Data & Research December 18, 2013

Retirement Assets Near $22T in Q3

Total U.S. retirement assets reached $21.7 trillion at the end of September, up 3.9% from the $20.9 trillion measured at the end of the June.
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Asset levels are up $2.1 trillion over the same quarter a year ago, analysis from the Investment Company Institute (ICI) shows, bringing retirement savings to 34% of all household financial assets in the U.S.

Assets in individual retirement accounts (IRAs) totaled $6 trillion at the close of the third quarter, an increase of 4.6% over the previous quarter. For employer-sponsored defined contribution (DC) plans, assets rose 4.4% in the third quarter to $5.6 trillion, according to the ICI.

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Private sector defined benefit (DB) plans ticked up to $2.9 trillion in assets at the end of the third quarter. Government pension plans—including federal, state and local government plans—reached $5.4 trillion in total assets, a 3.7% increase over the previous quarter.

The ICI research shows annuity reserves maintained in outside retirement holdings accounted for $1.9 trillion.  

Breaking down the DC numbers, more than 70% of the $5.6 trillion held in DC plans belonged to 401(k) accounts. Mutual funds managed $3.3 trillion, or 59%, of assets held in 401(k), 403(b) and other DC plans at the end of the third quarter.

For IRAs, 46% of total assets (or $2.8 trillion), belonged to mutual funds at the end of the third quarter.

Another interesting figure included in ICI’s analysis is the $573 billion held in target-date funds (TDFs), an increase of 6.1% since June.  Retirement accounts held the bulk of target-date mutual fund assets—with 89% of TDFs accessed through DC plans and IRAs.

Since the end of the same quarter a year ago, TDF assets are up $113 billion, or about 25%.

Data & Research December 18, 2013

Employees Less Concerned with Finances

Many employees do not consider financial planning a top priority for 2014, according to a new survey.
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The fifth annual New Year’s Resolution Survey from Allianz Life Insurance Company of North America finds only 16% of employees say they will include financial planning in their resolutions for 2014, less than half of the 33% who said they would make financial planning a high priority when making resolutions in 2009. In addition, nearly half (49%) of those surveyed say they are unsure about seeking financial advice in 2014, up from 44% when asked in 2012.

Survey results indicate employees are feeling more financially stable due to shedding bad financial habits. Fewer respondents say:

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  • l am spending too much money on things not needed (26% in 2013, compared with 30% in 2012);
  • I am not saving any money (27% in 2013, compared with 30% in 2012); and
  • I am spending more than I make (14% in 2013, compared with 18% in 2012).

In addition, more employees say they are guilty of none of these bad habits—28% in 2013, compared with 24% in 2012.

The top reason employees gave for ignoring financial planning as a priority is a belief they do not make enough money to worry about it. Thirty percent of those surveyed for 2013 gave this answer, compared with 34% in 2009. On the other hand, 27% of employees say they have a solid financial plan, up from 26% in 2012 and 23% in 2009.

The survey results show health and wellness issues are the top issue for employees in 2014. At 43%, the rate was almost unchanged from 44% in 2012. Employees say their second most important priority is financial stability (30%), followed by career and employment (15%), education (6%), and entertainment and leisure (5%). These results are at nearly the same level in preceding years, according to Allianz Life.

In terms of what resolutions they feel likely to keep, employees surveyed say exercise and diet is first at 43%, down slightly from 44% in 2012, but still average for the five years of the survey. Managing money better is second, at 40%, also in line with the five-year trend. As in earlier years, spending more time with family and friends, volunteering and stopping a bad habit finished the list.

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