Roth IRA owners can keep a good thing going

December 2016

One big advantage of a Roth IRA compared with a traditional IRA is that contributions can be withdrawn at any time without incurring taxes or penalties. This makes it ideal for investors who are beginning to build wealth. Young investors can contribute even before they have a separate emergency fund, knowing that contributions can be withdrawn if needed. Fortunately, however, Roth IRA owners seem more interested in building assets than using them. Read the article | Download a copy PDF

Another way to diversify

April 2016

When investing for retirement, investors can benefit from having different types of retirement accounts. Roth IRA contributions, unlike those of traditional IRAs, offer no immediate tax deduction but provide tax-free earnings and withdrawals. In 2015, more than $2 of every $3 contributed to a Vanguard IRA went into a Roth. Another way to increase tax diversification: Roth conversions. Investors who retire with traditional IRAs sometimes take advantage of their lower tax rates to make partial Roth conversions before age 70½, when Required Minimum Distributions (RMDs) begin. Read the article | Download a copy PDF

Are you an IRA superstar?

March 2016

An IRA superstar never misses a chance to contribute. Taking full advantage of an IRA means making a contribution every year without fail. An IRA superstar contributes the maximum. Making the most of your IRA means contributing not only each year, but also as much as you can. An IRA superstar doesn’t procrastinate. To really maximize the tax advantages of an IRA, it is best to contribute early in the year. Read the article | Download a copy PDF

IRA investors avoiding the panic button

January 2016

Large asset allocation changes are rare among Vanguard investors with most not making drastic portfolio allocation changes. They generally stick to their plan. In fact, fewer than 1 in 4 investors who owned Vanguard IRAs continuously from 2007 through September 2015 ever made a change that altered the stock allocation in the IRA by more than 20 percentage points in a single month. Read the article | Download a copy PDF

Is your IRA a globe-trotter?

October 2015

“Home bias” refers to the tendency of investors to favor investments from their own country. However, like investors the world over who can benefit from owning stocks outside their country of residence, most U.S. stock investors should take advantage of the diversification benefits of holding foreign-company stocks. As the relative market capitalization of international stocks has expanded, and costs of international investing have declined, Vanguard has recommended increased international exposure. Read the article | Download a copy PDF

Theory versus reality: Gliding into retirement

July 2015

The concept of a retirement “glide path” refers to a set of asset allocations followed by investors over a lifetime to try to reach their goals. On the path, an investor generally moves from allocations focused primarily on stocks to those focused more on bonds. The idea of moving from more risky to less risky assets as one approaches retirement is a key principle of Vanguard Target Retirement Funds. But how do actual IRA investors “glide” to retirement? To find out, we studied the allocations of more than 3.3 million Vanguard IRA® investors. Read the article | Download a copy PDF

Location, location, location

March 2015

To maximize IRAs, investors should consider “asset location.” This means holding tax-inefficient investments in IRAs, while keeping tax-efficient investments in taxable accounts. Our research shows that active equity funds are also a good choice to include in IRAs and some IRA investors may have opportunities for tax savings. Read the article | Download a copy PDF

Finding balance

January 2015

Nearly 40% of Vanguard IRA® investors own a balanced fund in their IRA, with younger investors, especially, drawn to these funds. Our research shows that holding balanced funds may help& investors avoid the trap of ‘extreme’ allocations. Read the article | Download a copy PDF

The benefits of a “backdoor” Roth

November 2014

Higher-income investors who want access to Roth IRAs may need to use the back door. Each year, more Vanguard investors make backdoor contributions. Over time, the tax benefit should prove well worth the additional step. Read the article | Download a copy PDF

A tale of three birth years

October 2014

At first glance, “millennial” IRA investors seem to have considerable catching-up to do. However, each year more millennials are opening IRAs. Millennial IRA owners are also more likely to make a contribution. If average balance and cash-flow patterns continue, millennials are on pace to surpass prior generations. Read the article | Download a copy PDF

But what if I don’t want my RMD?

September 2014

Retirees who need income from their investment portfolios should start by spending their required minimum distributions (RMDs). However, investors are not actually required to spend what they withdraw. Investors who don’t need to spend their RMD should consider converting traditional IRAs to Roth IRAs before age 70½. Read the article | Download a copy PDF

IRA contribution report: How do you compare?

September 2014

In 2013, average contribution amounts to Vanguard IRAs increased for the fifth consecutive year, and more investors contributed to an IRA than ever before. Much of this growth can be attributed to the 2013 contribution increase, which meant that everyone who contributed the maximum amount contributed more than they did in 2012. Read the article | Download a copy PDF

Now is the time to graduate to an IRA

May 2014

Helping your graduate find an IRA can ensure he or she doesn’t miss out on “prime saving years.” Because of compounding, every dollar contributed at age 20 can earn more than twice as much as a dollar contributed at age 35, and more than ten times as much as one contributed at age 55. Read the article | Download a copy PDF

Are investors breaking from the traditional?

April 2014

Vanguard investors favor Roth IRAs over traditional IRAs when making contributions by a margin or 2 to 1. The ratio is even more lopsided for younger investors. One reason for the preference is Roth IRA contributions can be worth more in retirement as investors are allowed to contribute more on an after-tax basis. Over time, these savings can add up. Read the article | Download a copy PDF

Take it to the limit . . . one more time

March 2014

More than half of Vanguard investors who contribute to an IRA save the maximum amount allowable. As investors age more contribute the maximum allowed. Research has shown that the number of investors who contribute the max amount drops when investors reach 50. It’s likely that investors don’t immediately recognize that when they hit age 50 they’re eligible to increase their annual contribution by $1,000. Read the article | Download a copy PDF

Are investors subjecting themselves to the “procrastination penalty”?

February 2014

More than double the amount of IRA contributions are made shortly before the deadline. Waiting until the last minute to make your annual contribution has a cost as missing out on a year’s worth of tax-advantaged compounding is like paying a “procrastination penalty.” Investors would be better served by making smaller, regular contributions, or by setting up automatic contributions. Read the article | Download a copy PDF

Do contribution deadlines lead to poor investment decisions?

January 2014

Between January and April the percentage of IRA contributions to money market funds increases as investors are under time constraints to make their annual contribution for the prior tax year. While investors know they need to make a contribution, they often park it in a money market fund because they haven’t decided where they want to invest the money. That “temporary” investment becomes permanent for many investors as two-thirds of last minute contributions remained in money market funds four months later. Read the article | Download a copy PDF


All investing is subject to risk, including the possible loss of the money you invest.

Diversification does not ensure a profit or protect against a loss.

When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.

We recommend that you consult a tax or financial advisor about your individual situation.