IRA Balances Continue Trending Up

The average account balance for individuals owning at least one IRA increased in 2013, to $119,804—an increase of 30% from 2010, according to the latest update from the EBRI IRA Database. The figure shows a 14% rise from IRA assets in 2012. The median (mid-point) followed the same pattern, rising from $25,296 in 2010 to $32,179 in 2013. That figure is a 27% increase over the three-year period. For the period 2012 to 2013, the increase is 15%.

The percentage of individuals who contributed to their IRA was relatively consistent over the period, according to “Individual Retirement Account Balances, Contributions, and Rollovers, 2013; With Longitudinal Results 2010–2013: The EBRI IRA Database,” ranging from 12% in 2010 to 14% in 2013. Although traditional IRAs held a far larger share of IRA assets in 2013, the bulk of new contributions went to Roth IRAs.

IRAs hold close to one- quarter of all retirement plan assets in the U.S. A substantial portion of these assets were rolled over from other tax-qualified retirement plans, such as defined benefit (DB) and 401(k) plans.

In order to show the full amount that individuals hold in IRAs, the EBRI IRA Database allows for the summation of any multiple IRA accounts of the same person. When accounting for multiple accounts, the average individual IRA balance was 26% larger than the unique single-account balance ($119,804 vs. $95,363).

When examining the same individuals in the database each year from 2010 to 2013 (a “longitudinal” sample), the median percentage change in these individuals’ account balances from 2010 to 2013 was a 34% increase. The 25^th percentile of these percentage changes was an uptick of 2.6%, while the 75^th percentile was a 57% rise.

Next: Growth rates for Roth versus Traditional IRAs. 

The increases found in the average balances in 2013 are likely to continue, as is the importance of IRA assets for individuals during retirement, according to Craig Copeland, senior research associate at EBRI and author of the report. “With growing 401(k) plan balances and IRAs a popular destination for 401(k) assets when people change jobs or retire, the amount of income derived from IRAs will grow significantly as a supplement to Social Security for the Baby Boom and Gen X generations,” he said.

The growth rates for Roth IRA balances were higher both overall and by age and gender. The median Roth IRA increase for the longitudinal sample was 52% from 2010 to 2013, compared with 28% for all traditional IRAs. A major factor in these different rates of growth was that new contributions make up a larger portion of the Roth IRAs than they do for traditional IRAs, which magnified the impact of contributions. Another factor is that Roth IRAs are not subject to required minimum distributions for those older than 70-½ years of age, as are traditional IRAs.

The percentage of individuals who contributed to their IRA was relatively consistent, ranging from 12% in 2010, to 14% in 2013. The percentage of individuals owning traditional IRAs who contributed to them rose from 5% in 2010 to 7% in 2013. In contrast, the percentage of Roth owners who contributed ranged from 24% to 26% from 2010 to 2103.

The percentage of contributors who contributed the maximum rose, from 43.5% in 2010 to 53.5% in 2012. However, with the increase in the maximum allowable contribution in 2013, the percentage contributing the maximum overall fell to 43% in 2013.

Other findings in the EBRI report are:

• The average contribution increased, from $3,335 in 2010, to $4,145 in 2013;
• The overall average IRA balance increased each year—from $89,427 in 2010, to $90,232 in 2011, to $101,649 in 2012, and to $118,185 in 2013; and
• Average balances for each gender grouping also increased each year.

“Individual Retirement Account Balances, Contributions, and Rollovers, 2013; With Longitudinal Results 2010–2013: The EBRI IRA Database,” was published in the May 2015 EBRI Issue Brief, online at www.ebri.org.