EE E E BB B B RR R R I— I I I— — — T- T- T- T- 166— 166— 166— 166— Senate HE Senate HE Senate HE Senate HE LP Committee Hearing— LP Committee Hearing— LP Committee Hearing— LP Committee Hearing— Oct. 7, Oct. 7, Oct. 7, Oct. 7, 2010— 2010— 2010— 2010— PP P P gg g g . 10 . . . 8 3 4 SUMMARY retirement altogether or reduce the amount they save as a function of household income. Similar to Figure 3, the Figure 1 lowest-income category ($15,000 to less than $25,000) Figure 8 has the largest negative reaction to this proposal, with If Congress were to modify the exclusion of employee contributions to retirement savings plans from taxable income, Stylized Examples of the Total Tax Advantage of a 401(k) Plan, as a T-167 The type of entity that the r Assuming that marginal tax e rates wil spondent l be wor cok nstant over t s for also aph pears to e accumulati have on an a sign d ifdecum icant imp ulation act on th periods and that i eir likelihood to re nvestment duce The Impact of Modifying the Exclusion of Employee Contributions Endnotes Percentage of Full-time Workers Currently Saving for Retirement w 56.7 ho w percent ould m i on st l dicati ikely ng a sa cut bac vings re k on the ductio ir savi n. ngs: lower-income workers, or those with higher income? This is examined Function of Marginal Tax Rate and Assumed Rate of Return income co savings. Fintin gure ues 8 shows t to be tahx- atdef with erre in d u privat ndee orga r these nizat proion possals , only , on 2 e may 2 per e cent of xpect th that e em the ployees re would be lit working tle cha for cor nge in porat ions overall with 1 Stating They Would Reduce the Amount Saved If They Were No Longer for Retirement Savings Plans From Taxable Income: Results From i Elective Deferrals are limited to $16,500 in 2011 b n detail in the March 2011 EBRI Notes, a co y Inter py of w nal Re hiven ch fol ue Code Sec. 40 lows this su 2(g)( mm1ary ). A plan and is av may pe ailrmit participants w able online at ho are age 50 or tax more than advant 1, ages accru 000 employees ing unde indicat r th 14%e p e that roposed they wo 401(uld re k) syste duce savin m, unless t gs. T he his pe partici rcenta pants ar ge e constrain increases to 30 perc ed in the amou ent for nt of Allowed to Deduct Senate Committee on Finance Retirement Savings Plan Contributions From A similar occurrence takes place when the percentage of those stating they would reduce the amount they are saving http://bit.ly/ebrimarch2011notes over at the end of the calendar year to make additional elective deferral contributions. The elective deferral limit increases by $5,500 for those the 2011 Retirement Confidence Survey MarginalTax Rate employees funds they ha wove to contr rking for busin ibute e eac sses with h year. 10 0–1,000 employees, and 35 percent for businesses with less than 100 Taxable Income, by Current Employer or stop saving altogether is displayed by the amount they curre ntly have in savings and investments, not including the over age 50 in 2011. Effective for years beginning on or after January 1, 2006, if a plan adopts a Roth feature, employees can designate some Although c 40% onventional wisdom is that upper-income workers would be most affected, new findings by the nonpartisan employees. Public employees have a lower-than-average propensity to decrease contributions (20 percent for federal 15% By Jack VanDerhei, Employee Benefit Research Institute 12% value of their primary residence or the value of defined benefit plans. Figure 5 shows that there is a significant or all of their elective contributions as designated Roth contributions ( Hearing on: which are included in gross income), rath er than traditional, pre-tax elective Employee Benefit Research Institute (EBRI) suggest that lower-income workers are far more likely to say they would Assuming that the participants need to reduce their contributions to the point that they are only able to contribute (1- employees and 16 percent for state and local employees). increase in the self-reported propensity to reduce savings for those in the lowest savings categories. For example, of contributions. 28% 35% reduce their contributions if the tax exclusion for employee contributions to retirement savings plans were lowered or marginal tax rate) times the previous amount because of their financial constraints, and that 401(k) contributions are no Introduction the full-time workers who are currently saving for retirement who report that they currently have less than $1,000, eliminated. 2 10% 35% Many workers longer deducti b may have t le (in any am wo fina ount), ncial Figure adva 2 shows t ntages tohe part peircenta cipate in ge an reduction i employer-s n 401 pons (k) balanc ored retirem es from elimi ent plan: An natin e g mployer Under a 401(k) plan, an employe“Ho e can elec w Do Complexity, Un t to have the employer contribute a por certainty and Other tion of the employee’s cash wages to the plan on a pre-tax In recent years proposals have surfaced to reform the 401(k) system based on the assumption that higher-income 30% 71.3 percent indicate they would reduce the amount saved. This value declines to 38.8 percent for those with savings match, as basis. These deferred deductions o Results from well f EBRI’s just-re contributio as the wages (ele taxn de s as a f lease ducti ctive deferra b d unction ility o 2011 ls) a f c R of marginal o e re not subject to f ntributio tirement Confidence S n ta s. E x rat v ederal income ta erything else es and as urvey (RCS) show that m sumed rat equal, it x withholding at t wo e oful return. d he time of defer be lo Simi o gica re tha l to lar to Figu n r assume those al, and half (5 the re 6 p y1, are not ercen within t) of Factors Impact Responses to Tax Incentives?” individuals receive more tax-related benefits from these programs than do individuals in lower marginal tax brackets (as of $1,000 to less than $10,000. full-time workers with household income of $15,000 to $25,000 currently saving for retirement say they would reduce employees reflected as taxa each rate o wh f re ble income on the emplo o do turn scenario not have, the an em impact yployer ee’s Fo is match availa r great m 1040 e, U.S. Ind r for th blos e wo ividual Income Tax Retu e in t uld be m he larger tax bra ore sensitive rn. cket to s the : a 5.9 percent di potential loss of t fferenc he ta e between x 8% 25% well as those who may pay no federal income taxes in a particular year). Some of these proposals have included Percentage Increase in the amount they save if they were no longer able to deduct retirement savings plan contributions from taxable income. Retirement Income 1 deductibility. This the highest and lowest ta is indeex d what is brackets at a observ 7.ed 5 percent in Figure rate of r 9, where t eturn he but percentage of reducing to a th ose witho 2.1 percent ut a differenc n employer m e at a a 2. tch 5 per- modificat Given these ions re of the curr sults, it is not ent federal surprising incom that e taxat the hi ion tr gherea pr tment that opensity to exc inludes some or dicate a reduc all tion in of t savings he cont as a r ributions esponse employees to Although this is does not technically mean that the employee contributions are “deductible,” it was easier to specify that treatment to Retirement Available After 10 Years By comparison, only 22 percent of full-time workers currently saving for retirement with household incomes of $100,000 20% indicati cent ratne of return. g that they of Contr iwoul butionsd reduce the amount saved is much larger (31.2 percent) than those whose employer matches make to tax-qualified defined contribution plans. This article provides some stylized examples of how the total tax Confidence Surv eliminating thee dedu y respoction ndents u fos r contri ing the common parlance. 6% 6% butions is also o bserved for those with lower educational levels. Figure 6 shows that or more say they would save less if the tax treatment of their retirement savings plan were reduced or eliminated. all or part of their contributions (22.5 percent). Wednesday, March 30, 2011 advantage o 32.2 percent f o some de f high sfine chool d contributio graduatesn in pl di ans varies cate they wo by ul marginal d reduc tax e sa r vin ate an gs, wh d co ereas ntra o sts these valu nly 22.1 perc es with ent of thos the po e wit tential h a 3 15% These findings are part of the 21st annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age Results From the 2011 Retirement Confidence Survey 2 Percentage of Full-time Workers Currently Saving for Retirement Stating They Would reduction in defined contribution balances if contributions were no longer “deductible.” This is followed by an analysis of graduate or professional degree have a similar response. 4% and retired Am Conclusio erin cans regarding r etirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and st 3 4 Although this highlyReduce the stylized analysis suggests that hi Amount Saved If They Were gher-incom No Longer Allowed to Deduct e employees would be the most li Retirement kely to be negatively 10:00 a.m. 10% two new questions from the 21 wave of the Retirement Confidence Survey (RCS) showing how workers would likely related issues. The survey was conducted in January 2011 through 20-minute telephone interviews with 1,258 individuals (1,004 workers and Savings Plan Contributions From Taxable Income, by Total Household Income Proposals to modify the exclusion of employee contributions for retirement savings plans from taxable income may have affect Marital status ed by a proposal to also appears t cut or el o have iminate a very the signific deductibili ant imty of pact on t 401(k he ) c like ontributio lihood that a ns (at least to full-time the worke point t r curre hey ar ntly sav e ing react if they were no longer allowed to deduct retirement savings plan contributions from taxable income. 60% 254 retirees) age 25 and older in the United States. Random digit dialing was used to obtain a representative cross section of the U.S. 7 8 unintended consequences accordin 2% g to results from the 2011 RCS. Instead of reducing the contribution levels of those 5% constrained with respect to the annual funds available to contribute to a 401(k) plan), behavioral economics has shown for retirement would reduce the amount saved. Figure 7 shows that more than 2 in 5 respondents that are single, 215 Dirksen Senate Office Building population. To further increase representation, a cell phone supplement was added to the sample. Starting with the 2001 wave of the RCS, all who might be thought to be most impacted (i.e., those with larger taxable incomes and hence higher marginal tax rates), that the react never mar 50%rieid (44 on of employees in sit percent) as well as tho uations s similar to t e not married, liv his are in oft g with en at a odds partner with (47 wha petrcent) wo would have uld r been educ p er th edeir sa icted vings. by an Current Tax Treatment and Potential Impact of Modifications data are weighted by age, sex, and education to reflect the actual proportions in the adult population. Data for waves of the RCS conducted 0% the RCS results suggest that the categories of full-time workers most likely to reduce (in some cases completely) their objective concerned simply with optimizing a financial strategy. In an attempt to better understand potential employee However, only 22 percent of married respondents, 16 percent of divorced or separated, and 14 percent of widowed 0% One of the most common ty A Large pes A Medium- of retir size ed meA Small nt savin Busig nes s pl s, an contri Federal butionsState or today i Locn al volv An Educ es employe ational or e Self Employ contributio mentns to 401(k) before 2001 have been weighted to allow for consistent comparisons; consequently, some data in the 2011 RCS may differ slightly with data 40% Corporation, With Business, With With <100 2.5% Government 5% Government Academic Institution 7.5% contributions are those: behavior respondents ind with respect to icated they a prwo oposed uld reduc elimination of deduc e their savings. tions for 401(k) contributions, this year’s RCS included two new plans. Although after-tax contributions to these plans have been utilized for several years (primarily in response to Sec. >1,000 Employees 100–1,000 Employees published in previous waves of the RCS. Data presented in tables in this report may not total to 100 due to rounding and/or missing categories. Employees questions. The first asked respondents how important is being able to deduct their retirement 5 savings plan contributions ? With the lowest household income. 30% 402(g) limits and/or the need to comply with ADP/ACP nondiscriminat ion requirements) and in Roth 401(k) plans that In theory, the weighted sample of 1,258 yields a statistical pr ecision of plus or minus 3 percentage points (with 95 percent certainty) of what the from their taxable Sourc income e: Employee Benefit Res in encour ear agi ch n Ins g them to save titute (ebri.org) calculations for retirem . See text for ent. explanation Whenof con scenar fin ios e and d to asfull sumptions -time . workers (n=591), the ? With the lowest current amounts in savings and investments, not including the value of their primary residence have recentlySour been ce: intro Employee duc Benefit ed for ma Research Ins ny e titute mployees, th (ebri.org) and Mathew e majo Greenwald rity of & As em soc ployee iates, Inc contr ., 2011 Retir ibutions ement Confidenc to 401 e (k Sur ) plans ar vey. e still so- results would be if all Americans age 25 and older were surveyed with complete accuracy. There are other possible sources of error in all 9 20% weighted results were as follows: or the value of defined benefit plans. Figure 3 called “before-tax” contributions. surveys, however, that may be more serious than theoretical calc Submitted T ulations of samplin estimony by g error. These include refusals to be interviewed and other Importance of Being Able to Deduct Retirement Savings Plan Contributions ? With the lowest educational levels. forms of nonresponse, the effects of question wording and question order, a nd screening. While attempts are made to minimize these factors, it 10% Not at all important ............................................................................................ 4.3% From Taxable Income as an Encouragement to Save for Retirement, Among Full- Determining the overall tax advantage of making before-tax contributions to a 401(k) plan involves the prediction of ? Who are single, never married or not married, living with a partner. is impossible to quantify the errors that may result from them. The RCS was co-sponsored by the Employee Benefit Research Institute (EBRI), a Jack VanDerhei, Ph.D. Not too important ............................................................................................... 5.0% time Workers, by Total Household Income 0% several factors, including amounts and timing of contributions, marginal tax rates during the accumulation and decumu- ? Who work for small private organizations. private, nonprofit, nonpartisan public policy research organization, and Mathe 5 w Greenwald & Associates, Inc., a Washington, DC, based market Research Director Somewhat important ......................................................................................... 27.8% Figure 9 Figure 2 80% $15,000 to $25,000 to $35,000 to $50,000 to $60,000 to $75,000 to $100,000 or More lation periods, rates of return, and withdrawal behavior during the decumulation period. Figure 1 shows results for a Investment Rate of Return research firm. The 2011 RCS data collection was funded by grants from more than two dozen public and private organizations, with staff time Very important .................................................................................................. 61.5% <$25,000 <$35,000 Employee Benefit Research Institute (EBRI) <$50,000 <$60,000 <$75,000 <$100,000 PeStylized Examples rcentage of Full -time of the Reduction Workers Currentl in y 401(k) Saving f Plan Balances or Retirement VanDerhei and Copeland (July 2010) document a significant reduction in the percentage “at risk” for inadequate highly stylized example in which an individual currently age 55 makes annual (end-of-year) contributions of a constant donated by EBRI Source: and Green Employee Benefi wald. RCS materials a t Research Institute (ebri.or nd a list of under g) and Mathew Greenw writers ma ald & Associ y be a ates, Inc., 2011 ccessed at the EBRI Web site: Retirement Confidence Survey. www.ebri.org/rcs. Not At All Important www.ebri.org Stating The Fry om Would Eliminating Deductions of Reduce the Amount Sa Contrib ved If The utions, y We as re No Long a er 70% If one were to look at this from a strictly financial perspective, one would assume that the lower-income individuals retirement income between 2003 and 2010, based in large part on the advent of auto-enrollment in 401(k) plans; amount to a 401(k) plan for 10 years and then immediately takes the account balance out as a lump sum, paying taxes Not Too Important Allo Function wed to Deduct of Marg Retirement inal Tax Rate and Assumed Savings Plan Contrib Rate of Return utions From For more detail, see Helman, Copeland and VanDerhei (March 2011, online at www.ebri.o 11 rg/surveys/rcs/2011/). (those most likely to pay no or low marginal tax rates and therefore have a smaller financial incentive to deduct however, for the one-third of the households with the lowest indexed pre-retirement income, the at-risk percentages, on the entire amount. In contrast, a second scenario is analyzed in which an individual currently age 55 makes annual SomewhatT Iaxab mportant le Income, by Existence of Employer Match The reactions become even starker as savings amounts grow, EBRI found: 71 percent of those with less than $1,000 in 60% 4 retirement savings contributions from taxable income) would be least likely to rate this as “very important.” However, while much s12% maller (they were 80 percent in 2003) are still extremely high (70 percent in 2010). Of course, when one In the RCS, retiree refers to individuals who are retired or who are age 65 or older and not employed full time. (end of year) contributions of the after-tax value of the same amount (viz., (1-marginal tax rate) times the amount savings said 35% they would red Veu ryce Impor the am tant ount saved if they were no longer allowed to deduct their contributions, compared Figure 3 shows that those in the lowest household income category ($15,000 to less than $25,000) actually have the limits the analysis to those who are already saving, the numbers improve substantially: among Gen Xers without any contributed in the first scenario) to a non-tax-advantaged vehicle for 10 years and then takes the account balance out as with about 13 percent of those with $500,000 or more. Worker refe 50% rs to all individuals who are not defined as retirees, rega Reductrdless of emplo ion in 401(k) Bala ynce ment status. largest percentage of respondents classifying the tax deductibility of contributions as very important (76.2 percent). future eligibility for participation in a defined contribution plan, the at-risk percentage is 60 percent, but it drops all the a lump sum paying no additional taxes at that time. Because the investment in the second scenario is made in a non tax- 30% 10% A 5 dditional groups found to be most likely to reduce their contributions to retirement savings plans include individuals 12 6 In order to ensure that a traditional 401(k) plan satisfies nondiscrimination requirements, the employer must perform annual tests, known as the way to 20 percent for those with 20 or more years of future eligibility. advantaged vehicle, it is assumed that federal income taxes on the investment income are paid at the end of each year. 40% who work for small private organizations as well as those with relatively low educational levels. The second question asked of those currently saving for retirement was “Suppose you were no longer allowed to deduct Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests, to verify that deferred wages and employer matching The total tax savings are computed as the difference between the net accumulation after taxes from Scenario 1 and the Marginal Tax Rate 25% retirement savings plan contributions from your taxable income. What do you think you (and your spouse) would be most However, the potential increase of at-risk percentages resulting from a substantial portion of low-income households contributions do not discriminate in favor Background: 8% In recent years, proposa of highl ls h y a compensated em ve surfaced toplo reform yees. Ot the 4 her t01(k) sy ypes of 401(k) pla stem base ns (e.g., safe har d on the assu bor 401 mption (k) plans) that h are igher- net accumulations after taxes from Scenario 2. This savings is then divided by the net accumulation after taxes from 30% 10 15% likely to do?” When confined to full-time workers (n=460), the weighted results were as follows: income individuals receive more tax-related benefits from these programs than do individuals in lower marginal tax subject to less co decreasing or eliminati mplex rules. ng future contributions to savings plans as a reaction to the exclusion of employee contributions Scenario 1 to show the advantage as a percentage of the amount that would be accumulated after 10 years. 28% 20% brackets (as well as those who may pay no federal income taxes in a particular year). Some of these proposals have for retirement savings plans from taxable income needs to be analyzed carefully when considering the overall usefulness 6 20% All investment income is assum 6% ed to be taxed as ordinary income in this example. Stop saving for retirement altogether .................................................................... 4.7% 35% included modifications of the current federal income taxation treatment that excludes some or all of the contributions of such proposals. Each of these scenarios is calculated at investment rates of return of 2.5, 5.0, and 7.5 percent, and marginal tax rates of Reduce the amount you save .............................................................................. 20.5% 7 employees make to tax-qualified defined contribution plans. 15% Actually, the constraints would need to be compared to the 402(g) limit as well as any plan-specific constraints on tax contributions (primarily 10% 15, 28, and 35 percent. Rates of return and marginal tax rates are assumed to remain constant over the 10-year period. Continue to save what you do now ...................................................................... 56.2% References The views expressed in this statement are solely those of Jack VanDerhei and should not be attributed to for the Highly Co4% mpensated Employees). From a strictly financial perspective, it is logical to assume that lower-income individuals (those most likely to pay no or Figure 1 shows that within each assumed rate of return scenario, the total tax advantage (as measured by the Increase the amount you save for retirement ....................................................... 17.1% the Employee Benefit Research Institute (EBRI), the EBRI Education and Research Fund, any of its ? Helman, Ruth, Craig Copeland and Jack VanDerhei. “The 2011 Retirement Confidence Survey: Confidence Drops 10% low 8 m 0% arginal tax rates and therefore have a smaller financial incentive to deduct retirement savings contributions from percentage increase in retirement income available after 10 years of contributions) increases with higher tax brackets. DiCenzo (January 2007). to Record Lows, Reflecting ‘the New Normal.’” EBRI Issue Brief, no. 355 (Employee Benefit Research Institute, programs, officers, trustees, sponsors, or other staff. The Employee Benefit Research Institute is a Combining the first two categories above (and eliminating those who refused to answer or responded that they did not $15,000 to $25,000 to $35,000 to $50,000 to $60,000 to $75,000 to $100,000 or More taxable income) would be least likely to rate the exclusion of employee contributions for retirement savings plans from However the absolute difference between the total tax advantage of the highest vs. the lowest tax bracket varies with March 2011). nonprofit, nonpartisan, education and r <$25, 2%000 <$35,000 <$50,000esearch organiza <$60,000 tion established in Washington, DC, i <$75,000 <$100,000 n 1978. 9 know) results 1.4 percent responded that t in approximat heyely 1 did not kno in 4 ful w. l-time workers (25.6 percent) who indicated that they would reduce (in some taxable income as “very important.” 5% the assumed rate of return. At a 7.5 percent rate of return assumption, the absolute difference is 6.4 percent; however, EBRI does not take policy positions, nor does it lobby, advocate specific policy recommendations, or ? DiCenzo, Jodi. “Behavioral Finance and Retirement Plan Contributions: How Participants Behave, and cases complet Source: Employee ely) their Benefit cont Resributions earch Institut if e ( the ebri.or abil g) and ity to Mathewde Grduct them eenwald & Assoc was iates, Ieliminat nc., 2011 Re etd. iremFi ent gure Conf 4 idenc shows e Survey.the distribution of the 10 H18 pe owever, rcent res the ponded that t RCS data she ho yw did not kno that those w an ind 0.35 percent the househol red i fused to ans ncome cate wer. gory of $15,000 to $25,000 actually have the this decreases to 2.2 percent at a 2.5 percent rate of return assumption. receive feder Prescriptive al funding. Solutions,” EBRI Issue Brief, no. 301 (Employee Benefit Research Institute, January 2007). percentage of 0% full-time workers currently saving for retirement who state that they would either stop saving for largest perce 0% ntage of respondents classifying the tax deductibility of contributions as “very important.” While higher- 11 ? VanDerhei, Jack. “Retireme 2.5% nt Income Adequacy for To 5% da 7.5 y’s Workers: How Certain, How M % uch Will It Cost, and See endnote 17 of VanDerhei and Copeland (July 2010) for more detail. retirement altogether or reduce the amount they save as a function of household income. Similar to Figure 3, the lowest- Yes No income workers would be the most likely to be negatively affected by a proposal to cut or eliminate the exclusion of Some proposals have focused on this disparity by suggesting that the deductibility of 401(k) contributions be either How Does Eligibility for Participation in a Defined Contribution Plan Help?” EBRI Notes, no. 9 (Employee Benefit Investment Rate of Return income category ($15,000 to less than $25,000) has the largest negative reaction to this proposal, with 56.7 percent employee contributions to retirement savings plans from taxable income, EBRI notes that behavioral economics has 12 reduced or eliminated. Presth umably, those who continued to make contributions under these proposals on an after-tax Research Institute, September 2010): 13 -20. Source: Employee Benefit Research Institute (ebri.org) and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence VanDerhei (September 2010) also demonstrates that eligibility for a defined contribution retirement plan has a significant positive impact on EBRI 1100 13 St. NW #800 Washington, DC 20005 (202) 659-0670 www.ebri.org indicati shown n that workers’ react g a savings reductio ion in s n. imilar situations are often at odds with what would have been logically predicted. basis would be able to recover those contributions free of federal income tax when withdrawn and pay taxes only on the Source: Employee Benefit Research Institute (ebri.org) calculations. See text for explanation of scenarios and assumptions. reducing the additional compensation most families need to achieve the desired level of retirement income adequacy. ? VanDerhei, Jack, and Craig Copeland. “The EBRI Retirement Readiness Rating:™ Retirement Income Preparation investment income similar to what is available under the current tax code for non-Roth after-tax contributions. and Future Prospects.” EBRI Issue Brief, no. 344 (Employee Benefit Research Institute, July 2010). ebri.org Notes • March 2011 • Vol. 32, No. 3 5 ebri.org ebri.org EBRI ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org - VanDerhei Notes Notes Notes Notes Notes Notes Notes Notes • • • • • • • • March March March March March March March March - T-167 2011 2011 2011 2011 2011 2011 2011 2011 - Senate • • • • • • • • Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Finance 32, 32, 32, 32, 32, 32, 32, 32, No. No. No. No. No. No. No. No. - 3 3 3 3 3 3 3 3 30 March 2011 10 8 4 3 2 6 7 5 9 Figure 4 Figure 5 Percentage of Full-time Workers Currently Saving for Retirement Percentage of Full-time Workers Currently Saving for Retirement Stating They Would Reduce the Amount Saved If They Were No Longer Stating They Would Reduce the Amount Saved If They Were No Longer Allowed to Deduct Retirement Savings Plan Contributions From Allowed to Deduct Retirement Savings Plan Contributions From Taxable Income, by Total Household Income Taxable Income, by Amount They Currently Have in Savings 60% 80% 50% 70% 60% 40% 50% 30% 40% 20% 30% 20% 10% 10% 0% 0% $15,000 to $25,000 to $35,000 to $50,000 to $60,000 to $75,000 to $100,000 or More <$25,000 <$35,000 <$50,000 <$60,000 <$75,000 <$100,000 Less Than $1,000 to $10,000 to $25,000 to $50,000 to $100,000 to $150,000 to $250,000 to $500,000 or $1,000 <$10,000 <$25,000 <$50,000 <$100,000 <$150,000 <$250,000 <$500,000 More Source: Employee Benefit Research Institute (ebri.org) and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey. Source: Employee Benefit Research Institute (ebri.org) and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Figure 6 Figure 7 Percentage of Full -time Workers Currently Saving for Retirement Percentage of Full-time Workers Currently Saving for Retirement Stating They Would Reduce the Amount Saved If They Were No Longer Stating They Would Reduce the Amount Saved If They Were No Longer Allowed to Deduct Retirement Savings Plan Contributions From Allowed to Deduct Retirement Savings Plan Contributions From Taxable Income, by Education Taxable Income, by Marital Status 50% 35% 45% 30% 40% 35% 25% 30% 20% 25% 20% 15% 15% 10% 10% 5% 5% 0% Married Not Married, Living With a Divorced or Separated Widowed Single, Never Married 0% Partner High School Graduate Some College 4-year College Degree Graduate or Professional Degree Source: Employee Benefit Research Institute (ebri.org) and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey. Source: Employee Benefit Research Institute (ebri.org) and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey.