US Retirement Assets Hit Record $40T

Asset growth is led by an increase in holdings in IRAs and 401(k) plans.

Total U.S. retirement assets climbed to $40 trillion as of June 30, marking a 1.3% increase from March and the highest since the Investment Company Institute started tracking the figure in 2000. Retirement assets represented 32% of all household financial assets in the U.S., reflecting a steady rise in the nation’s long-term savings, the firm noted.

Individual retirement accounts led the growth, gaining $14.5 trillion in assets in the second quarter, a 1.5% increase from the first quarter of 2024. Defined contribution plans followed closely, growing $11.3 trillion, up 1.9% from Q1.

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Government defined benefit plans, which include federal, state and local government pensions, gained $8.5 trillion in Q2, representing a modest 0.5% uptick since March. Private sector DB plans reported $3.2 trillion in assets over the quarter, while annuity reserves outside retirement accounts totaled an additional $2.4 trillion.

US Total Retirement Market Assets

Source: ICI

Of the $11.3 trillion gained in employer-based DC retirement plans, $8 trillion of that came from 401(k) plans. Among other DC plans, $625 billion was added in private sector funds, $1.3 trillion in 403(b) plans, $465 billion in 457 plans and $911 billion in the Federal Employees Retirement System’s Thrift Savings Plan.

Mutual funds continue to play a critical role in managing U.S. retirement savings in Q2, particularly in DC plans like 401(k)s, which had $5.2 trillion—65%—of their assets managed by mutual funds at the end of June, the ICI noted. Equity funds remained the dominant investment choice within those funds, holding $3.1 trillion, followed by $1.4 trillion in hybrid funds, which include target-date funds.

IRAs, similarly, saw a significant portion of their $14.5 trillion in assets allocated to mutual funds, with 43%—or $6.3 trillion—invested in these vehicles. Equity funds accounted for $3.7 trillion, while hybrid funds managed $1.1 trillion.

Overall, mutual funds made up nearly half—49%—of the combined assets in IRAs and DC plans, totaling $12.8 trillion. They also played a role in variable annuities, which offer similar tax advantages to retirement plans. In June 2024, variable annuity mutual fund assets outside retirement accounts reached $1.4 trillion.

Mutual funds have started to be overtaken in DC retirement plan investing by collective investment trusts, which face lighter regulation and can be offered with lower fees to employer-sponsored plans. According to recent Morningstar data, CIT target-date funds now have more assets than mutual fund TDFs.

Product and Service Launches – 9/19/24

FinFit partners with Sunny Day Fund to add emergency savings accounts; Equitable enhances flagship retirement solution for K-12 educators; Munich Re launches longevity reinsurance product for US and Canada markets; and more.

FinFit Partners With Sunny Day Fund to Add Emergency Savings Accounts

FinFit, a financial wellness platform available to U.S. employers, has partnered with Sunny Day Fund to make workplace emergency savings accounts available to its customers via the FinFit SafetyNet platform.

The FinFit SafetyNet platform is comprised of three elements:

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  • Emergency savings: Employees elect to have an amount of their choosing deposited into their Sunny Day Fund emergency savings account each pay period. Payroll integration is used to set up the withholding;
  • Emergency credit: Employees can access funds at any time to cover unexpected expenses or make financial ends meet; and
  • Debt consolidation loan: Employees can pay down debt at a lower rate or avoid high-cost payday loans or borrowing from retirement savings. They can also choose to “plus-up” their loan repayment to add to their emergency savings account while they are repaying their loan, or “spill over” the same repayment amount into savings after their loan is repaid in full.

“We’re thrilled to partner with Sunny Day Fund to help workers build short-term liquidity and longer-term savings all in one seamless experience,” Michael Woodhead, chief commercial officer of FinFit, said in a statement. “For such a big undertaking, we needed a partner with demonstrable success in moving people from debt into savings.”

Equitable Enhances Flagship Retirement Solution for K-12 Educators

Equitable, a financial services organization and principal franchise of Equitable Holdings Inc., announced a new series in its Equi-Vest line of deferred variable annuity products, Equi-Vest Series 202. This enhanced version is designed to help educators supplement their retirement savings.

Equi-Vest Series 202 is available to employees enrolled in a 403(b) plan at public schools across the United States. The structured investment option allows participants to capitalize on potential market gains, up to a cap, while maintaining a level of protection against market losses. Specifically, it provides buffered indexed options that include downside protection on losses up to 30%, longer segment periods and the opportunity to lock in gains.

It also provides growth potential that mirrors the index selected, up to a cap. Equi-Vest is the only 403(b) product in the market that offers a variable annuity with an index-linked option, according to FinFit.

“Our new EQUI-VEST series builds on our expertise as the leading provider of registered index-linked annuities, adding an investment option that helps address these concerns,” Jim Kais, head of group retirement for Equitable, said in a statement. “We hope this makes planning for the future a bit more reassuring for educators, so they can stay focused on teaching their students.”

Munich Re Launches Longevity Reinsurance Product for US and Canada Markets

Munich Re North America Life has announced a new offering—longevity reinsurance—aimed at allowing clients to accumulate assets while transferring biometric risk.

Clients can pass on longevity risk by converting uncertain future pension or annuity payments into a fixed cash flow stream, locking in mortality assumptions and a fee at inception.

With the increased reserve and capital requirements for longevity risks, and further changes coming in the U.S., insurers and asset reinsurers can leverage Munich Re’s strong balance sheet and deep mortality expertise.

“We are known for applying our scale, capacity, and insight to solve complex client challenges in ways that enable them to grow their businesses,” Mary Forrest, president and CEO of Munich Re North America Life, said in a statement. “We look forward to partnering with clients to evaluate the impact of longevity reinsurance and to designing a customized approach that supports their specific goals.”

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