Employee Benefit Research Institute (EBRI) said that was the largest annual asset decrease since IRAs came into being more than 20 years ago.
The EBRI research said that assets held in bank accounts or with life insurance companies, however, increased from 1999 to 2001. IRAs now account for the largest share (22%) of the $10.6 trillion in total US retirement assets.
More than 17% of Americans 21 year old or older, including nearly 21% of retirees, now own IRAs. This statistic grew steadily from 1996 to 2000 and correlates with family income, educational level, and age, the research said.
IRA growth has been fueled by rollovers of assets from other types of retirement plans as well as investment gains. Most IRA owners don’t make a contribution in a given year, although those who do contribute tend to save the maximum allowable.
Some highlight trends from the EBRI research:
- Total IRA assets increased annually between 1981 and 1999, not increasing by double digits only in 1994. IRA assets experienced their first two years of declines in 2000 and 2001.
- The portion of IRA assets in bank accounts fell steadily between 1982 and 1999, from 71.2% to 9.6%. Since 1999, it rebounded to 10.6%.
- IRA investments in mutual funds and brokerage accounts mirrors this trend, reaching a high of 80.8% in 1999. In 2001, 47% of assets were in mutual funds (down from a high of 48% in 1999) and brokerage accounts slipped to 32.1% (down from 32.8% in 1999).
- Nearly 22% of those who made a tax-deductible contribution in 1998 also made one in 1996 and 1997 and 51% contributed in one of those two years.