Individual Retirement Account

An Individual Retirement Account (IRA) in the United States is a form of personal pension scheme offered by many financial institutions. It provides tax advantages to encourage retirement savings. In simple terms, an IRA is a trust arrangement that holds investment assets purchased with a taxpayer’s earned income, designed to benefit the individual in later life.

The IRA is one of several types of individual retirement arrangements, as outlined in IRS Publication 590 (Individual Retirement Arrangements – IRAs). Other retirement arrangements may include employer-established benefit trusts and individual retirement annuities, in which a taxpayer purchases an annuity or endowment contract from a life insurance provider.

Types of Individual Retirement Accounts

Over the years, various types of IRAs have been introduced through legislation. While they all serve the purpose of retirement savings, their tax treatment, contribution rules, and administrative requirements differ.

1. Traditional IRA

• Contributions to a Traditional IRA are often tax-deductible (commonly described as “pre-tax contributions”).
• Transactions and investment earnings within the IRA are not taxed until withdrawal.
• Withdrawals during retirement are treated as taxable income, except for contributions that were not deducted when deposited.

Depending on contribution type, a Traditional IRA may be either a:

• Deductible IRA – where contributions reduce taxable income, or
• Non-deductible IRA – where contributions are made after tax.

Traditional IRAs were first introduced under the Employee Retirement Income Security Act of 1974 (ERISA) and gained popularity following the Economic Recovery Tax Act of 1981.

2. Roth IRA

• Contributions to a Roth IRA are made with after-tax income (non-deductible).
• While contributions can be withdrawn at any time without penalty, the earnings may also be withdrawn tax-free in retirement, provided certain conditions are met.
• This account type was introduced under the Taxpayer Relief Act of 1997 and is named after Senator William V. Roth Jr.

3. MyRA

• The MyRA (short for “My Retirement Account”) was a retirement savings initiative launched by the Obama administration in 2014, based on the principles of the Roth IRA.
• It was designed as a simple starter account for workers without access to employer-sponsored retirement plans.

4. SEP IRA (Simplified Employee Pension)

• A SEP IRA allows an employer—typically a small business or self-employed individual—to make retirement contributions into a Traditional IRA set up in an employee’s name.
• It functions as an alternative to a company pension fund.

5. SIMPLE IRA (Savings Incentive Match Plan for Employees)

• A SIMPLE IRA requires employers to match employee contributions.
• It functions similarly to a 401(k) plan, but has:
  • Lower contribution limits
  • Simpler and less costly administration
• Despite being termed an IRA, it is often treated separately in practice.

6. Conduit IRA

• A Conduit IRA is a Traditional IRA funded exclusively with a transfer from a qualified plan, such as a 401(k).
• Although their use has declined following 2001 legislation that allowed direct transfers between qualified plans, some plan administrators still require conduit IRAs for rollovers.
• The purpose is to preserve certain tax and asset protection advantages from the original qualified plan.

7. Self-Directed IRA

• A Self-Directed IRA is legally the same as a Traditional or Roth IRA but offers greater investment flexibility.
• The custodian allows investments in a wide range of alternative assets, including:
  • Real estate
  • Private mortgages
  • Private company stock
  • Oil and gas limited partnerships
  • Precious metals
  • Intellectual property
  • Even horses

Although the Internal Revenue Code (IRC) restricts some investments (e.g., life insurance contracts and collectibles), custodians themselves may impose further restrictions.

Specialist custodians, particularly those focused on alternative investments or socially responsible investing (SRI), are better equipped to administer such accounts. Some providers use environmental, social, and corporate governance (ESG) ratings to guide investment choices.

8. Legislative Changes and Rollovers

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) significantly relaxed rules on rollovers:

• Most retirement plans can now be rolled into an IRA if specific conditions are met.
• Similarly, most retirement plans can accept IRA funds.

However, exceptions remain—for instance, non-governmental 457 plans can only be rolled into another non-governmental 457 plan.

Tax Treatment Overview

• For most IRAs (except Roth IRAs), the tax rules on contributions, distributions, and earnings are broadly similar.
• SEP IRAs and SIMPLE IRAs, however, also include additional rules akin to those governing employer-sponsored qualified plans. These rules dictate who may participate, how contributions are calculated, and the obligations of the employer.

Funding an Individual Retirement Account

Historical Background

Individual Retirement Arrangements (IRAs) were first introduced in 1974 under the Employee Retirement Income Security Act (ERISA). At the outset, taxpayers were permitted to contribute up to 15% of their annual income or $1,500 (whichever was less) each year. These contributions could be deducted from taxable income, providing a strong incentive to save for retirement.

The funds could be invested in:

• Special United States savings bonds paying a fixed interest of 6%
• Annuities commencing at age 59
• Trusts managed by banks or insurance companies

Initially, eligibility was limited to workers not covered by an employer-based retirement plan. This restriction was lifted in 1981, when the Economic Recovery Tax Act (ERTA) expanded eligibility to all working taxpayers under the age of 70, regardless of existing coverage. Contribution limits were also increased to $2,000 annually, and individuals could contribute an additional $250 on behalf of a non-working spouse.

Subsequently, the Tax Reform Act of 1986 introduced income-based restrictions. Workers earning above $35,000 (single) or $50,000 (married filing jointly) who were already covered by an employer-sponsored retirement plan gradually lost the ability to deduct contributions. However, such individuals could still make non-deductible contributions to an IRA.

Contribution Limits Over Time

The maximum contribution limits for IRAs have gradually increased in response to inflation and policy reforms:

• 1975–1981: $1,500
• 1982–2001: $2,000
• 2002–2004: $3,000
• 2005–2007: $4,000
• 2008–2012: $5,000
• 2013–2018: $5,500
• 2019–2021: $6,000

Since 2002, individuals aged 50 or older have been permitted to make an additional “catch-up” contribution of up to $1,000 per year. This policy recognises the need for late savers to boost their retirement reserves.

Current Funding Rules and Limitations

The Internal Revenue Service (IRS) imposes several important conditions on IRA funding:

1. Revocation Period
   • A new IRA may be revoked within seven calendar days of opening, without penalty.
2. Permissible Assets
   • IRAs may only be funded with cash or cash equivalents.
   • Transferring other asset types (e.g., property, collectibles) constitutes a prohibited transaction and disqualifies the account from tax benefits.
3. Eligible Income
   • Contributions can only be made from taxable compensation.
   • Ineligible income sources include:
     • Unearned taxable income (e.g., investment gains)
     • Tax-exempt income (other than combat pay for military personnel)
     • Social Security benefits (whether retirement or disability)
     • Child support payments (whereas alimony and separate maintenance, if taxable, are eligible)

✅ Rollovers, transfers, and conversions between IRAs and other retirement arrangements may include a wide range of assets.

1. Annual Contribution Limits
   • Contributions to all IRAs (Traditional and Roth combined) cannot exceed the lesser of:
     • $6,000 per year (or $7,000 if aged 50 or older, under the catch-up rule), or
     • The individual’s earned income for that year.
   • These limits, in effect for 2019–2021, are subject to periodic inflation adjustments.

Example:
A 45-year-old taxpayer contributes $4,000 to a Traditional IRA in one year. They may still contribute an additional $2,000, either to the same account, to a Roth IRA, or split between the two.

1. Deductibility and Income Thresholds
   • The deductibility of Traditional IRA contributions is subject to income thresholds.
   • If the contributor or their spouse is covered by an employer-based retirement plan, deductions are gradually reduced and eventually eliminated above certain income levels.
   • Thresholds vary based on tax filing status (single, married, joint, etc.) and which spouse has employer coverage.
   • Full details are provided in IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs).

Restricted Investments

Once funds are deposited into an Individual Retirement Account (IRA), the account owner may instruct the custodian to invest in a broad range of assets. These may include publicly traded securities (such as stocks, bonds, and mutual funds) and, in some cases, non-publicly traded or alternative assets. However, both the Internal Revenue Code (IRC) and custodial policies impose restrictions.

3.1 Prohibited Assets under the IRC

The IRC does not attempt to provide a full list of permitted investments. Instead, it specifies what cannot be held within an IRA. The following are strictly prohibited:

• Collectibles such as artwork, antiques, baseball cards, stamps, or rare coins
• Life insurance policies of any type

Holding such items in an IRA would result in disqualification of the account’s tax-advantaged status.

3.2 Custodian-Imposed Restrictions

Even when the IRC permits certain asset types, custodians may enforce stricter internal rules. For example:

• The IRC allows an IRA to own rental property, yet many custodians prohibit direct real estate ownership under their custody.
• Many custodians restrict IRA investments to traditional brokerage products like stocks, bonds, and mutual funds, while excluding alternative assets altogether.

Custodians and administrators are not permitted to provide investment advice; they only enforce compliance with their policies and the IRS rules.

3.3 Prohibited Transactions

Beyond asset restrictions, IRA owners must avoid self-dealing or transactions that create immediate benefit for themselves or related parties. For example:

• An IRA may own a rental property, but the owner cannot:
  • Use it as a personal residence
  • Allow a family member (such as a parent) to live there
  • Personally undertake repairs, such as fixing a leaking tap

These activities are deemed prohibited transactions and can disqualify the account.

3.4 Alternative Investments in Self-Directed IRAs

A self-directed IRA expands investment choices significantly. Depending on the custodian, such accounts may hold:

• Real estate (direct ownership of rental property, raw land, or mineral rights)
• Private mortgages
• Shares in private companies
• Precious metals
• Intellectual property rights
• Specialist assets such as livestock or horses

While these are permitted under the IRC, they often introduce added complexity, particularly regarding valuation, taxation, and compliance.

3.5 Use of Derivatives and Leverage

Publicly traded derivatives such as options and futures may be held in IRAs, subject to custodian approval. However:

• Not all brokers permit derivatives trading within IRA accounts.
• Investments involving leverage or certain structures may expose the account to Unrelated Business Income Tax (UBIT), thereby diminishing tax advantages.

3.6 Borrowing and Loans within an IRA

An IRA may borrow or lend money under specific conditions:

• Loans must be non-recourse, meaning they are secured solely by the IRA-owned asset and not by the account owner personally.
• The account owner may not pledge the IRA itself, or its assets, as collateral for an external personal debt.

These safeguards exist to prevent the blurring of lines between the taxpayer’s personal finances and the IRA’s protected retirement assets.

Distribution of Funds

Although funds may technically be withdrawn from an Individual Retirement Account (IRA) at any time, the U.S. tax code imposes rules, penalties, and exceptions to preserve the account’s purpose as a retirement savings vehicle.

4.1 Standard Withdrawal Rules

• Normal Retirement Withdrawals:
  IRA funds can generally be withdrawn penalty-free once the account holder reaches the age of 59 years and 6 months. Withdrawals are treated as taxable income, unless an exception applies.
• Required Minimum Distributions (RMDs):
  Holders of non-Roth IRAs must begin taking mandatory withdrawals by 1 April of the year following their 72nd birthday.
  • Failure to take the RMD results in a 50% penalty on the amount that should have been withdrawn.
  • RMDs are calculated using IRS life expectancy tables, which take into account the owner’s age and, in some cases, the age of a spouse who is the designated beneficiary.
• Charitable Distributions:
  Withdrawals made directly to qualifying charities after the age of 72 may be exempt from tax. These are known as Qualified Charitable Distributions (QCDs).
• Upon Death of the Owner:
  Beneficiaries must continue distributions. If a designated beneficiary exists, payments may be stretched over the beneficiary’s life expectancy, subject to IRS rules.

4.2 Early Withdrawals and Penalties

Withdrawals made before age 59½ are typically subject to a 10% penalty in addition to standard income tax. However, there are specific exemptions—commonly referred to as hardship withdrawals—where penalties do not apply.

4.3 Penalty Exceptions (Hardship Withdrawals)

Penalty-free withdrawals are permitted under the following circumstances (subject to detailed IRS rules):

1. Medical Expenses
   • Withdrawals covering unreimbursed medical costs exceeding 7.5% of adjusted gross income (AGI).
2. Health Insurance While Unemployed
   • Distributions equal to the cost of medical insurance premiums during a period of unemployment.
3. Disability
   • If the account holder becomes permanently disabled and unable to engage in substantial gainful employment.
4. Death of the Owner
   • Funds distributed to beneficiaries of a deceased IRA owner are penalty-free.
5. Substantially Equal Periodic Payments (SEPPs)
   • Withdrawals taken as part of a structured annuity or instalment scheme under IRS rules.
6. Higher Education Costs
   • Withdrawals used to pay for qualified education expenses for the owner, children, or grandchildren.
7. First-Time Home Purchase
   • Up to $10,000 (lifetime maximum) may be withdrawn to buy, build, or rebuild a first home.
8. IRS Levy
   • Distributions made to satisfy an IRS levy on the IRA.

4.4 Roth IRA Distributions

Roth IRAs are treated differently from traditional IRAs:

• Contributions (Basis):
  Contributions themselves (the “basis”) can always be withdrawn penalty- and tax-free, even before age 59½, under a first-in, first-out (FIFO) rule.
• Earnings:
  Growth or earnings withdrawn before age 59½ are subject to tax and penalties unless an exemption applies.
• Converted Funds:
  Amounts converted from a traditional IRA into a Roth must remain in the account for at least five years to avoid penalty, unless a penalty-free exception applies.

4.5 Nondeductible Contributions

If contributions to a traditional IRA were nondeductible, or if the account holder voluntarily chose not to claim a deduction, those amounts may be withdrawn tax- and penalty-free. Only the growth (earnings) remains taxable.

Bankruptcy Status and Protection from Creditors

The treatment of Individual Retirement Accounts (IRAs) in cases of bankruptcy and creditor claims has been shaped by a series of significant court rulings and legislative reforms in the United States.

5.1 Federal Bankruptcy Protection

• Rousey v. Jacoway (2005)
  On 4 April 2005, the United States Supreme Court unanimously ruled in Rousey v. Jacoway that IRAs qualify for protection under section 522(d)(10)(E) of the U.S. Bankruptcy Code (11 U.S.C. § 522(d)(10)(E)). The Court reasoned that because IRA withdrawals are tied to age-based eligibility, they serve the same retirement function as other pension schemes and thus warrant equivalent protection.

At the time of the ruling, 34 states already had laws protecting IRAs in bankruptcy, but this decision extended a federal exemption for IRAs across the country.

• Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005
  This legislation further strengthened protections by:
  • Exempting Traditional, Roth, SEP, and SIMPLE IRAs up to at least $1,000,000 (indexed periodically for inflation).
  • Allowing courts to raise this exemption limit if “the interests of justice so require.”
  • Providing full exemption for IRAs that originated as rollovers from employer-sponsored retirement plans (e.g., 401(k)s).
  • Increasing the Federal Deposit Insurance Corporation (FDIC) insurance limit for IRA deposits at banks.
• Prohibited Transactions
  The Eleventh Circuit Court of Appeals ruled that if an IRA engages in a prohibited transaction (as defined in IRC sections 408(e)(2) and 4975(c)(1)), its assets lose their bankruptcy protection.
• Inherited IRAs – Clark v. Rameker (2014)
  In June 2014, the Supreme Court ruled in Clark v. Rameker that inherited IRAs do not qualify as “retirement funds” under 11 U.S.C. § 522(b)(3)(C). As such, inherited accounts are not exempt from bankruptcy estates under federal law.

5.2 Protection from Creditors

Outside bankruptcy proceedings, creditor protection for IRA assets varies depending on federal provisions and state-specific laws.

• Available Strategies:
  IRA owners may seek protection through:
  1. Rollover into a qualified plan such as a 401(k), which generally enjoys stronger protection.
  2. Taking a distribution (though this may incur taxes) and protecting the proceeds alongside other liquid assets.
  3. Relying on state exemption laws, which provide varying levels of protection.
• State-Specific Examples:

• • In California, IRA and self-employed plan assets are protected only to the extent that they are “reasonably necessary” to support the debtor and their dependents in retirement. Courts make this determination case by case, taking into account other resources and income. Skilled and well-educated debtors with time until retirement are typically granted less protection.
  • In Nevada, IRAs are protected up to $500,000 from writs of execution.
• Limits of Protection:
  Even in states with robust protections, IRA assets are generally not shielded in cases involving:
  • Divorce settlements
  • Unpaid taxes
  • Fraudulent conduct
  • Secured debts (e.g., deeds of trust)
• Federal Protection under BAPCPA:
  As of 2019, IRAs are protected up to $1,362,800 (adjusted every three years for inflation). However, inherited IRAs remain unprotected under federal law, though some states extend protection to such accounts.

Borrowing, Double Taxation, and Inheritance

6.1 Borrowing Rules

The rules governing borrowing from an IRA are highly restrictive:

• An IRA owner may not borrow directly from their IRA. The only exception is an indirect rollover, which allows the owner to withdraw funds temporarily provided they are redeposited into an IRA within 60 days. This is permitted once every 12 months across all IRAs owned by the individual.
• If the 60-day limit is exceeded, the transaction is treated as an early withdrawal, triggering income tax and, where applicable, early withdrawal penalties.
• An IRA itself may incur debt, but the loan must be a non-recourse loan. This means the IRA’s assets (e.g., property within a self-directed IRA) can secure the debt, but the IRA owner cannot personally guarantee the loan.
• Income generated from debt-financed property within an IRA may be subject to Unrelated Business Taxable Income (UBTI) rules, meaning the IRA must pay tax on certain forms of leveraged income.

6.2 Double Taxation

Although IRAs are designed to provide tax advantages, they are not immune from double taxation in certain cases:

• Foreign dividends may be taxed at source (in the country of origin).
• The U.S. Internal Revenue Service (IRS) generally does not allow foreign withholding taxes on dividends within an IRA to be claimed as a credit or deduction.
• This creates situations where IRA holders face tax at source overseas and tax again upon withdrawal in the U.S.
• Critics argue this contravenes certain international tax treaties, such as the S.-Canada Income Tax Convention, though the matter remains unresolved.

6.3 Inheriting an IRA

The rules surrounding inherited IRAs depend on the relationship of the beneficiary to the deceased owner.

a) Spousal Beneficiaries

A surviving spouse who inherits an IRA has several options:

1. Treat the IRA as their own
   • They may continue contributions, designate beneficiaries, and avoid mandatory early distributions.
   • This allows for continued tax-deferred or tax-free (Roth) growth.
2. Rollover into another plan
   • Funds may be rolled into another retirement plan, with distributions determined by Required Minimum Distribution (RMD) rules based on the surviving spouse’s life expectancy.
3. Disclaim the IRA
   • Up to 100% of the assets can be disclaimed, enabling the IRA to pass directly to other beneficiaries (often children).
   • This can also reduce taxable income for the spouse.
4. Take a lump sum
   • All assets may be withdrawn at once, though this typically incurs significant federal income tax unless special requirements are met.

b) Non-Spousal Beneficiaries

For non-spouse heirs, the options are more limited:

1. Lump-sum withdrawal
   • Immediate distribution is permitted but often leads to substantial federal tax liabilities.
2. Disclaimer of assets
   • Beneficiaries may disclaim all or part of the assets within nine months of the owner’s death.
3. Distributions based on the owner’s age
   • If the beneficiary is older than the original IRA owner, withdrawals may be based on the owner’s life expectancy rather than their own.

c) Multiple Beneficiaries

• If an IRA passes to multiple heirs without division, distributions are calculated based on the age of the oldest beneficiary.
• To optimise tax efficiency, beneficiaries can split the inherited IRA into separate accounts, each subject to individual RMD rules.

Statistics of Individual Retirement Accounts (IRAs)

Overview of IRA Data Collection

Comprehensive data on IRAs are compiled by the Employee Benefit Research Institute (EBRI) through its IRA Database (Centre for Research on IRAs), alongside detailed analyses such as those by Copeland (2010). These statistics provide insights into balances, contribution behaviour, and demographic patterns.

Highlights from 2008 Data

• Balances:
  • The average IRA account balance was $54,863, while the median stood at $15,756.
  • When aggregating all accounts belonging to the same individual, the average balance was $69,498, with a median of $20,046.
  • The gap between average and median values shows significant positive skew – meaning a relatively small number of very large accounts increased the average.
• Age and Balances:
  • Balances grew with age, peaking in the 65–69 age group before levelling off in the 70+ bracket.
• Contributions vs Rollovers:
  • Rollovers dominated contributions, accounting for over 10 times the value of new contributions.
  • While 28.5% of rollovers were under $5,000 and 53.1% were under $25,000, around 20.2% were above $100,000, showing a significant share of large rollovers.
• Types of IRAs (2008):
  • 33.6% – Traditional IRAs
  • 33.4% – Rollover IRAs
  • 23.4% – Roth IRAs
  • 9.6% – SEP and SIMPLE IRAs
  • Combining Traditional and Rollover IRAs shows they comprised 67% of all accounts.
• Contribution Behaviour:
  • Only 15.1% of individuals with an IRA made contributions in that year.
  • Contribution rates varied sharply by account type:
    • 7.2% of Traditional or Rollover IRA owners contributed.
    • 29.5% of Roth IRA owners contributed.
  • Contributions were heavily concentrated at the maximum level:
    • Around 40% contributed the full allowance.
    • 46.7% contributed close to the maximum ($5,000–$6,000 range).

Government Accountability Office (GAO) Report (2014)

The GAO issued a landmark report in November 2014, based on 2011 tax-year data.

Key Findings:

• Number of Taxpayers with IRAs: Around 43 million.
• Total Market Value: $5.2 trillion.
• Tax Revenue Impact: In 2014, the U.S. federal government was estimated to forgo $17.45 billion in tax revenues due to IRAs, designed to offer fair tax treatment for individuals without employer-sponsored retirement plans.

Account Balances:

• 98.5% of taxpayers had IRA balances at $1,000,000 or less.
• 1.2% had balances of $1,000,000 to $2,000,000.
• 0.2% (83,529 taxpayers) had balances of $2,000,000 to $3,000,000.
• 0.1% (36,171 taxpayers) held balances of $3,000,000 to $5,000,000.
• <0.1% (7,952 taxpayers) had balances of $5,000,000 to $10,000,000.
• <0.1% (791 taxpayers) held balances of $10,000,000 to $25,000,000.
• <0.1% (314 taxpayers) possessed balances of $25,000,000 or more.

Demographic Characteristics of High-Balance Holders:

• Generally aged 65 or older.
• More likely to be joint filers.
• Typically had adjusted gross incomes above $200,000.

Retirement Savings and IRA Balances

8.1 Distribution of Balances

Although the average IRA balance in 2008 was approximately $70,000, and the median balance about $20,000, there is significant disparity among account holders:

• 6.3% of individuals held balances of $250,000 or more (around 12.5 times the median).
• In rare cases, balances have exceeded $100 million (approximately 5,000 times the median).

Such extreme accumulations often arise when IRA owners invest in private company shares that subsequently appreciate substantially.

8.2 Government Accountability Office (GAO) Findings

In November 2014, the GAO reported:

• 314 taxpayers with IRA balances exceeding $25 million.
• 791 taxpayers with balances between $10 million and $25 million.

The GAO study focused on account valuations and examined whether tax incentives genuinely encouraged new or additional savings. Concerns raised in this report contributed to broader debates in Congress about the reform of retirement tax incentives.

8.3 Joint Committee on Taxation Report (2019)

At the end of 2019, the Joint Committee on Taxation found:

• 28,615 taxpayers with Traditional and Roth IRA assets exceeding $5 million.
• Collectively, these accounts were valued at nearly $280 billion.

A 2021 investigative report highlighted the case of entrepreneur Peter Thiel, who accumulated a $5 billion Roth IRA through early-stage investments in start-ups—opportunities unavailable to most taxpayers.

Such extreme cases involve less than 0.1% of the 65+ million IRA owners in 2018, prompting policy proposals to limit excessive accumulation within tax-advantaged retirement accounts.

8.4 The Broader Retirement Savings Crisis

Despite the existence of extraordinarily large IRAs, the majority of Americans face a retirement savings shortfall.

• A 2015 National Institute on Retirement Security study, The Continuing Retirement Savings Crisis, reported:
  • 45% of working Americans had no retirement account assets, either in IRAs or employer-based plans such as 401(k)s.
  • The median retirement account balance was just $2,500 for all working-age households.
  • For households nearing retirement, the median rose to only $14,500.
• By 2020, half of American adults held less than $6,500 in combined IRAs and defined contribution plans.

8.5 Performance of IRA Investments

While inflation-adjusted stock market values generally increased between 1978 and 1997, by March 2013, values were lower than levels seen between 1998 and 2007. This underperformance meant many retirees did not achieve the expected returns on their IRA savings.

• In 2010, Duncan Black, writing in USA Today, observed that the median household retirement account balance for workers aged 55–64 was $120,000.
• He noted this sum would provide only a minimal supplement to Social Security—and emphasised that one-third of households approaching retirement had no savings at all.