The Investment Company Institute (ICI) recently surveyed more than 9,000 adults to learn more about the characteristics and activities of those with IRA accounts, says Money Talks News’ recent article entitled, “3 Ways Retirees Are Spending Their IRA Savings.”
As part of the survey, ICI looked at what retiree households —those in which the head of household or spouse has retired from their lifetime occupation — do with the money they take out of their traditional IRAs.
Here’s what they said:
- Reinvest or save it in another account. Almost half (44%) of retiree households used a traditional IRA withdrawal. It can be tough to stop when you have spent year after year scrimping and saving for retirement. Maybe that’s why so many people withdraw funds from their IRA and put the cash right back to work.
- Pay for living expenses. Thirty-seven percent of retiree households said that they used a traditional IRA withdrawal for this purpose. The whole point of building a nest egg is to make sure you have enough money to pay the bills in retirement, and for many of the survey respondents, paying for living expenses is the primary reason they tap their IRA.
- Buy, repair, or remodel a home. About 15% of retiree households said that they used a traditional IRA withdrawal for this purpose. In addition, retirees often tap an IRA to spruce up their homes. While this might sound surprising, it shouldn’t be because housing is the No. 1 expense most people face during their golden years.
Here are some other common reasons why retirees use their IRAs, according to the survey:
- Some other purpose: 12%
- Spent it on a car, boat, or big-ticket item other than a home: 6%
- Used it for an emergency: 5%
- Spent it on a health care expense: 4%
- Paid for education: 1%
Reference: Money Talks News (February 25, 2023) “3 Ways Retirees Are Spending Their IRA Savings”