Having Both a 401(k) Plan & an IRA Changes the Retirement Picture
Robert Powell, CFP®
A new EBRI study finds that individuals maintaining both a 401(k) and an individual retirement account (IRA) have combined assets that are, on average, about 2.5 times larger than the average 401(k) balance and a median combined balance that is approximately 3.5 times the median 401(k) balance.
The Issue Brief, “Having Both a 401(k) Plan and an IRA: How Much Does This Change the Retirement Asset Picture?,” combines two unique datasets: the EBRI/ICI 401(k) Database of 27 million plan participants and the EBRI IRA database of 19 million account holders. This provides a rare perspective on the relative amount of assets held by those having both account types, allowing for a more accurate picture of the total retirement assets of Americans, the interactions between the two account types, and potential leakage within the retirement system.
Having Both a 401(k) Plan and an IRA: How Much Does This Change the Retirement Asset Picture?
Oftentimes, reporting on retirement assets focuses on the average balances of either 401(k) plans or individual retirement accounts (IRAs). While this provides invaluable information on the behavior within those accounts, it does not show a complete picture of the amount of retirement assets workers or retirees have accumulated. Many individuals hold both 401(k) plans and IRAs — especially as they grow older and move from job to job. This Issue Brief combines the EBRI/ICI 401(k) Database of 27 million plan participants with the EBRI IRA Database of 19 million accountholders to provide a unique perspective on the relative amount of assets held by those having both account types. This allows for a more accurate picture of total retirement assets across individuals. Key findings include: