New research highlights importance of IRAs in retirement planning

More than four in ten US households have IRAs, according to an Investment Company Institute report.

More than four in ten U.S. households (42%) own individual retirement accounts, amounting to 55.5 million households.

Newly published research from the Investment Company Institute found that traditional and Roth IRAs account for 36% of household financial assets among those owning them, and those individuals were more likely to have engaged in rollover activity, with those owning Roth IRAs also having higher contribution rates.

The study also reveals that IRA holders are generally willing to take some investment risks, with more than 70% holding mutual funds and more than 30% holding ETFs within their IRAs.

Among those with traditional IRAs, 62% of them included rollover assets and 43% of those with rollovers had contributed to their traditional IRAs in addition to the rollovers. Information about rollovers was sought from multiple sources, including financial advisors, employer-provided materials, and content from financial services firms.

Almost nine in ten respondents with traditional IRAs had preserved their entire employer-sponsored retirement plan balance in their most recent rollover. This was mostly due to not wanting to leave assets with their previous employer, consolidation of assets, and desire for more investment options.

In the tax year 2022, two in ten traditional IRA-owning households made contributions, while twice as many Roth IRA owners did so.

The ICI report, The Role of IRAs in US Households’ Saving for Retirement, 2023, included two surveys conducted in mid-2023 that also found that around two-thirds of traditional IRA–owning households in mid-2023 indicated that they have a multicomponent strategy for managing income and assets in retirement.