More American families with a retirement plan at work are invested in a 401(k), while ownership of individual retirement accounts (IRAs) is declining, according to a recent report by the Employee Benefit Research Institute (EBRI), a non-partisan organization.
The share of American families with a member in any employment-based retirement plan from a current employer increased from 38.8 percent in 1992 to 40.6 percent in 2007, before declining in 2010 to 37.9 percent.
Ownership of 401(k)-type plans among these families doubled from 31.6 percent in 1992 to 79.5 percent in 2007, and increased again in 2010 to 82.1 percent. Meanwhile, the percentage of families owning an IRA or Keogh retirement plan (for the self-employed) declined from 30.6 percent in 2007 to 28.0 percent in 2010.
Retirement plan assets account for a growing majority of most Americans’financial wealth, outside the value of their home, EBRI found. Defined contribution plan balances accounted for 58.1 percent of families’ total financial assets in2007, and that share grew to 61.4 percent in 2010.
Retirement readiness remains an upmost concern. EBRI research finds that many people are unlikely to afford a comfortable retirement. “Americans lost a tremendous amount of wealth between 2007 and 2010, and the percentage of families that participated in an employment-based retirement plan and/or owned an IRA decreased as well,” Craig Copeland, EBRI senior research associated and author of the report, said in a statement.
On the plus side, he added, the percentage of eligible family heads who actually participated in a defined contribution plan remained virtually unchanged during this time.
Among total IRA assets, rollover IRAs account for 44.5 percent of assets, regular IRAs 44.1 percent, and Roth IRAs 11.4 percent. Therefore, rollover IRAs account for a larger share of assets than regular IRAs, while the two together account for just under 90 percent of the IRA assets. “The report notes that tracking individual-account retirement plans such as 401(k)s and IRAs is important because traditional defined benefit pension plans have long been declining in the private sector, while\defined contribution retirement plans have increased—a trend that makes it ever-more important for most private-sector workers to build their retirement wealth through individual-account savings plans,” the organization cautioned.
A recent American Association of Retired Persons (AARP) survey found that just over three-quarters (77 percent) of older Americans continue to work for access to a 401(k) or other type of retirement plan.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.