Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Stop the Presses! Good News for IRA Savers

Don't Miss Out —
Follow us on:

Here's welcome news on the retirement savings front, courtesy of Fidelity Investments. Average balances on IRA saving accounts Fidelity administers reached over $81,000 at the end of 2012, a 53 percent increase from the end of 2008. Fidelity is the top provider of IRAs to U.S. investors, according to a Cerulli Associates survey.

The news was even better for older folks. Those in the 60-to-69 age bracket saw their balances rise 70 percent, to $127,800 from $75,000. It was up 81 percent for those ages 50 to 59, to $75,700 from $41,900.

Slideshow: Enclaves of the Rich and Ready for Retirement

The rising market of the last several years was a big help. The Standard & Poor's 500 Index rose 66 percent with dividends reinvested over the three years ended June 28, according to Bloomberg data.

The results are a rare bright spot amid the constant drumbeat of reports about how woefully unprepared Americans are financially for retirement. They also reinforce the mantra that consistent saving with a long-term horizon can pay off. You can contribute as much as $5,500 a year to your IRA, $6,500 if you're over 50. The average IRA contribution in Fidelity's analysis was $3,920 in 2012, so savers have a ways to go before hitting their annual contribution limit.

Slideshow: Golf Carts to Island Divorces: 10 Notorious Tax Loopholes

Fidelity also offered some stats on conversions from traditional IRAs to Roth IRAs. In a Roth, you pay the tax up front in exchange for tax-free gains forever. In 2012, Roth IRA conversions increased 12 percent year over year among the nearly seven million individual IRAs analyzed by Fidelity; in December, conversions jumped 52 percent in just one month, compared with the same period in 2011.

While some financial planners say Roth IRAs are a no-brainer, the rightchoice depends on factors including your age at the time you convert and your expected tax bracket in retirement. As Fidelity vice president Ken Hevert said in a press release about the analysis, "a Roth IRA also offers additional flexibility on when to take distributions since the accounts are not subject to required distributions at age 70 ½."



Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.