- The importance of IRAs in helping U.S. households save for retirement is growing in a variety of ways. And they complement employer-provided retirement plans and savings, says a recent study by the Investment Company Institute (ICI) on the role IRAs played in 2015.
“The Role of IRAs in U.S. Households Saving for Retirement, 2015,” contained in the February 2016 edition of ICI Research Perspective, says that in the third quarter of 2015, the $7.3 trillion in assets held in IRAs made up 31% of U.S. retirement market assets — a 13-percentage point jump in 20 years. Almost one-third of U.S. households had IRAs by the middle of last year, says the ICI, and more than 80% of those households also participated in employer-provided retirement plans.
The study says that rollovers play a key role in IRAs’ growth. Nearly half of households with traditional IRAs said their IRAs contained rollovers from employer-provided plans; the three most common primary reasons they cited for doing so were:
1. wanting more investment options (21%);
2. not wanting to leave assets behind at the former employer (19%); and
3. consolidating assets (16%).
The study also shows that IRA holders were reluctant to make withdrawals: 22% made them in 2014. And when they did make withdrawals, they generally were related to retirement. Almost three-quarters of households with traditional IRAs said that they do not plan to use IRA funds until age 70½; use for living expenses and emergencies were the highest expectations. Of the households with traditional IRAs that did make withdrawals from them, 73% were retirees and 9% were younger than age 59.
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