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How Does Your IRA Balance Compare to Average?

The average IRA balance is just under $100,000, but that number tells you only so much about how you’re doing in comparison.
Dec. 11, 2018
Investing, IRA
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There’s nothing wrong with a little IRA voyeurism, especially if it inspires you to think more critically about how you’re saving for retirement. But it’s also important to recognize what retirement savings averages really tell you — and if they’re even a good measure of how you stack up.

Here are some key figures related to IRAs, along with advice on how you should think about these numbers.

$97,515

That’s the average IRA balance as of 2016, according to the Employee Benefit Research Institute (EBRI). It arrives at that calculation by dividing the total assets saved ($2.36 trillion) by the number of accounts (about 24 million) tracked in its IRA database. But that’s not a true representation of how much the typical IRA owner is sitting on.

$123,973

This amount, which represents the average IRA balance per individual, is more telling. A difference exists here because it’s common for people to have multiple IRAs, whether from doing a 401(k) rollover, from funding both Roth and traditional accounts, or from setting up different accounts at different times during their lives.

$283,200

And here’s what happens after you’ve been at this savings thing for a while. Households that own IRAs that are at least 20 years old have this much in their accounts on average. Naturally, the longer your money has to grow, the higher the balance will be. For comparison, data from the 2016 Investment Company Institute’s IRA Owners Survey shows that the average IRA balance for an account that has been held for less than 10 years is $82,100. Those who’ve had the IRA for 10 to 19 years have an average of $158,300 in the account.

25%

When it comes to adding new money to an existing IRA, savers clearly prefer the Roth. This is the percentage of Roth IRAs in the EBRI database that received new contributions in 2016. By contrast, just 6% of traditional IRAs received new contributions.

It’s not surprising that active savers favor the Roth. The Roth comes with a lot more flexibility than its traditional peer. Roth perks include the ability to withdraw contributions (though not earnings) at any time and for any reason. With a traditional IRA your contributions are locked up until age 59½. Try to cash out before then and you’ll pay an early withdrawal penalty and taxes on nonqualified distributions.

» Trying to choose? See Roth IRAs versus traditional IRAs

Making sense of the numbers

As you review your IRA balances with fresh eyes, keep in mind that the amount someone else has saved isn’t really that instructive unless that person is planning to fund a retirement identical to yours. (For what it’s worth, the average household run by someone age 65 and older spends around $46,000 a year, or $3,800 a month.)

A truer rendering of your retirement readiness will include the entirety of your savings sources — your IRAs, of course, but also your 401(k), pension and any spare change in the couch cushions that you plan to devote to the cause.

Plug those numbers into a retirement calculator and see how much money your savings will provide for you when it’s time to quit the 9-to-5 grind.

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