IRA Allocations Vary By Age, Balance, and Type – But Not Gender

The investment allocation of individual retirement accounts (IRAs) varies by a variety of factors, but the asset allocation differences between genders was minimal, according to a new report by EBRI.

Those older, having higher account balances, or owning a traditional IRA that originated as a rollover had, on average, lower allocations to equities, according to the report, which notes that as account balances increased, the percentages of assets in equities (i.e., direct ownership, mutual funds, etc.) and balanced funds (including target-date funds) combined decreased, while bond (i.e., direct ownership, mutual funds, etc.) and “other” (i.e., real estate, annuities, etc.) assets’ shares increased.

Equity allocations for the youngest IRA owners (under age 35) with small account balances were the lowest across the age groups. However, when balances reached $10,000 or more, younger IRA owners had significant increases in equity allocations, such that those ages 25−34 with the largest account balances had the largest equity allocation.

“Those under age 45 were much more likely to use balanced funds than were older IRA owners, and those under age 35 with balances less than $25,000 had particularly higher allocations to balanced funds,” noted Craig Copeland, EBRI senior research associate and author of the report. “This shift follows the standard investing ‘rule of thumb’ that individuals should reduce their allocation to assets with high variability in returns (equities) as they age.”

These and other findings come from the latest update of the EBRI IRA Database, an ongoing project by EBRI that currently contains information on 14.85 million accounts of 11.1 million unique individuals with total assets of $1.002 trillion, as of year-end 2010. The EBRI IRA Database is able to provide a more complete assessment of cumulative IRA investments and activity by virtue of its ability to link the holdings of individual IRA owners both within and across data providers.

The press release is online here. The full report is online here. 

Average IRA Balances a Third Higher When Multiple Accounts are Considered

The average IRA balance is about a third higher and the median (mid-point) balance is almost 42 percent larger when multiple individual retirement accounts (IRAs) owned by an individual are taken into account, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI).

EBRI’s new analysis, based on its unique EBRI IRA Database,™ shows that in 2010 the average IRA individual balance (all accounts from the same person combined) was $91,864, while the median balance was $25,296. By comparison, the average and median account balance of all IRAs was $67,438 and $17,863, respectively. Compared with 2008, the average and median individual balances are up 32 and 26 percent, respectively.

“The results show the importance of being able to look at an aggregation of an individual’s combined account balances to determine the potential total retirement savings he or she has,” said Craig Copeland, EBRI research associate and author of the report. The report provides results for the second year of data available from the EBRI IRA Database.™

The full report is published in the May 2012 EBRI Issue Brief, “Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database,™” online at http://www.ebri.org It analyzes 2010 data from the more than 11 million individuals with more than $1 trillion in the EBRI IRA Database™ and highlights the distribution of IRA owners by IRA types, account balances, rollovers, and contributions to IRAs. A unique aspect of the EBRI IRA Database™ is the ability to link the balances of individuals with more than one account in the database, providing a more complete picture of their IRA-based retirement savings.

The press release is online here. The full report is online here.

New EBRI IRA Database Finds Owners With Multiple IRAs Raise Average Balance by 25%

A new and unique EBRI database on individual retirement accounts (IRAs) — just released — for the first time will allow researchers to more accurately measure IRA assets and ownership across multiple data providers, and to track retirement assets as they move through different types of retirement plans.

For instance, the EBRI IRA DatabaseTM finds that when owners of more than one IRA are identified and their assets are combined, their total IRA balance is about 25 percent higher than the unaggregated account average within the database.

The press release is online here. The full report is published in the September 2010 EBRI Issue Brief, “IRA Balances and Contributions: An Overview of the EBRI IRA Database,” and is online here.

IRA Balance by Type and Gender

The EBRI IRA DatabaseTM is unique in that it can link the accounts of individuals with more than one account in the database, thus aggregating total IRA assets and giving a more realistic picture of their IRA-based retirement savings. Not only will EBRI be able to link individuals within and across data providers in the database, but in the near future it will also be able to link the data with participants in 401(k) plans, allowing retirement funds to be tracked as they are generated, rolled over, and ultimately used. The data security techniques used by data providers assure that EBRI has no ability to identify individuals, so that all privacy is assured.

“IRAs are an incredibly important piece of the retirement puzzle, since they hold the largest single share of the $13 trillion in U.S. retirement assets,” said Craig Copeland, senior research associate at EBRI and author of the study. “This new database will allow us to generate unique and extremely valuable information about how Americans are using IRAs, including rollover IRAs which hold funds that were accumulated in employment-based defined benefit and defined contribution plans, for retirement.”

The full report provides data on the four major types of IRAs, average and mean balances (including by gender), contributions and rollovers, and owners who max out on their IRA contributions.