October 22, 2013

Only About 2% of Retirement Assets Are Held in Roth IRAs

If you read all the personal finance sites and blogs like I do you'd get the impression that everyone and anyone has a Roth IRA and that they're a really big deal.   Well not so much in reality.  

A little under 2% of all retirement funds are held in Roth IRAs.

I figured that from data in the EBRI issue brief titled IRA Balances and Contributions: An Overview of the EBRI IRA Database.   The data in the report is for 2008 so its a little dated, but I'm assuming the mix of moneys in retirement accounts hasn't changed drastically.

First I jump forward to Box Figure A in the report that shows that about $13.3 trillion was held in retirement accounts and 26.8% of that or $3.6T is in IRAs or Keoghs. 

Next look at Figure 1 in the report that breaks down the % of different kinds of IRA accounts people have.

Here is are those #'s :



Now you might be tempted to think that if IRAs are 26.8% of retirement and 23.4% of IRAs are Roths that would mean that 26.8% x 23.4% of retirement funds are in Roths.   But thats not the case because the average balance in a Roth is actually much lower than the average balance in other IRAs.

The average balance by IRA account type out of Figure 3 in the report are :


You can see the Roths hold the smallest balances.

Roths account for just under 6% of the total money in IRAs.    And as IRAs are 26.8% of all retirement funds then that means that Roths hold about 1.6% of all retirement money.

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1 comment:

  1. Interesting find here, as like you said almost every financial site or personal finance blog is always pushing to use a Roth IRA. Who would have thought the % was so low? I currently contribute to my normal 401k up to employer match and then max out my Roth IRA so I have a balance of tax deferred and tax free accounts.

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