The Investment Company Institute, in partnership with the Securities Industry and Financial Markets Association, unveiled a new research series on IRAs Tuesday.
Sixty-three percent of traditional IRA investors who contributed to their accounts in 2007 made repeat contributions in 2008, noted Sarah Holden, ICI senior director of retirement and investor research, on an ICI webinar call.
And 60% of those 2007 contributors maxed out their IRA payments. Conversely, on the lower end of the income scale, as well as among those workers who are not offered a 401(k), research showed that participation is active due to the known tax advantages.
The research showed the “highest persistence in the highest group and in the lowest group,” Holden said.
“Investors who don’t have a savings plan through work or want to supplement their savings might want to consider IRAs, which are a powerful tax-advantaged savings vehicle,” she said.
Where participation in IRAs is low, the ICI noted, it could be due to high savings rates in other vehicles, such as 401(k)s, or because an employee doesn’t earn much and expects Social Security to comprise most of their retirement income.
The ICI plans to continue its IRA research with reports on rollovers, asset allocations and withdrawals.
Commenting on the new research series, ICI President and CEO Paul Schott Stevens said: “We built this database to provide a deeper look into IRA use and will use the database on an ongoing basis to learn more about one of the most important components of Americans’ retirement savings.”
IRAs totaled $4.9 trillion at the end of 2009, more than one-quarter of total U.S. retirement market assets and almost 10% of U.S. households’ total financial assets.