According to an EBRI report, those older, having higher
account balances, or owning a traditional IRA that originated as a rollover
had, on average, lower allocations to equities, according to the report, which
notes that as account balances increased, the percentages of assets in equities
(i.e., direct ownership, mutual funds, etc.) and balanced funds (including
target-date funds) combined decreased, while bond (i.e., direct ownership,
mutual funds, etc.) and “other” (i.e., real estate, annuities, etc.) assets’
shares increased.
Equity allocations for the youngest IRA owners (younger
than age 35) with small account balances were the lowest across the age
groups. However, when balances reached $10,000 or more, younger IRA owners had
significant increases in equity allocations, such that those ages 25 to 34 with
the largest account balances had the largest equity allocation.
“Those under age 45 were much more likely to use balanced
funds than were older IRA owners, and those under age 35 with balances less
than $25,000 had particularly higher allocations to balanced funds,” noted
Craig Copeland, EBRI senior research associate and author of the report. “This
shift follows the standard investing ‘rule of thumb’ that individuals should
reduce their allocation to assets with high variability in returns (equities)
as they age.”
Roth IRAs had the highest share of assets in equities
(59.1%) and balanced funds (15.5%). Traditional-originating from rollovers IRAs
had the lowest percentage in equities (at 41.3%), but also had the highest
percentage of assets in money (12.8%) and the highest percentage in bonds. Roth
IRA owners were also much more likely to have 90% or more of their account
invested in equities than owners of the other IRA types. IRA owners who also
were ages 35 to 44 or had account balances of less than $10,000 were more
likely to have extreme allocations (more than 90%) to equities.
Overall, as of year-end 2010, about 46% of total IRA assets
were in equities, 20% in bonds, 11% in balanced funds, 9% in money and 15% in
“other” investments.
These and other findings come from the latest update of the
EBRI IRA Database, an ongoing project by EBRI that currently contains
information about 14.85 million accounts of 11.1 million unique individuals
with total assets of $1.002 trillion, as of year-end 2010. Full results are
published in the October 2012 EBRI Notes at www.ebri.org.