Here’s some interesting news from the Employee Benefit Research Institute. Not everyone is aware of this, but Americans have more retirement income in IRA accounts ($7.2 trillion) than in 401k accounts ($5.6 trillion). A few years ago EBRI started collecting information about IRA contributions, and they now have enough data to show some trends over the past few years. For starters, more people are putting money in IRAs: 14.1 percent in 2015 compared to 12.1 percent in 2010. And the amount of money they’ve been contributing has gone steadily up:
The basic story is simple: more people are starting IRAs, and the ones who do are contributing more to them. That’s especially true of young people, who are contributing 15-20 percent more than they were just a few years ago.
IRAs tend to be popular with middle-class and upper-middle-class workers, so this doesn’t tell us anything about the retirement prospects of the poor and working class, who rely primarily on Social Security. Still, it’s consistent with the numbers for 401k accounts, which have been used by more people; more young people; and more low-income people ever since the Pension Protection Act passed in 2006.
We still need to make Social Security more generous for the poor and working class, but this data is consistent with the notion that the demise of old-school pensions hasn’t been a disaster. The source of retirement income has changed over the years, but the amount has stayed about the same.