The Employee Benefit Research Institute is out with its latest measure of IRA account balances, contributions, withdrawals and asset allocations.
EBRI examined trends in each category from 2010 to 2015, and contrasted the results of consistent and inconsistent IRA account owners. Given recent broad-market performance and greater awareness of retirement plans, the results are about what one would expect.
Account balances: EBRI reported that “results show significantly higher balances in the consistent sample of IRA owners compared with the annual cross-sectional sample. While the cross-sectional overall average balance increased 36.1 percent from 2010 to 2015, the increase for those IRA owners who continuously owned IRAs from 2010-2015 was 47.1 percent.”
Contributions: There were “considerable differences by IRA type in the likelihood of consistent account owners contributing to the IRA and in the number of years contributions were made,” according to the organization.
Among Traditional IRA owners, 87.2 percent did not contribute to the IRA in any year, while 1.8 percent contributed in all six years.
“In contrast, 60.1 percent of Roth IRA owners did not contribute in any year and 9.7 percent contributed in all six years,” it added. “Roth IRA owners ages 25 to 29 were the most likely to contribute in any year at 64.1 percent, and Roth IRA owners ages 30 to 34 were most likely to contribute in all six years at 15 percent.
Asset allocation: EBRI reports that the percentage allocated to equities decreased from 45.7 percent in 2010 to 44.4 percent in 2011 before a sharp increase in 2012 to 52.1 percent, subsequent increases to 54.7 percent in 2013, and to 55.7 percent in 2014.
There was then a decline in 2015 to 54.7 percent. The amount allocated to balanced funds was constant from 2010 to 2011 before a slight decline in 2012 and an even smaller uptick in 2013, 2014 and 2015. The percentage in money increased in 2011 and fell through 2014 before leveling off in 2015.
Withdrawals: Among consistent account owners, the percentage of individuals taking a withdrawal from a Traditional or Roth IRA rose from 14.6 percent in 2010 to 18.4 percent in 2011. It then rose to 19.6 percent in 2012, 21 percent in 2013, 22.6 percent in 2014 and to 23.8 percent in 2015.
Furthermore, the percentage of consistent account owners ages 71 to 79 in 2015 who took a withdrawal increased from 34.4 percent in 2010 to 80.5 percent in 2015.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
