Where are tax breaks going? Study shows little of subsidies are used for retirement
Although the United States spends more than $100 billion per year on tax subsidies for retirement savings accounts, very little of it is actually saved for that purpose, according to a recent study by Harvard.
These tax incentives are to encourage families to save money for retirement. In actuality, the study estimates that for each $1 of government expenditure, total savings are only increased by 1 cent.
The study found that those in the higher tax brackets responded to incentives, but the response simply shifted savings away to different, tax-favored vehicles. That represented about 15 percent of retirement savers. The other 85 percent did not change habits of saving because of tax incentives.
Other policies were tested to see if they would have greater impact on retirement savings. Automatic contributions by employers, called "nudges," had a greater effect on savings.
One of the reasons for this, according to Harvard, is that "most individuals are passive savers who do not pay attention to employer pension contributions and thus do not offset such contributions by saving less in other accounts."
- Dave Ramsey says: Don't leave an estate with...
- Renewable energy advocates decry proposed...
- The Gateway adding new dining concept
- Z'Tejas closing after 13 years at The Gateway
- Balancing act: Survey says lack of balance,...
- Overstock employees ride bicycles to work to...
- Protesters from across U.S. arrested at Utah...
- Battered by recalls, GM buoyed by its large SUVs
- Renewable energy advocates decry... 15
- Protesters from across U.S. arrested at... 12
- Obama gives protection to gay,... 7
- New solar energy project at Utah... 6
- Balancing act: Survey says lack of... 4
- Parks visitors spent $596M in Utah last... 4
- Beef pollutes more than pork, poultry,... 2
- Airlines scrap Israel flights over... 2