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Retirement Planning > Retirement Investing

Survey: 7 in 10 Households Have a Tax-Advantaged Retirement Account

By Warren S. Hersch

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About 7 in 10 U.S. households have a tax-advantaged retirement account, a new study discloses.

Investment Company Research published this finding in a new survey commissioned by Green IRA Success, the marketing name of Seattle, Wash.-based Green Wealth Management Inc.

The study finds that 71% of U.S. households have a tax-advantaged retirement account. The group includes individuals who own an employer-sponsored retirement plan only (30%); own an IRA and employer-sponsored retirement plan only (31%); and own an IRA only (10%).

Household with “formal” retirement savings accounts (IRAs, employer-sponsored retirement plans or both) typically have accumulated more financial assets than those who have not taken advantage of these accounts.  In 2011, the study notes, median financial assets of households owning IRAs were six times greater than the financial assets of households that do not own IRAs.

In 2011, the study adds, households owning IRA for less than five years had median IRA holdings of $7,000, whereas households owning IRAs for 20 years or more had media IRA holdings of $35,300.

Among households that have owned IRAs for at least 10 years and contributed to them in tax-year 2010, the average IRA balance in 2011 was $148,000 and the median balance was $80,000, the study observes.

More than 16 million U.S. households, or 43% of all U.S. households owning traditional IRAs, had traditional IRAs that included rollover assets. Media traditional IRA holdings that include rollovers were $50,000 in 2011, while median traditional IRA holdings that did not include rollovers were $20,000, the survey discloses.

The study observes, however, that most U.S. households do not contribute to IRAs. In tax-year 2010, only 15% of all U.S. households made IRA contributions. And most of the contributors owned traditional IRAs (41%).

This compares to 34% who contributed to Roth IRAs only, 13% who contributed to an employer-sponsored IRA only and 12% who contributed to more than one type of IRA.

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