CNN Money reported last week that 43% of Americans have less than $10,000 in retirement savings, which is a statistic provided by the Employee Benefit Research Institute in their Retirement Confidence Survey (2010 results). If that figure isn’t scary enough, it appears that 27% of workers have less than $1,000. Both figures are increases from 2009, when 39% had less than $10,000 and 20% had less than $1,000 a year ago.

While the statistics are sobering, it does show how much the recession has hurt a lot of people. If you lose your job, the first thing to go after your emergency fund is probably going to be your retirement savings. Keeping a roof over your head and food in your stomach is going to take precedence over retirement tomorrow.

If you dig a little deeper in the statistics, you get a little more color on the situation and it’s not a good one. 56% of workers between 25 and 34 have less than $10,000 in savings, 46% between 35-44, 38% between 45-54, and a mind boggling 29% of workers over 55 have less than ten grand in their retirement savings. (on the other side, it’s pretty amazing that 10% of workers between 25 and 34 have over $100,000 in retirement savings, so it’s not impossible, which totally blows away both my expectations and what we know about average retirement savings)

If you’re one of the ones with less than $10,000 in retirement savings, don’t despair because 43% of Americans are there with you. We’re going through some tough times now but once we get back on our feet, retirement savings has to become a priority. Social security and other entitlement programs aren’t going to be here forever. It’s only a matter of time before they are replaced as defined benefit (pension) retirement plans are being replaced with defined contribution (401k) retirement plans (Math doesn’t care which political party’s name is written on your voter card, the current system is not sustainable).

If you’re in better shape, excellent, congratulations but don’t pat yourself on the back just yet. Share your tips with your working friends so that we can come back in five years and talk about how great it was we reversed the trend. We’re not getting many incentives to save for the future, just look at CD rates if you need a reminder, but that doesn’t mean we shouldn’t do it.

43% have less than $10k for retirement [CNN Money]

I, like many other personal finance bloggers, am a huge fan of IRAs because they give you a tax-advantaged opportunity to save for your retirement. Both types, the Roth and the Traditional, offer tax benefits that are hard to find anywhere else. The Roth IRA offers you to reap the growth of your retirement assets tax free while the Traditional IRA gives you an immediate tax benefit for contributing to your own future.

There’s a reason why the IRS puts contribution limits on IRA accounts. As many of you know, you have until April 15th to make a contribution to your Traditional or Roth IRA for the 2009 tax year. What you may not know is how much you’re able to contribute.

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Now that the income limitations have been lifted and anyone can convert a tax-deferred Traditional or Rollover IRA into a tax free Roth IRA, a lot of blogs, gurus, and news sites have been celebrating the Roth IRA conversion. I have always held the Roth IRA in high regard because it’s a fantastic retirement investment vehicle that offers a little more predictability. I pay taxes on my contributions today and I get all the appreciation tax free, what’s not to love about it?

Unfortunately, whether or not you should convert a Traditional or Rollover IRA to a Roth IRA is not as clear cut. There are a lot of important factors many people are overlooking when it comes to Roth IRA conversions. While you may gain some tax benefits in your retirement assets, it does come at a cost to your overall financial picture. To ignore those could be extremely detrimental. Let’s take a look at the four major factors to consider before you convert to a Roth IRA.

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If you’re confused about how much you can contribute to your Roth IRA this year, this calculator can help!

As you probably know, you have until tax day, April 15th, to make a contribution to your Roth IRA for 2009. What you might not know is how much you are able to contribute, if your income (modified adjusted gross income) happens to be within the phaseout range for your filing status. There are a lot of websites that will give you the ranges, the rules for calculating your personal limit, but I couldn’t find a simple calculator that did the math for me… so I built one.

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A year ago, when I met with my accountant, we spent some time talking about our retirement, our goals, and how we were going to reach them. In looking at our retirement accounts, I saw that the vast majority of our savings were in tax-deferred accounts like 401(k)s and Rollover IRAs. We only had a very small percentage in tax-free Roth IRA accounts, which I’ve always said was probably the best retirement account in existence. Where else can you invest in the stock market and have your gains be entirely tax free? Nowhere.

Right now, you can convert a traditional IRA to a Roth IRA as long as your adjusted gross income is under $100,000. The $100,000 limit applies whether you are single or married, tax filing classification wise, which makes it one of the few limits that is the same for both. So if your AGI is under $100,000, then you can convert today and you don’t have to wait for 2010.

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This Foundation post is dedicated to what I consider the best retirement weapon available – the Roth IRA account. The Roth IRA was championed by Senator William Roth of Delaware and created with the Taxpayer Relief Act of 1997, signed by President Clinton. The primary tax benefit of the Roth IRA, at least the one most lauded, is that your account’s appreciation and earnings are tax free. The tradeoff is in the contributions, which are not tax-deductible.

This is the biggest distinction between it and the Traditional IRA. On a traditional IRA, your contributions are tax-deductible but your earnings and appreciation are taxed as ordinary income when you start making regular disbursements in retirement.

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You can avoid costly mistakes if you understand the difference between tax-advantaged investments and tax-advantaged accounts.

What are tax-advantaged investments? Investments that people make specifically because of the tax advantages they provide are referred to as tax-advantaged investments. In fact, if not for the tax advantages, most people would not buy those particular investments. Tax-free bonds, fixed and variable annuities are examples.

Mutual funds offer tax benefits but they are not generally considered tax-advantaged because people don’t buy them specifically for the tax benefits. Real estate also has tax advantages but is also not generally included in this category. What’s important to keep in mind is that these investments have tax advantages regardless of what account you hold them in.

What are tax-advantaged accounts? Retirement accounts are tax-advantaged. Examples are IRA’s, 401(k)s, SEP IRA’s, ROTH IRAs etc. What’s critical to understand is that you can buy any investment you like within these accounts and the returns are tax-advantaged. The tax benefits don’t depend on the investments you make within these accounts.

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It’s April 15th, it’s getting late, and chances are you’re done with your taxes or getting ready to send it in. Here’s the best last minute tax tip you could possible get and you have until midnight tonight to get it done.

Lending Club, through EntrustCAMA, recently announced that they were going to offer self-directed IRAs. When you open an IRA with a brokerage firm, you can invest in stocks, bonds, and mutual funds. When you open a self-directed IRA, you can invest in pretty much anything as long as you follow a few rules. I won’t go into those rules, you can read about self-directed IRAs at the Motley Fool, but this is a savvy move by Lending Club but I think it’s a mistake for average investors to participate.

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Reader TTFK sent me an email this morning about the “Credit for Qualified Retirement Savings Contributions,” also known as the Saver’s Credit, claimed on Form 8880, a tax credit I haven’t covered recently. The Retirement Savings Contribution tax credit is a tax credit, up to $1,000 ($2,000 for joint filers), for contributions you make into qualified retirement accounts. It’s a great incentive for you to save towards your retirement if you’re able to and those who earn less than $26,500 ($53,000 married filing jointly) qualify for some of the tax credit. Unfortunately, if you earn more than that, you don’t qualify.

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