best ways to prepare for the future.

				
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