Investment strategies also vary considerably based on the size of the IRA account balance. As account balances increase, the proportion of assets in equities and balanced funds decrease, and allocations to bonds and other types of assets increase. Here's a look at how investment allocation changes as account balances grow:
Less than $25,000 saved. People with less than $25,000 in their IRA account tend to invest it aggressively, with approximately 69 percent invested in equities. Balanced funds are also popular, especially among those with the least savings. For people with less than $10,000 invested in their IRA, 21 percent is in target-date or similar types of funds. Bond allocations are very low (6.9 percent) for people with less than $10,000 saved and 10.1 percent for those with account balances between $10,000 and $24,999. Investors with small balances can make significant progress by boosting their savings rate. "The primary goal as income increases should be to increase the percentage of salary that is being saved," says Trott. "Even though income is increasing, it's extremely important to make sure that they continue to monitor their spending."
$25,000 to $99,999 saved. People with between $25,000 and $49,999 in their IRA continue to have a large allocation to equities (65.2 percent), but that amount drops to 59.8 percent for people with $50,000 to $99,999. The latter group has a higher bond allocation (15.2 percent).
$100,000 to $249,999 saved. The allocation to equities declines as retirement savers accumulate bigger account balances. People with between $100,000 and $149,999 in their IRAs have 55.7 percent of their account balance invested in the stock market, which declines to 52.4 percent among those with $150,000 to $249,999 saved.
$250,000 or more saved. People with $250,000 or more saved for retirement have the most diversified portfolios. They have the smallest proportion (45.7 percent) of their IRA account allocated to equities and the largest proportion invested in bonds (24.2 percent). Relatively affluent retirement savers are the least likely to use balanced funds (7.7 percent). They also have 9.2 percent of their account balance invested in money funds, including money market mutual funds and certificates of deposit. "They are maintaining their balances instead of growing their balances like those who are younger and those with smaller balances," says Copeland.