5 Incredible Facts About the Current Retirement Market | Ed Slott and Company, LLC

5 Incredible Facts About the Current Retirement Market

By Jeffrey Levine, IRA Technical Expert
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@IRAGuru4EdSlott

1. Did you know that ... Americans have an estimated $24.2 trillion in retirement assets1? To put that into perspective, the entire gross national debt is only about $18.1 trillion, making the U.S. retirement market about 33% larger. 

2. Did you know that ... IRAs make up the largest single share of the retirement market with an estimated $7.3 trillion1? $7.3 trillion may not seem like a lot of money compared to a $24.2 trillion total, but consider this: If you added up all of the money held in 401(k)s, 403(b)s, 457(b)s and similar defined contribution employer-sponsored retirement plans1, it still would only come to about $6.6 trillion. About a decade ago, IRAs held about the same amount of funds as the cumulative total held in defined contribution employer-sponsored plans, but since that time IRAs have “taken the lead” and the gap has grown considerably.

3. Did you know that ... An estimated $324 billion was rolled from plans to IRAs in 20132? Part of the reason why the gap between IRAs and employer-sponsored defined contribution plans has continued to grow in recent years is the propensity for many retirees to roll their plan funds over to an IRA after leaving their job. Such rollovers should, of course, be carefully considered before they are made. While in many situations an IRA rollover is the best option (most often due to the increase of control it offers), there are plenty of circumstances when it’s best to leave your money in your employer plan or to look at a different option altogether, such as NUA (net unrealized appreciation).

4. Did you know that ... There are more than 600,000 people with $1 million in an IRA3? According to a study released by the Government Accountability Office (GAO), about 630,000 taxpayers have cumulative IRA balances worth $1 million or more. To put that into perspective, the entire population of Vermont, according to the most recent census, is only about 626,000.  Here’s something else to chew on, even though the report was released at the end of 2014, it was based on data for 2011. Given the market’s favorable performance since 2011, it’s likely there are now some additional entrants into the $1 million IRA club.

5. Did you know that ... More than 300 people are thought to hold more than $25 million in IRAs3? Mitt Romney has company! According to the same GAO study referenced above, an estimated 314 taxpayers have more than $25 million in an IRA. With IRA contribution limits today at $5,500 for 2015 ($6,500 if you’re 50 or older by the end of the year), it’s unlikely these IRA balances originated in IRAs from the get-go. Instead, the overwhelming likelihood is that these IRAs represent rollovers from plans, which have larger contribution limits.

1  - The Role of IRAs in U.S. Households’ Saving for Retirement, 2014 - ICI

2 - Retirement Investor 2014: Understanding 401(k) Participant Behavior and Trends in IRAs, Rollovers and Retirement Income - Cerulli and Associates

3 - Preliminary Information on IRA Balances Accumulated as of 2011 – Government Accountability Office

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