Welcome!

News Feed Item

Middle-Income Americans Lack Understanding of Retirement Tax Impact, New Study Says

CHICAGO, April 9, 2014 /PRNewswire/ -- A majority of our country's middle-income Boomers and retirees have significant gaps in their understanding of how federal taxes will impact their retirement finances, according to a new study released by the Bankers Life Center for a Secure Retirement ® (CSR).

Retirement Tax Study Infographic

In fact, today, more Americans have an accurate understanding of how lottery winnings are taxed (94%) than the mainstays of their retirement income: Social Security benefits (39%) and retirement accounts, such as traditional IRAs (35%), Roth IRAs (31%) and 401(k)s (29%).

The Retirement Tax Considerations for Middle-Income Americans study, which focused on 1,000 Americans ages 50 and older with an annual household income of between $25,000 and $75,000, found that respondents also share a dislike for doing taxes and filing their personal returns. 

Tax Filing Assistance
When asked to choose which activity they disliked the most, respondents say that doing taxes (23%) is almost equally as disliked as the unpleasant experience of going through airport security (29%).  In fact, getting a flu shot is preferable to doing taxes for many middle-income Americans over age 50.

However, when it comes to completing and filing their annual tax returns, only four in 10 (38%) work with a tax preparer.  More than half (54%) prepare and file their own tax return, with one in three (31%) using tax-preparation computer software.  Nearly one in five (18%) complete their tax returns on their own without any external advice or guidance. 

Retirement Account Guidelines and Penalties
401(k) plans and traditional IRAs are a popular way to save for retirement but a large percentage of older Americans are unaware that significant tax penalties apply when rules governing these accounts are not followed.  More than half (57%) do not know that 70½ is the age at which required minimum distributions from traditional IRAs and 401(k) plans must begin. 

Furthermore, a majority of the respondents are unaware that in certain circumstances they may be able to withdraw funds from a traditional IRA without penalty. Among the exceptions are:

  • To pay for health insurance while unemployed
  • To pay for college expenses
  • To buy a home
  • To pay for medical expenses

Only 2% of respondents were aware of all four exceptions.

Tax Deductions
Claiming all eligible deductions and dependents is a common way to reduce an individual's total tax burden.  However, most middle-income Americans age 50 and older cannot identify many of the tax deductions potentially associated with retirement.

  • 56% do not know that blindness is cause for a higher standard deduction
  • 68% cannot correctly identify 65 as the age at which a higher standard deduction is granted
  • 90% are unaware that, in some cases, they may claim their parents living outside the household as their dependents for tax purposes

"Many people focus on building their retirement savings without considering the role of taxes once they are retired," said Scott Goldberg, president of Bankers Life.  "Make tax planning a part of any retirement planning discussion and talk to a qualified tax professional who can help ensure you claim all applicable tax deductions and credits, this year and in the future."

Methodology
The research for this report was conducted in February 2014 for the Bankers Life Center for a Secure Retirement by the independent research firm The Blackstone Group. The full report can be viewed at CenterForASecureRetirement.com.

A nationwide sample of 1,000 Americans ages 50 and older, who have an annual household income of between $25,000 and $75,000, participated in the internet-based survey on questions relating to federal taxes. The margin of error is +/-3.1 percentage points at the 95% confidence level.

About the Center for a Secure Retirement
The Bankers Life Center for a Secure Retirement is the Company's research and consumer education program.  Its studies and consumer awareness campaigns provide insight and practical advice to help everyday Americans achieve financial security in retirement. To learn more, visit CenterForASecureRetirement.com.

Bankers Life products focus on the insurance needs of the middle-income retirement market through nationwide subsidiaries of CNO Financial Group, Inc. (NYSE: CNO). These companies offer a broad portfolio of life and health insurance designed especially for those near or in retirement. To learn more, visit BankersLife.com.

Photo - http://photos.prnewswire.com/prnh/20140409/DE01290-INFO

SOURCE The Bankers Life Center for a Secure Retirement

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
DevOps is not just last year’s buzzword. Companies with DevOps practices are 2.5x more likely to exceed profitability, market share, and productivity goals. But how do you enable high performance? What can you do right now to start? Find out from DevOps experts including Gene Kim, co-author of "The Phoenix Project," and the Dynatrace Center of Excellence.
SYS-CON Events announced today that iDevices®, the preeminent brand in the connected home industry, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. iDevices, the preeminent brand in the connected home industry, has a growing line of HomeKit-enabled products available at the largest retailers worldwide. Through the “Designed with iDevices” co-development program and its custom-built IoT Cloud Infrastruc...
In most cases, it is convenient to have some human interaction with a web (micro-)service, no matter how small it is. A traditional approach would be to create an HTTP interface, where user requests will be dispatched and HTML/CSS pages must be served. This approach is indeed very traditional for a web site, but not really convenient for a web service, which is not intended to be good looking, 24x7 up and running and UX-optimized. Instead, talking to a web service in a chat-bot mode would be muc...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
The cloud competition for database hosts is fierce. How do you evaluate a cloud provider for your database platform? In his session at 18th Cloud Expo, Chris Presley, a Solutions Architect at Pythian, will give users a checklist of considerations when choosing a provider. Chris Presley is a Solutions Architect at Pythian. He loves order – making him a premier Microsoft SQL Server expert. Not only has he programmed and administered SQL Server, but he has also shared his expertise and passion w...
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
SYS-CON Events announced today that AppNeta, the leader in performance insight for business-critical web applications, will exhibit and present at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. AppNeta is the only application performance monitoring (APM) company to provide solutions for all applications – applications you develop internally, business-critical SaaS applications you use and the networks that deli...
Fortunately, meaningful and tangible business cases for IoT are plentiful in a broad array of industries and vertical markets. These range from simple warranty cost reduction for capital intensive assets, to minimizing downtime for vital business tools, to creating feedback loops improving product design, to improving and enhancing enterprise customer experiences. All of these business cases, which will be briefly explored in this session, hinge on cost effectively extracting relevant data from ...
SYS-CON Events announced today that Column Technologies will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Established in 1998, Column Technologies is a global technology solutions provider with over 400 employees, headquartered in the United States with offices in Canada, India, and the United Kingdom. Column Technologies provides “Best of Breed” technology solutions that automate the key DevOps principal...
The Art of DevOps provides a fun overview to help teams understand DevOps. Written in the style of the famous 6th century Chinese manuscript “The Art of War,” this eBook describes DevOps in the form of a mission to continuously deliver assets to the operational battlegrounds safely, securely, and quickly. It’s a fun read with valuable insights.