ICI study looks at trends, behaviors related to IRAs

A new study released this week by the Investment Company Institute examined how many Americans own an individual retirement account (IRA) and how they use them.

The ICI study, called “The Role of IRAs in U.S. Households’ Saving for Retirement, 2017,” examines various activities by traditional IRA-owning households.

Roughly 35.1 million, or 27.8 percent of U.S. households, own traditional IRAs, making them the most common type of IRA. Roth IRAs were the second most common type of IRA, held by 19.7 percent, while employer-sponsored IRAs were owned by 6.0 percent.

Among traditional IRA owners, 77 percent held them through investment professionals, while 30 percent held them through direct market sources, such as mutual fund companies.

“U.S. households have access to a full range of investment options for opening their IRAs,” Sarah Holden, senior director of retirement and investor research at ICI, said. “This level of accessibility is one of the most popular features of IRAs as a vehicle for retirement savings.”

Further, 57 percent said their traditional IRAs contained rollovers from employer-sponsored retirement plans. And the vast majority rollover the entire amount.

“IRA investors typically research rollover and withdrawal decisions and tend to steward the assets to and through retirement,” Holden said. “The broad range of financial services options available when investing in an IRA means that traditional IRA-owning households can personalize their investment choices. In addition, most of these households have a planned strategy for managing income and assets in retirement.”

Also, 64 percent of traditional IRA owners consulted a financial adviser to determine the amount to withdraw. In addition, 81 percent of households that made traditional IRA withdrawals were retired. Retirees used their withdrawals to cover living expenses, reinvest or save into another account, for home purchase or repair, or to pay for healthcare expenses.