Fed Data Shows Fewer Own DC Plan Accounts

EBRI finds the percentage of all families with an individual account retirement plan, such as a 401(k) plan or an IRA, has decreased.

The share of families with an individual account retirement plan is ticking down, but the assets in those plans are going up, according to a new analysis by the Employee Benefit Research Institute (EBRI).

The percentage of all families with plans such as a 401(k) plan or an individual retirement account (IRA) decreased from 52.8% in 2001 to 48.2% in 2013, based on the most recent data from the 2013 Survey of Consumer Finances (SCF) from the Federal Reserve. Retirement plan ownership from a current employer among families declined from 2010 to 2013, but the percentage of family heads who were eligible for defined contribution (DC) plans and chose to participate held essentially stable at 78.2% in 2010 to 78.7% in 2013.

According to the EBRI report, the percentage of families owning IRAs or Keoghs was unchanged from 2010 (28.0%) to 2013 (28.1%). But, the percentage of families with an individual account retirement plan from a current employer or a previous employer or an IRA/Keogh declined from 50.4% in 2010 to 48.2% in 2013. However, when including defined benefit (DB) retirement plans, the percentage with any retirement plan was unchanged from 63.8% in 2010 to 63.5% in 2013.

While ownership of individual account retirement plans was declining, the median (mid-point) account balance of families owning an individual account retirement plan increased. The value was $35,456 in 2001 and had reached $59,000 by 2013.

“For many families, individual account retirement plan savings constitute most of whatever financial assets they have,” says Craig Copeland, senior research associate at EBRI and author of the report. “Looking at these accounts is key to understanding how well—or poorly—people are preparing for retirement.”

Among families owning such plans, the EBRI report notes, individual account retirement plan assets were a clear majority of their total financial assets: 70.3% in 2013 at the median, the same share as in 2010. Across all demographic groups, these assets accounted for at least 49.2% of median total financial assets (when these accounts were owned).

Copeland adds that results of this study do not answer questions about what is needed for a successful retirement, but they do show the continued growing importance of individual account retirement plans. “Consequently, any policy that alters this system could have consequences—either positive or negative—for Americans’ ability to fund a comfortable retirement,” he says.

The full report, “Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances,” is published in the November EBRI Issue Brief and is available online at www.ebri.org.