| IRAs contain Largest share of Retirement Assets |
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| Do you have an IRA? |
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InspiraFS
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| IRAs contain Largest share of Retirement Assets |
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IRA assets encompassed 28% of all retirement assets at of the end of the second quarter, according to a November 2012 Investment Company Institute (ICI) research report. The report also noted that assets in IRAs at the end of June 2012 totaled more than $5.1 trillion, a slight drop from $5.2 trillion at the end of the first quarter of 2012, but remain the largest single pot of retirement funds. The entire retirement marketplace was valued at $18.5 trillion.
ICI is the authority for retirement industry investment research.
This report confirms that the largest growth in the retirement industry continues to be in the IRA marketplace. At the end of 2011, according to the ICI report, IRAs were 27% of the entire retirement plan marketplace. The growth to the current 28% level can be attributed to not only high unemployment resulting from layoffs, but also the fact that baby boomers are retiring.According to the Pew Research Center, on January 1, 2011 the oldest baby boomers began to reach age 65. At that time, the number of individuals per day reaching age 65 was approximately 10,000. That same Pew study also showed that those 65-and-older, a group which currently constitutes 13% of the United States’ population, will represent 18% by 2030.
Also, at the SPARK Conference in November, Bob Wuelfing of RG Wuelfing & Associates reported that net cash flows into IRAs from 2002 through 2011 were nearly double the cash flows into defined contributions plans ($1.55 trillion compared to $833 Billion).
This means that the IRA business will continue to grow. So, organizations that are not focused on this business are missing out on revenue, particularly organizations that are involved in processing or servicing retirement plans. Having an IRA strategy is simply good business and can help organizations replace revenue currently lost as a result of rollover distributions.
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Mon Nov 26, 2012 4:29 pm |
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oldguy
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quote:
assets in IRAs at the end of June 2012 totaled more than $5.1 trillion, a slight drop from $5.2 trillion at the end of the first quarter of 2012, but remain the largest single pot of retirement funds. The entire retirement marketplace was valued at $18.5 trillion.
Why not focus on the other $13.4T? (Why fixate on the $5.1T?)
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Mon Nov 26, 2012 5:30 pm |
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InspiraFS
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@oldguy:
I focused on the IRA assets because I think it's interesting that IRAs make up more than 401(k)s. Here is a link to the report, you can scrutinize the other data however you'd like.
ICI Report
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Mon Nov 26, 2012 5:46 pm |
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clydewolf
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| Re: IRAs contain Largest share of Retirement Assets |
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quote:
Originally posted by InspiraFS
Also, at the SPARK Conference in November, Bob Wuelfing of RG Wuelfing & Associates reported that net cash flows into IRAs from 2002 through 2011 were nearly double the cash flows into defined contributions plans ($1.55 trillion compared to $833 Billion).
-InspiraFS
I am sure the Cash Flows from the DC Plans to the IRA are what is driving this increase.
The DC Plans are the best method for accumulation effort because the annual limit is higher, and the employee finds the automatic withhold so easy.
But once the employee must leave his employer it is generally accepted the IRA is the best option.
The only time this would not be case would be when the former employee is age 55 or older when they separate from the CD Plan sponsor.
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Mon Nov 26, 2012 9:31 pm |
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oldguy
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quote:
Here is a link to the report,
Thank you.
Inn Fig 1, why does ICI separate the 401/403/457 categories from the IRA? Aren't they all DC? That would mean that the DC category is over $10B, more than half of the $18B retirement funds.
quote:
This means that the IRA business will continue to grow. So, organizations that are not focused on this business are missing out on revenue, particularly organizations that are involved in processing or servicing retirement plans. Having an IRA strategy is simply good business and can help organizations replace revenue currently lost as a result of rollover distributions.
At any rate, I doubt that you can blindly apply recency to the IRA trend and assume that it will continue to grow - that seldom works. The IRA Rollover activity, as a result of unemployment, may well be drying up. The unemployment rate may remain high but the wave of new cash-outs may be over.
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Mon Nov 26, 2012 11:27 pm |
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