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Retirement Planning > Retirement Investing

IRA Owners Staying on Top of Retirement Planning

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A report released in November by the Investment Company Institute found that IRA owners are likely to adopt other complex planning and savings behaviors. The report found 73% of households that own a traditional IRA said they have a multi-step plan for managing income and assets after they stop working.

Among the strategies cited in the study are setting aside emergency funds, developing a retirement income plan, reviewing insurance policies, determining retirement expenses and determining when to take Social Security benefits.

The report, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2013,” found 63% of those traditional-IRA-owning households are also working with an advisor on their retirement strategy.

Sarah Holden, ICI’s senior director of retirement and investor research, called IRA owners “good stewards” of their assets. “This study highlights the thoughtful and thorough approach that IRA-owning households take in preparing for their retirement,” she said in a statement.

IRA assets continued to show moderate growth in the second quarter. ICI found assets in IRAs as of Q2 were near $6 trillion, up 0.9% since the first quarter, and accounted for more than a quarter of all retirement assets in the United States. Total retirement assets were about $21 trillion, more than a third of all household financial assets.

Part of the reason for that growth is that withdrawals from IRAs are relatively low. Just 21% of households said they took a withdrawal during the 2012 tax year. Of those, more than three-quarters had a retired person living there.

Unfortunately, contributions are low as well. Just 15% of households said they made any contribution in the 2012 tax year, down from 16% the prior year. However, low contribution rates may be attributed to households saving elsewhere. Among those not making contributions who were not yet retired, 37% said they were saving enough in a workplace plan. That’s good news considering the high rate of rollovers to IRAs. Among households who had made a rollover into their plan, 85% rolled the entire balance of their plan into an IRA.

The report is based on data collected in two surveys, both conducted in May. The IRA Owners Survey polled more than 3,000 owners of traditional, Roth and employer-sponsored IRAs. The ICI Annual Mutual Fund Shareholder Tracking Survey polled more than 4,000 households; of those about 38% owned an IRA.

Check out Rollovers From Employer-Sponsored Plans Fueling IRA Growth: ICI on ThinkAdvisor.


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