Capital Briefs: Bank CDs Rank Third as Retirement Product

Bank certificates of deposit are the third most popular vehicle for retirement savings, according to survey of 1,000 workers that was released Tuesday.

Consumers said they place $20 of every $100 in retirement savings in bank accounts, compared to $26 in stocks, $22 in annuities, $8 in government bonds, $6 in municipal bonds, and $5 in corporate bonds. (The remaining $13 is placed in other investments.)

Fifteen percent said they intended to open a Roth Individual Retirement Act account when they become available next month. This account allows consumers to invest after-tax dollars in an account that may draw down tax- free after retirement. Another 54% said they were very interested in the accounts, which could provide banks with a source of long-term deposits.

Respondents also said they increased savings 2% to $203 per month during the past year, the third consecutive year that savings rose. But consumers also said they need to save more than $500 per month to meet their retirement needs, and only 44% said they are saving more this year than last year.

Workers also are increasingly using employer-sponsored savings plans, the survey found. Workers said they hold an average of $61,672 in these plans, a 10% increase from 1996.

The sixth annual Workplace Pulse Survey on retirement was commissioned by Colonial Life & Accident Insurance Co. and the Employers Council on Flexible Compensation, and was conducted by the Marketing Research Institute in early November.