Withdrawal rates from IRAs by retirees required to draw from their accounts shows that most are doing so at a rate that will preserve their savings throughout retirement, according to the Employee Benefits Research Institute.
The EBRI analyzed withdrawal patterns between 2010 and 2012. As retirees hit age 70 ½ and are required to take minimum distributions, they are tending to do so at rate consistent with their initial withdrawal amount, it found.
Over the three-year period, the average withdrawal rate for those required to make distributions was 5.1 percent, the EBRI said.
Just under 21 percent of traditional and Roth IRAs had a withdrawal in 2012: 24.3 percent of traditional accounts had a withdrawal, compared to 3.6 percent of Roth accounts.
Those age 65 or older accounted for 65.4 percent of the withdrawals. Just over half were made be those 71 and older.
About 11 percent of withdrawals were made by account holders younger than 50, likely due to financial hardship, the EBRI said.
Among owners of Roth IRAs, 44 percent of withdrawals were made by those under 50, and only 9.8 percent were made by those age 71 or older.
About 35 percent of withdrawals from Roth IRAs were from accounts with less than $10,000.
“Median withdrawal rates are encouraging in that they suggest that many individuals would be able to maintain the IRA as an ongoing source of income throughout retirement,” said Craig Copland, the report’s author.
Copeland cautioned that while the organization’s findings were positive, a wider time frame needs to be reviewed before firmer conclusions can be drawn on IRAs’ sustainability throughout retirement.