Retirement Assets Could Hit $22T

Investible retirement assets of U.S. households aged 55+ will nearly double, to $22 trillion by 2020, LIMRA research predicted.

Calling the pool “ a huge opportunity for the financial services industry,” Jafor Iqbal, associate managing director at LIMRA retirement research, said there will be a need to help Americans identify how much income they will need in retirement, develop a plan for investing their portfolio to generate income, while continuing to grow their assets.

In 2010, U.S. households age 55+ held $12 trillion, according to LIMRA analysis of the Survey of Consumers Finances, Federal Reserve Board. Based on U.S. Census projections, the assets held by this cohort will grow to $22 trillion that they will directly invest in products for generating retirement income.

The number of Americans who receive income from an employment-based pension plan is dipping, and many more retirees will have most of their retirement assets invested in retirement plans. The study estimates that almost two-thirds of these assets will be directed toward products that will generate income for them in retirement.

“With such a large demand, advisers may have to provide income product solutions more efficiently,” Iqbal said. “We are witnessing financial services firms changing the structure and business model to accommodate more customer-centric information and process, promoting uniform tools and services across the institutional and retail businesses to capture rollovers, emphasizing smooth transition of assets from the savings in institutional plans to retail side of the business where most retirement income products and solution are typically available.”

These findings are from LIMRA’s Retirement Income Reference Book (RIRB), which was published in December. The RIRB provides a view of the latest LIMRA data, projections and research on retirement income market, and brings together highlights from the various studies that LIMRA has been doing to help companies achieve their strategic business goals in the retirement space.