Make sure you understand what is—and is not—held away when determining retirement assets.
Sounds obvious, yet new research from the Employee Benefit Research Institute (EBRI) finds the overall cumulative, average IRA balance per individual is 27 percent larger than the IRA balance per account.
It can have major implications when deciding how, and from where, to take required minimum distributions, among other issues.
The research organization finds that the average IRA account balance in the database was $97,515 at year-end 2016, the year studied, and the average individual balance (when all accounts owned by the individual are combined) was $123,973.
Average account balances differed significantly by the type. Roths had the lowest average balance, while Traditionals had the highest average balances.
Rollovers to IRAs in 2016, regardless of the source, amounted to over 16 times more than the total contributions in the database, with the average and median rollover to a Traditional IRA in 2016 at $94,238 and $21,383, respectively.
Other important findings include:
- Just under 11 percent of all accounts in the database received a contribution in 2016, but Roth IRAs were more likely to receive a contribution than Traditional IRAs (24.9 percent vs. 5.5 percent).
- Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2016, including 27.1 percent of Traditional IRA owners compared with 4.6 percent of Roth IRA owners.
- One-half of all IRA assets were allocated to equities, although this varied with owner age, account balance, and type.
- Those owning Traditional IRAs had, on average, lower allocations to equities. In addition, equity allocations peaked for both Traditional and Roth owners ages 45 to 54. IRAs with the largest and smallest balances had the lowest combined exposure to equities (including the equity share of balanced funds).
- Overall in 2016, 28.6 percent of IRAs had less than 10 percent in equities and 26.6 percent had more than 90 percent in equities, so-called “extreme allocations” in a particular asset category. Also, more than one in five (23.4 percent) had more than 90 percent of their assets in bonds and money.
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.
