Retirement Assets Now Total $16.4 Trillion

Assets of the nation's retirement savings plans reached a record $16.4 trillion in 2006, and account for nearly 40% of household financial assets.

The total assets in retirement plans are an 11% increase over 2005 and a 55% increase since 2002, according to the Investment Company Institute (ICI).

Two decades ago, retirement assets were only about 24% of household financial assets. Currently, nearly two-thirds of Americans’ retirement assets is held in employer-sponsored retirement plans, including both defined contribution plans and defined benefit plans. Additionally, ICI noted, a significant portion of assets held in IRAs originated in employer plans and were then rolled over into IRAs. One-quarter of Americans’ DC plan and IRA assets – about $4.1 trillion – is invested in mutual funds, according to the ICI statement. Mutual funds manage 52% of DC plan assets and 47% of IRA assets.

Most of the increase in retirement assets during 2006 can be attributed to strong growth in employer-sponsored defined contribution plans and individual retirement accounts (IRAs), ICI said in a statement. Investors held $8.3 trillion in individual retirement accounts (IRAs) and DC plans at year-end 2006. The remainder of retirement assets is in annuities, government pension plans, and private defined benefit plans.

Assets in defined contribution plans and IRAs continued to grow more rapidly than assets in other types of retirement plans in 2006, increasing 15% compared with 8% for other retirement plans. Together, assets in defined contribution plans and IRAs represented 51% of retirement assets in 2006, up from 39% in 1990.

Also, ICI found that assets invested in lifestyle and lifecycle funds grew 50% in 2006 to $303 billion, after rising 57% in 2005.

ICI’s study, The US Retirement Market, 2006, is available here.