Even with new, higher contribution limits on IRAs and 401(k)s, most brokers remain skeptical that such plans are adequate retirement savings vehicles.
“It's still a joke,” says a New York-based UBS PaineWebber rep. “It's not even close as far as meeting retirement needs.”
Next year, the new IRA contribution limit will be $3,000 per taxpayer. That increases to $4,000 in 2005 and $5,000 in 2008. For 401(k)s, the new contribution limit will be $11,000 in 2002. That increases $1,000 a year until 2006, when the maximum is $15,000.
One California-based Prudential Securities rep is grateful for any improvement. “Anytime you get the chance to put more money away, it's always positive,” he says.
A Florida-based Salomon Smith Barney rep has been waiting for a change in IRA limits in particular. “As assets and wealth have grown, they've never adjusted the limits. It's been the same since I came into the business 16 years ago. IRAs were never indexed for inflation like 401(k)s.”
Even so, the SSB rep projects that many people retiring in 15 to 20 years will have financial difficulties, despite the new limits. He contends that if self-employed people can put away $30,000 a year, everyone else should be allowed to do the same.
“People age 65 to 70 today have enough because they were allowed to put a higher percentage of salary in defined benefit plans, and they're also collecting Social Security in a system that hasn't failed them,” the rep says. That's not the case for those who will be retiring in 15 to 20 years.