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Recalibrating Retirement Spending and Saving$
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John Ameriks and Olivia S. Mitchell

Print publication date: 2008

Print ISBN-13: 9780199549108

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780199549108.001.0001

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The Role of Individual Retirement Accounts in US Retirement Planning

The Role of Individual Retirement Accounts in US Retirement Planning

(p.81) Chapter 5 The Role of Individual Retirement Accounts in US Retirement Planning
Recalibrating Retirement Spending and Saving

Sarah Holden

Brian Reid

Oxford University Press

With the rising importance of individual retirement accounts (IRAs), which now total one-quarter of US retirement assets, public policy has sharpened its focus on how individuals manage those accumulations through work and retirement years. Individuals are required to take distributions from their IRAs after age seventy-and-a-half, while distributions taken prior to age fifty-nine-and-a-half generally incur a ten percent penalty. Previous research has found that IRA owners rarely tapped these assets prior to retirement. This chapter updates results and shows that these patterns continue. Several factors influence the probability of withdrawal (prior to sevent-and-a-half): being younger than sixty lowers the probability of a withdrawal, but being retired, in poor health, or having a home mortgage increases the likelihood of withdrawal.

Keywords:   IRA, tax incentive, retirement saving, withdrawal, assets, distribution, contribution, penalty

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