The economic recovery has resulted in lower unemployment and a rising stock market. Housing sales have perked as well. But one oft-forgotten area has rebounded to post significant year-over-year gains.
According to a new study by Businessweek, IRA balances at a major outlet have jumped by more than 50 percent since the crippling economic lows of 2008. Average balances climbed to approximately $81,000 at the end of 2012, from about $53,000 in 2008.
Obviously, the rise in the stock market played a significant role. IRA accounts are often tied to the market, though different plans can mitigate the risk.
At its lowest depths, the Dow Jones Industrial Average hovered above 6,000 points in 2008, but currently stands above 15,000 points. The NASDAQ fell below 1,300, but has almost tripled in four years. It is still nearly 1,000 points below the historical high set in 2000. The Standard & Poor's 500 has risen by more than 247 percent since its lows around 680 points. It has increased by 32 percent since the start of 2013, suggesting that retirement account balances could be poised for an even bigger 2013.
Given the significant gains in the markets over the past four years, it should come as little surprise that retirement accounts have prospered as well. Somewhat surprising, however, was the financial impact on those closest to retirement.
For individuals in the 60-69 age bracket, IRA balances grew 70 percent to an average of $127,800. People from age 50-59 saw their accounts post even larger percentage point advances, though balances were lower, on average. Their retirement accounts rose 81 percent, from $41,900 to $75,700.
Planning for the future
While the strength of these accounts is impressive, it shows the extreme importance of saving for retirement. It is easy to consult a financial professional to find out what type of retirement account could provide the strongest return. Time deposit IRAs provide set parameters on saving at a potentially higher interest rate, while managed IRAs offer the peace of mind of knowing that a highly trained professional is always there to help.
Choosing the right IRA depends on a variety of factors, including age, interest level and potential contribution. There are also contribution limitations, which vary by age. Consulting with licensed professionals can often provide a clear blueprint.