Individual Account Retirement Plans

The Total Individual Account Retirement Plan Assets, by demographics, was the subject of a 2010 study by Craig Copeland and published by the Employee Benefit Research Institute.

It highlights the fact that your participation in an employment-based arrangement retirement plan is a crucial factor to ensure that your retirement provision is adequate to cover your expenses in retirement.

The study concludes that individual account plan assets are mainly held by higher net worth families with a higher family income, and a higher education level. Interestingly, assets in general are concentrated in this same group.

It found that the individuals in this group are more likely to be offered an employment-based retirement plan. The assumption is made that individuals in this group find it easier to save for retirement due to the automatic savings created by the plan. Consequently, these assets have grown significantly for this group.

It was also concluded that for those employees with fewer assets, but participating in these plans, these retirement plans have been effective in helping them accumulate assets they otherwise may not have been able to save without these plans.

In future retirees will probably rely on assets managed by themselves. Fewer employees are participating in a defined benefit pension plan. An increasing number of defined benefit plans offer a lump-sum distribution at retirement, and more employees participate in a defined contribution plan, primarily a 401(k) plan. This trend has had a positive impact, in that many employees who previously had no retirement plan at all now at least have access to a tax-advantaged plan.

On this Web site we have several discussions urging you to participate in a tax-advantaged retirement plan and to contribute as much as allowed by the plan rules. As the above study concludes, such a plan helps you to accumulate assets that otherwise might not have been attainable.

Do visit these discussions on this Web site. Educate yourself. And make sure you understand fully the retirement plans available to you through your employer and/or to you individually. Your retirement future depends on that.

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