The 60-Plus Group Holds Nearly $6.5T In IRA Assets

June 2018, Boston. New research from Cerulli Associates, a global research and consulting firm, finds that individual retirement account (IRA) assets surpassed $9 trillion in 2017. Notably, 70% of those assets are held by individuals age 60 and older.

"A significant driver of IRA asset growth is rollover activity from defined contribution (DC) plans, especially for the age 60 and older cohort," states Dan Cook, analyst at Cerulli.

"As investors approach retirement, and transition into this life stage, their financial focus shifts from accumulating assets to drawing down assets to generate retirement income," says Cook. "This draw-down phase is far more complex than the accumulation phase as retirees often rely on a mosaic of sources, such as IRA savings, 401(k) savings, and Social Security, for retirement income."

"An investor's draw-down strategy can have significant implications for taxes, duration of income, and, ultimately, lifestyle in retirement," continues Cook. "Given the idiosyncratic nature of retirement income planning, investors generally require the assistance of a financial professional. However, some financial advisors are not necessarily well versed on nuanced topics such as Social Security claiming strategy or healthcare expenses."

"Asset managers and IRA providers can create value by providing thought leadership content and/or planning tools that help financial advisors meet the needs of investors age 60 and older," says Cook. "Given the substantial amount of IRA assets held by investors near retirement or in retirement, income planning will become an increasingly important topic going forward."

Cerulli's latest report, U.S. Retirement End-Investor 2018: IRA Owners and 401(k) Plan Participants, contains the results of Cerulli's new IRA Owners Survey, which polls more than 1,000 IRA owners, including both active employees and retirees. The new survey addresses IRA owners' decision-making processes regarding investment selection, their use of financial advisors, and broader strategies in preparing for retirement. The report also features Cerulli's age-based IRA market sizing, which provides a breakout of assets and account ownership by age-range. Cerulli rounds out its coverage of end-investors in the retirement market with findings from its 401(k) Plan Participant Survey and comprehensive analysis of opportunities in the IRA rollover market.