A majority of Americans are not aware of the money that could be coming their way if they made an annual contribution to an Individual Retirement Account, says a recent survey by TIAA-CREF.

Only 22% of Americans are putting some money into an IRA, and most who do save are not investing enough to reap the full tax benefits. That lack of knowledge, particularly among those aged 18 to 34, means less money when retirement years roll around, says Dan Keady, TIAA-CREF’s director of financial planning.

“With younger Americans, they are particularly unaware of [the] benefits of an IRA and flexibility of the Roth, and that would be [an] area where financial literacy would make a huge impact in their lives by helping them start saving earlier,” Keady notes.

According to the survey, younger Americans were the least conscientious about their IRA and also the least aware of the potential benefits. Nearly three-fourths (73%) of survey respondents aged 18 to 34 did not know the maximum contribution, while on average, 61% of the adults surveyed were unaware of the limits. In addition, 58% of young Americans did not know that growth in an IRA is tax-deferred.

Among all the respondents, over half, or 55%, miss out on the tax and savings benefits of an IRA because they are putting in less than the maximum contribution. Investors can contribute up to $5,000 (up to $6,000 for those age 50 or older) to a traditional or Roth IRA.

One reason investors may not be maximizing their IRAs’ potential may be that 62% of those polled did not know two important pieces of information: that there are catch-up contributions that allow adults age 50 and older to contribute more than the annual minimum and that Roth IRA withdrawal guidelines allow contributors to take out money without paying taxes or penalties. 

Average income also weighed on an investor’s contributions. Only 8% of those making less than $35,000 a year put money into an IRA while 13% of those earning between $35,000 and $50,000 contributed.

One big positive note, according to Keady, is that women were right behind baby boomers in terms of making the full investment in their IRAs. Although only 34% of men contributed their annual maximum, 41% of women were meeting their annual limits.

“Women are out of work longer for children and aging parents, and women live longer so actively engaging and building their financial literacy is an encouraging part of the survey.”

TIAA-CREF surveyed 1,007 adults age 18 and older by phone this past February.

A national financial services organization, TIAA-CREF manages $464 billion in assets and provides retirement services in the academic, research, medical, and cultural fields.

Mason Braswell writes for Financial Planning.