Roth and traditional IRAs don’t behave the same way, and neither do their investors.
According to two reports released by the Investment Company Institute, there are a number of differences between the two sets of investors, although both account types “provide savers with flexibility and diversification in their retirement savings options,” Sarah Holden, ICI senior director of retirement and investor research, says in a statement.
Holden adds, “Both IRAs have options that appeal to workers in various stages of their lifetime savings cycles and help millions of Americans prepare for retirement.” Differences range from how such accounts are started to the demographics of each type’s devotees. And while both groups had only “modest” reactions to financial stresses, there are a number of ways in which the Roth group diverges from the traditional crowd.
Traditional IRAs held $6.9 trillion in assets as of the end of 2016, while Roths held $690 billion at the same time. Traditional IRA investors at the end of 2016 numbered close to 12 million, while Roth investors numbered 5.9 million. Numbers aside, there are other contrasts between the investor groups themselves.
Check out the gallery for seven differences between investors who own Roths and those who have traditional IRAs.
— Related on ThinkAdvisor: