SAN FRANCISCO, Feb. 20 /PRNewswire-FirstCall/ -- A new survey from
Charles Schwab & Co., Inc. shows younger investors are aware they should be
saving for retirement, but face significant challenges like competing
spending priorities and a lack of information to make simple investment
choices. Schwab surveyed over 500 Americans between the ages of 25 and 40
-- a range that generally overlaps with the so-called Generation X --
regarding finances and retirement.(1)
The survey found paying daily living expenses is a higher priority than
saving for retirement for this age group, with paying off debt also a
significant factor. While more than eight in 10 of those born into
Generation X are taking some sort of action to save for retirement, only 40
percent of those who are saving have an IRA. Those who do not have an IRA
say they don't need one, don't have enough money to fund one, or believe
the accounts are too complicated.
"Gen-X'ers are facing a range of financial challenges -- from paying
off college debt to making mortgage payments to saving for their families,"
said Rande Spiegelman, vice president of financial planning for the Schwab
Center for Investment Research. "What we are seeing in these results is
that competing spending priorities are impacting their ability to save for
retirement. But with a few minor adjustments, younger investors can make
the necessary changes to ensure they are doing everything they can to save
for the future."
More than four in ten (44 percent) of those who do not currently fund
an IRA said they would be more likely to invest in an IRA if there were a
simple, one-time investment choice to automatically help them reach their
retirement goal. This perspective was shared almost equally between current
IRA/401(k) investors (50 percent) and non-investors (39 percent). One in
five Americans (20 percent) in this age group report that they either do
not have enough information to understand how an IRA works or they simply
do not know what an IRA is.
Tax Refunds Offer Great IRA Opportunity
The survey found only 16 percent of people in this age group plan to
use their tax refund to invest in an IRA or other retirement account, with
the majority opting to either save it for other uses (59 percent) or use it
to pay off debt (58 percent). Many are likely unaware that the Pension
Protection Act -- signed into law last summer -- gives taxpayers the
ability to directly invest all or a portion of their refund into an IRA.
The option appears on forms for the 2006 tax year.
"15-Minute IRA" Offers Advantages To Younger Investors
The release of the Schwab survey coincides with the company's recently
launched "15-minute IRA," which makes it easier than ever for people to
open and fund an account, and at the same time select a fund that targets
their retirement date or choose from a wide range of other investments.
Schwab IRAs offer a number of advantages to investors, including no account
service fees.(2) Schwab IRAs also provide access to a wide range of
investment choices, from Schwab Target date retirement funds to hundreds of
other no-load, no transaction fee mutual funds, as well as stocks, bonds,
CDs and more. Investors can open an account by visiting
http://www.schwab.com/OpenIRA, calling 1-800-398-9609 or visiting a Schwab branch.
Additional resources, including an IRA Analyzer that helps investors find
the IRA type that's right for them are also available at
http://www.schwab.com/IRA.
INVESTORS SHOULD CONSIDER CAREFULLY INFORMATION CONTAINED IN THE
PROSPECTUS, INCLUDING INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES.
YOU CAN REQUEST A PROSPECTUS BY CALLING SCHWAB AT 1-877-658-4135. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. INVESTMENT VALUE MAY
FLUCTUATE, AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
ORIGINAL COST.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.8 million client
brokerage accounts, 570,000 corporate retirement plan participants, 149,000
banking accounts, and $1.3 trillion in client assets. Through its operating
subsidiaries, the company provides a full range of securities brokerage,
banking, money management and financial advisory services to individual
investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org ),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org ) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com. (0207-5613)
Important Footnotes and Disclosures
(1) The survey was conducted by StrategyOne using three waves of an
omnibus survey among 561 Americans aged 25-40. Interviews were implemented
via telephone from January 12, 2007 through January 23, 2007 using the
field services of Opinion Research Corporation (ORC). ORC uses a rigorous
methodology including random digit dialing and computer-assisted telephone
interviewing. The margin of error for the total sample of adults was plus
or minus 4.1 percentage points at the 95% level of confidence, which means
that in 95 out of 100 times that a sample of this size is drawn, the
results would not vary by more than 4.1 percentage points in either
direction. The margin of error for the sub-samples in this additional
analysis is:
-- 378 Americans who are currently investing in an IRA or participating
in a 401(k): +/-5.0
-- 183 Americans who are neither investing in an IRA nor participating in
a 401(k): +/-7.2
(2) IRA accounts are subject to a minimum balance charge of $50 per
year if, after receipt of notice and a notice period, their assets remain
below the account opening minimums of $2,000. The minimum balance charge is
waived for accounts of households with balances of at least $10,000 or at
least eight equity and/or options trades in the preceding 12 months. Small
Business Retirement accounts are not subject to minimum balance
requirements.
15-Minute IRA account opening statement applies to opening an IRA and
funding it online. Other methods may require additional time.
Charles Schwab & Co., Inc. receives remuneration from fund companies
participating in the Mutual Fund OneSource(R) service for recordkeeping and
shareholder services and other administrative services. Schwab also may
receive remuneration from transaction fee fund companies for certain
administrative services.
Trades in no load funds available through Mutual Fund OneSource service
(including Schwab Funds), as well as certain other funds, are available
without transaction fees when placed through schwab.com or our automated
phone channels. For each trade order placed through a broker, a service
charge applies. Schwab reserves the right to change the funds we make
available without transaction fees and to reinstate fees on any funds.
Funds are subject to management fees and expenses.
This information provided here is for general informational purposes
only and should not be considered an individualized recommendation or
personalized investment advice. It is not intended to be a substitute for
specific individualized tax, legal or investment planning advice. The
strategies mentioned may not be suitable for everyone. Each investor needs
to review investments and strategies in light of his or her own particular
situation. Where specific advice is necessary or appropriate, Schwab
recommends consultation with a qualified tax advisor, CPA and/or attorney.
SOURCE Charles Schwab
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Related links:
http://www.schwab.com/
CONTACT:
Matt Hurwitz of Charles Schwab,
+1-415-636-3700, or matt.hurwitz@schwab.com
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