The MarketsMarch 28, 2014

Retirement Assets Totaled $23T at Year-End 2013

Total U.S. retirement assets reached $23 trillion at year-end 2013, growing 15.6% during the year, according to an analysis from the Investment Company Institute (ICI).

Reported by John Manganaro

Retirement savings accounted for 34% of all household financial assets in the United States at the end of the fourth quarter of 2013, the ICI says.

Assets in individual retirement accounts (IRAs) totaled $6.5 trillion at the end of the fourth quarter of 2013, an increase of 5.3% from the end of the third quarter and up about $600 billion, or 10.7%, from year-end 2012.

Defined contribution (DC) plan assets rose at a slightly lesser rate (5.1%) in the fourth quarter, reaching $5.9 trillion by the end of December 2013. DC plan assets started the year at about $5 trillion, implying an annual growth rate close to 18%.

Government pension plans—including federal, state and local government plans—held $5.6 trillion in assets as of the end of December 2013, a 5.6% increase from the end of September 2013 and a growth of about $700 billion (14.3%) from the beginning of the year.

Private-sector defined benefit (DB) plans held $3.0 trillion in assets at the end of the fourth quarter of 2013, and annuity reserves outside of retirement accounts accounted for another $2.0 trillion. Both of these retirement savings environments showed relatively muted growth for the year, with annuity reserves gaining about $200 billion and private DB plans pulling in $300 billion.

Mutual Funds Still Favored

The ICI finds Americans held $5.9 trillion in all employer-based DC retirement plans on December 31, 2013, of which $4.2 trillion was held in 401(k) plans. Those figures are up from $5.6 trillion and $4.0 trillion, respectively, as of September 30, 2013. Mutual funds managed $3.5 trillion, or 60%, of assets held in 401(k), 403(b), and other DC plans at the end of December 2013.

IRAs held $6.5 trillion in assets at the end of the fourth quarter of 2013, up from $6.2 trillion at the end of the third quarter of 2013. Forty-five percent of IRA assets, or $3.0 trillion, are invested in mutual funds.

As of December 31, 2013, target-date mutual fund assets totaled $618 billion, an increase of 7.9% in the fourth quarter. Retirement accounts held the bulk of target-date fund (TDF) assets; in fact about 90% of target-date mutual fund assets are held through DC plans and IRAs, the ICI says.

The ICI’s full analysis is available here.