Whatever the caprices of the American job market in recent years, plenty of us have been rolling over retirement money from former employers’ plans into independent retirement accounts, according to a study released in late December by the Investment Company Institute.
Based on findings from a May survey, “45 percent of traditional IRA-owning households with rollovers in their traditional IRAs reported that consolidating assets was among the reasons for their rollovers, and 19 percent said it was the primary reason,” an ICI news release says.
Following are some of the findings of the ICI:
- Forty percent of U.S. households owned IRAs.
- In 2012, 20 million U.S. households (or 51 percent of all U.S. households owning traditional IRAs) had traditional IRAs that included rollover assets.
- IRAs represented more than one-quarter of U.S. total retirement market assets, compared with 17 percent two decades ago.
- With their most recent rollovers, the vast majority of these households (80 percent) transferred the entire retirement plan account balance into the traditional IRA.
- Nearly eight in 10 traditional IRA–owning households with rollovers made their most recent rollover in 2000 or later, including 60 percent whose most recent rollover was within the past seven years.
- Among households with rollovers in their traditional IRAs, 44 percent only had rollover IRAs (having never made traditional IRA contributions).
- IRA ownership increases with household income, with 58 percent of households earning $50,000 or more having an IRA.
- IRA assets increase with length of IRA ownership: The average assets for an IRA held less than10 years is $52,800 and that average rises to $188,200 for 20 years and more.
- Among all IRA-owning households in May 2012, 80 percent also had employer-sponsored retirement plans.
- Most IRA-owning households are between ages 35 and 64.
- Only 16 percent of U.S. households contributed to any type of IRA in tax year 2011, and very few eligible households made “catch-up” contributions to traditional IRAs or Roth IRAs.
And next, what to do with all that money? Sixty-nine percent of traditional IRA–owning households in 2012 say they have a strategy for managing their money in retirement, the ICI says, and of that number, 61 percent consult a professional financial adviser.
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