World Economic

Americans have $4.6 trillion stashed away in individual retirement accounts. Imagine how much more we could have — and how much better prepared we’d be for retirement — if we understood IRAs.

"For many Americans, I-R-A seems to stand for ‘Intricate Retirement Account,’" said Richard Hisey, chief investment officer of AARP Financial. A survey by this AARP subsidiary found 44 percent of adult Americans acknowledge they don’t really understand how IRAs work, and 36 percent are not sure or don’t know whether they’re eligible to contribute.

All Americans with income from work and their spouses are eligible if they are under age 701/2. Older workers can contribute if their income is not too high.

(Eligibility rules vary between two basic types of IRAs, traditional and Roth.) Yet, just 14 percent of households contributed to an IRA for the 2006 tax year, according to a separate study by the Investment Company Institute, an industry group.

According to the ICI study, 40 percent of households have an IRA (in line with the AARP Financial finding that 39 percent of Americans do) payday loans http://us-fast-cash-now.com. Three-fourths of them also have a retirement plan at work, the ICI found. Another 31 percent of households have a retirement plan at work but no IRA. The other 29 percent have neither.

Among those with a workplace plan but no IRA, many probably don’t realize they can have one. Another survey by Fidelity Investments and National Financial found 49 percent of non-IRA owners realize they can contribute to both a workplace plan and an IRA in the same year.

"Most people are going to need additional savings" beyond a 401(k)-type plan, said John Rag