IRA SPENDDOWN. Craig Copeland, EBRI EBRI Policy Forum December 13, 2018

Transcription

1 IRA SPENDDOWN Craig Copeland, EBRI EBRI Policy Forum December 13, 2018

2 EBRI IRA DATABASE Annual data from Cross sectional and longitudinal data (accounts are linked across years for those that remain in the database) Account and individual level (link multiple accounts of an individual) In 2016, the database included 24.2 million accounts for 19.1 million individuals with assets of $2.36 trillion Compares closely to Internal Revenue Service (IRS) tabulations EBRI IRA Database 2016 Internal Revenue Service 2015 Data Total Assets $2.36 trillion $7.48 trillion Percentage Traditional Assets 85.0% 85.4% Average Rollover Amount $94,238 $94,535 Average Account Balance $123,973 $127,980 Average Traditional Contribution $4,154 $4,153 Average Traditional Withdrawal $17,237 $15,949 Employee Benefit Research Institute

3 EBRI IRA Database 2016 Internal Revenue Service 2015 Data Age Under % 1.4% or older Unknown Type Traditional SEP/SIMPLE Roth Based on an asset comparison with the Federal Reserve s Financial Accounts report 2016 number of $8.08 trillion, the database includes about 27 percent of the 2016 assets. The number of individuals owning IRAs in the database (19.1 million) represents about onethird of all IRA owners, given the 58.4 million individuals the Internal Revenue Service reported owning an IRA in Employee Benefit Research Institute

4 VARIABLES IRA Types Account balances Contributions Rollovers Withdrawals Asset Allocation Age Gender Employee Benefit Research Institute

5 GOALS OF THIS PRESENTATION Examine the spenddown of IRAs through balance changes and withdrawal rates Determine the percentage of IRAs in 2012 that still have positive balances in By ages 60 or older Calculate the percentage of accounts that decrease and increase from By ages 60 or older Show withdrawal rates of those ages 71 or older Compare IRA Database results to HRS results Employee Benefit Research Institute

6 IRAs Owned by Those Ages 60 or Older What Happens to Them From 2012 to 2015? Closed? Decreased Balances? Increased Balances? Employee Benefit Research Institute

7 PERCENTAGE OF IRAS OWNED BY THOSE AGES 60 OR OLDER IN 2012 THAT STILL HAVE A POSITIVE BALANCE IN 2015, BY OWNER AGE 100% 90% 80% Positive Balance in % 62.8% Accounts That Went to Zero in % 50% 80.8% 81.9% 81.8% 83.5% 78.9% Accounts That Went to Zero in % 30% 11.2% Accounts That Went to Zero in % 10% 0% 12.5% 5.4% 4.8% 4.9% 6.4% 4.8% 6.9% 6.6% 6.6% 5.9% 7.4% 13.3% 6.9% 6.6% 6.6% 5.8% 7.2% All Source: EBRI IRA Database. Employee Benefit Research Institute

8 PERCENTAGE OF ACCOUNTS OWNED BY THOSE AGES 60 OR OLDER THAT WENT TO ZERO OR HAD A DECREASE IN THEIR ACCOUNT BALANCE FROM 2012 TO 2015, BY OWNER AGE 100% 90% 80% 70% 45.0% 35.0% 41.3% 50.8% 59.0% 60% 76.9% 50% 40% 30% 20% 55.0% 65.0% 58.8% 49.2% 41.0% 10% 23.1% 0% All No Decrease Total Decrease (Goes to Zero + Balance Decrease) Source: EBRI IRA Database. Employee Benefit Research Institute

9 IRAs Owned by Those Ages 60 or Older, by Account Balance Employee Benefit Research Institute

10 PERCENTAGE OF IRAS OWNED BY THOSE AGES 60 OR OLDER IN 2012 THAT STILL HAVE A POSITIVE BALANCE IN 2015, BY ACCOUNT BALANCE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 69.2% 74.5% 77.5% 80.5% 82.4% 83.2% 83.7% 84.7% 86.9% 6.9% 6.5% 9.8% 6.3% 8.7% 5.7% 7.9% 5.2% 4.9% 4.8% 7.1% 4.5% 13.9% 6.4% 6.2% 6.0% 3.9% 10.2% 5.8% 8.2% 5.1% 6.7% 5.8% 5.6% 5.4% 5.0% 4.0% Positive Balance in 2015 Accounts That Went to Zero in 2015 Accounts That Went to Zero in 2014 Accounts That Went to Zero in 2013 Source: EBRI IRA Database. Employee Benefit Research Institute

11 PERCENTAGE OF ACCOUNTS OWNED BY THOSE AGES 60 OR OLDER THAT WENT TO ZERO OR HAD A DECREASE IN THEIR ACCOUNT BALANCE FROM 2012 TO 2015, BY ACCOUNT BALANCE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 48.9% 43.2% 44.1% 44.2% 43.9% 44.9% 45.9% 46.3% 44.9% 51.1% 56.8% 55.9% 55.8% 56.1% 55.1% 54.1% 53.7% 55.1% No Decrease Total Decrease (Goes to Zero + Balance Decrease) Source: EBRI IRA Database. Employee Benefit Research Institute

12 Traditional IRA Owners Ages 71 or Older Withdrawal Rates Geometric means by age? Employee Benefit Research Institute

13 12% 10% DISTRIBUTION OF THE GEOMETRIC MEAN OF WITHDRAWAL RATES BY TRADITIONAL IRA OWNERS 71 OR OLDER IN 2010 WHO TOOK A WITHDRAWAL IN EACH YEAR , BY OWNER AGE All or Older 9.9% 8% 6% 4% 4.5% 4.0% 4.7% 5.8% 7.5% 5.5% 4.4% 5.2% 6.4% 8.3% 7.6% 6.7% 6.6% 7.4% 2% 0% 25th Percentile Median 75th Percentile Source: EBRI IRA Database. Employee Benefit Research Institute

14 COMPARISON BETWEEN HRS AND EBRI IRA DATABASE ARE THE RESULTS CONSISTENT IN THE INITIAL YEARS? Employee Benefit Research Institute

15 Retirement age HRS-when they stop working Database-anyone 65 or older DETAILS OF COMPARISON Percentage of Initial Balance 3 to 4 Years Later IRA Database sample which includes accounts that go to zero (or closed) Not the sample as that only includes the accounts that have a positive balance each year from , so biases the results upwards (more accounts will be in the higher percentage of initial balance categories since the zeros are not included) Rollovers included in IRA Database as HRS allows for rollovers to be added to assets as well Employee Benefit Research Institute

16 DISTRIBUTION OF THE PERCENTAGE OF INITIAL ASSETS THAT THESE ASSE TS REPRESENT 3 TO 4 YEARS AFTER RETIREMENT, BY INITIAL ASSET AMOUNT 100% 90% 80% 70% 41% 50% 48% 49% 50% 53% 60% 50% 40% 30% 20% 10% 0% 11% 14% 17% 19% 17% 26% 27% 6% 14% 3% 17% 7% 19% 2% 5% 20% 24% 1% 10% 16% 9% 14% 6% 5% HRS IRA Database HRS IRA Database HRS IRA Database <$200,000 $200,000-$499,999 $500,000 or more <20% 20%-49% 50%-79% 80%-100% 100% or more Source: EBRI IRA Database and EBRI Issue Brief, no. 447 (April 3, 2018). Employee Benefit Research Institute

17 Appendix Percentage Change in Balances of Those Still Positive in 2015, by Age Employee Benefit Research Institute 2018 COPYRIGHT

18 DISTRIBUTION OF ACCOUNT BALANCE CHANGES FROM 2012 TO 2015 FOR AC COUNTS THAT STILL HAVE POSITIVE BALANCES IN 2015, BY AGE OF ACCOUNT OWN ER 50% 40% % 30% 25.0% 20% 10% 13.9% 4.4% 9.3% 0% -10% -2.6% -9.3% -8.9% -20% -30% -21.5% 25th Percentile Median 75th Percentile Source: EBRI IRA Database. Employee Benefit Research Institute

19 TH STREET NW WASHINGTON, D.C