When it comes to independent retirement accounts, Roths attract a younger crowd, while older investors tend to gravitate toward traditional IRAs.
That’s according to the latest version of an annual study from the Investment Company Institute (ICI), “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2013.” The study, based on data for 5.2 million Roth IRA owners at year-end 2013, found that Roth IRA investors exhibit substantial differences from investors who use traditional IRAs.
According to the study, just 24 percent of Roth IRA investors were 60 or older, compared with 38 percent of traditional IRA investors.
In addition, 31 percent of Roth IRA investors were younger than 40 at the end of 2013, compared with just 15 percent of traditional IRA investors.
One factor that could account for the disparity is the income limitations on Roths, since older people tend to bring in more money and might find themselves locked out of using Roths.
Then there’s the rollover factor. Older workers roll over more often than younger ones for two main reasons: first, people tend to need some time in the workforce before they have anything to roll over, and second, rollovers have been allowed to traditional IRAs since 1974, when they first became available.