New Pension Law Presents Additional Opportunities for Increased IRA Savings

BOSTON, January 17, 2007 - Fidelity Investments today released new research on IRA ownership, which shows that although seven out of 10 Americans fear not having enough money to live on in retirement, just under half (46%) are utilizing an IRA as part of their overall retirement savings strategy.

The study also found that despite the benefits of the recent pension legislation, which provides savings incentives such as permanency to IRA contribution limits and allows Americans to have their tax refund directly deposited into up to three different accounts, including an IRA, only 7 percent of non-IRA holders surveyed plan to open an IRA before the April 16 tax deadline. Furthermore, the study showed that even current IRA holders surveyed are not taking full advantage of their existing accounts, with just 37 percent having contributed for the 2006 tax year (as of December 1) and only 16 percent saying they are extremely/very likely to contribute before the April tax filing deadline.

"Every American has the opportunity to reap the benefits of this country's historic pension legislation, but sitting on the sidelines without an IRA, or having an IRA but not fully funding it annually, means you're missing out on one of the best retirement savings opportunities of our time," said John Ragnoni, senior vice president, Fidelity Personal Investments.

Misperceptions Around IRA Ownership Contributing to Problem

Misperceptions and lack of knowledge and understanding about IRAs continue to be barriers to IRA ownership. Of the 1,000 Americans surveyed (500 IRA owners and 500 non-IRA owners), almost half (46%) of non-IRA owners believe that to open an IRA account requires the maximum annual dollar amount contribution, when in fact an IRA generally can be opened with relatively small monthly contributions. Additionally, 59 percent did not know they could contribute to a rollover IRA, which, by allowing investors to consolidate their retirement savings in one place, can help them more easily monitor and manage their investments.

There also is investor confusion around contributing to both a 401(k) and an IRA. Only 52 percent of non-IRA owners surveyed knew that they could contribute to both an IRA and an employer-sponsored plan in the same year, and 56 percent of respondents overall and three quarters (74%) of non-IRA owners did not know the correct 2006 contribution limits.

"The first step in becoming a successful investor is to understand all of your options, and these results indicate a real need to help investors through greater education and awareness," said Ragnoni. "Generally, anyone with an income is eligible for an IRA, and recently introduced products can help investors get started. With our SimpleStart^SM IRA, one can begin saving with as little as $200 per month, and our Fidelity Freedom Fund lifecycle funds provide an all-in-one fund solution which may make it easier to invest."

The Fidelity study showed that IRA owners are nearly twice as likely to use the Web proactively in seeking financial information as non-IRA owners. Yet even IRA owners struggled to answer basic questions in the survey and 57 percent were unable to confirm if their IRA provider offered lifecycle funds as an investment option.

Investors Reluctant to Make Lifestyle Changes

Projecting into the future, only 26 percent of IRA owners and 31 percent of non-owners said they are likely/very likely to make a lifestyle change, such as cutting back on restaurant meals or takeout in order to save more for retirement next year.

Additionally, although 49 percent of non-owners indicated that a lack of money is one of the major barriers in saving more for retirement, the hypothetical proposition of suddenly receiving a $5,000 windfall did not always result in investors changing their savings behavior.

In fact, when presented with a hypothetical windfall of $5,000, IRA owners would invest an average of $2,200 for the long term, while non-owners would invest just $1,250 on average. Of those who would use the money for long-term savings, one out of two (49%) of non-IRA owners (and 45% of owners) said they would elect to put the money into a bank account (such as a CD or savings account), instead of an IRA or other retirement savings vehicle, also suggesting a lack of awareness of an IRA's tax-advantaged options.

"Even if you can't contribute the maximum, it's crucial that you save something for the future and that you do so in a tax-advantaged account. Making some small trade-offs now to find that extra money for retirement can really pay off in the future," said Ragnoni.

About the Fidelity Study

Fidelity Investments conducted this IRA study to examine how Americans perceive IRA vehicles (within the context of retirement savings in general), and how those attitudes impact (or are associated with) IRA ownership and usage. Interviews were conducted online from November 21-30, 2006, by Northstar Research Partners, an independent research firm, with a national sample of 500 IRA owners and 500 non-owners who meet the following criteria: Primary or joint decision-maker for investments; household income of $40k or more; age 25 to 64; and not retired.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of more than $2.9 trillion, including managed assets of nearly $1.4 trillion as of December 31, 2006. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

Before investing, consider the funds' investment objectives, risks, charges and expenses. Contact Fidelity for a prospectus containing this information. Read it carefully.

Performance of the Freedom Funds depends on that of their underlying Fidelity funds. These funds are subject to the volatility of the financial markets in the U.S. and abroad and may be subject to the additional risks associated with investing in high yield, small cap and foreign securities.

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