IRA Owners Make Thorough Investors

The study, called “The Role of IRAs in U.S. Households’ Saving for Retirement, 2013,” shows around 73% of IRA-owning households have a multistep strategy for managing income and assets in retirement.

Plan elements most frequently cited include setting aside emergency cash, developing a retirement income plan, reviewing applicable insurance policies, determining retirement expenses and testing when to take Social Security benefits.

A weaker majority (63%) of IRA-owning households reported having consulted with a financial adviser when developing their strategy. Other results from the study show Americans are accumulating significant resources in traditional IRA products—largely through rollovers from employer-sponsored retirement plans.

Among households with rollovers included in their IRA balance, more than eight in 10 (85%) indicated they had rolled over their entire balance from a previous job’s retirement plan into an IRA.

For the 46.1 million U.S. households owning IRAs in May 2013, IRA assets accounted for about one-third of their household net worth. With $5.7 trillion in assets, IRAs accounted for more than one-fourth of all U.S. retirement assets in the second quarter of 2013.

“Our research consistently finds that IRA owners are good stewards of their money, building substantial financial assets,” says Sarah Holden, ICI’s senior director of retirement and investor research.

Other encouraging findings from the study show IRA withdrawal activity continues to be relatively infrequent and is most often related to retirement. Only about one-fifth (21%) of traditional IRA-owning households reported that they took withdrawals in tax year 2012. More than three-quarters of the households with withdrawals reported that someone in the household was retired.

The most commonly listed use of IRA withdrawals was to pay living expenses, cited by 38% of retired IRA-owners taking withdrawals.

A full copy of survey results and highlights is available here.