Research by the Employee Benefit Research Institute found that 22% of working-age Americans own a 401(k) account and have an average balance of just over $53,600, according to 1999 data recently released by the US Census Bureau.
By comparison, about 15% of working-age Americans own an IRA and have an average of balance of just over $33,000. Overall, about one-third of all Americans have a 401(k), IRA, or both, EBRI said.
The article notes that retirees’ income sources are projected to continue shifting away from traditional defined benefit pension plans to defined contribution retirement plans — predominantly the 401(k)-type plans.
Not only that but IRAs, when funded through rollovers after a job change, have become the primary vehicle for holding assets originally accumulated in defined benefit plans and defined contribution plans such as 401(k)s, the article notes.
Among the report’s findings:
- IRA owners have contributed to their accounts on average for 7.6 years, while 401(k) participants have contributed to their plans on average for 6.5 years.
- Ownership of both types of plans increases generally with monthly individual income and education. Furthermore, male, working, white, and married individuals are the most likely to own either type of these accounts.
- Among Americans ages 21-64 during the period from November 1998 to February 1999, 9.6% owned only an IRA, 16.5% owned only a 401(k) plan, and 5.8% owned both an IRA and a 401(k) plan. The remaining 68.1% owned neither type of plan.
The June issue of EBRI Notes, IRA and 401(k)-Type Plan Ownership, examines the status of retirement preparation of all Americans ages 21-64 by determining the extent of their IRA and 401(k) ownership from November 1998 to February 1999.
The research is based on the Census Bureau’s Survey of Income and Program Participation (SIPP) data.