A Nationwide Retirement Solutions study found that while many Americans said they’d think about funding a LSA, that money would have to be shifted from somewhere else since they wouldn’t be upping their total savings amount. The majority of employees reported that the dollars would likely be diverted from their savings accounts rather than from their employer-sponsored retirement plans. Those indicating they were likely to use the LSA reported to pollsters that they would contribute between $500 and $3,000 annually
While 75% of private sector employees and 65% of government employees would be likely to put money into an LSA, only about four in 10 (43%) of private sector employees and 35% of government employees said they might increase their total savings if the LSA became available.
Among public sector workers 45 to 54 year old, 76% pinpointed insufficient income as their primary reason not to save, while only 43% of private sector employees in this age category cited that as their top reason.
Under the proposed legislation, LSAs are part of a general, consolidated savings program to which individuals can contribute up to $5,000 annually with no limitations based on age or income (See They’re Baaaack, Again! ). Individuals would be able to convert existing tax-preferred savings into these new accounts in order to consolidate and simplify their savings arrangements.
The survey was conducted online within the U.S. in January 2004 among adults (aged 18+), of which 845 were private sector employees and 633 were public sector employees.
A copy of the study is HERE .