ICI Measures Retirement Assets at $24.7 Trillion

An analysis from the Investment Company Institute (ICI) finds retirement assets of U.S. investors reached $24.7 trillion as of December 31, up 1.7% during the year’s final quarter and 6% from year-end 2013.

With the year-end 2014 results, retirement assets now account for approximately 36% of all household financial assets in the United States, ICI says.  

Assets in individual retirement accounts (IRAs) totaled $7.4 trillion at the end of the fourth quarter, an increase of 1.4% from the end of the previous quarter. Defined contribution (DC) plan assets rose 2.1% in the fourth quarter, to $6.8 trillion, ICI notes.

Government defined benefit (DB) plans—including federal, state and local government plans—held $5.2 trillion in assets at the end of December, for a 1.9% increase over the end of September. Private-sector DB plans held $3.2 trillion in assets at the end of the fourth quarter, and annuity reserves outside retirement accounts accounted for another $2 trillion.

Overall, Americans held $6.8 trillion in all employer-based DC retirement plans on December 31, of which $4.6 trillion was held in 401(k) plans. ICI says those figures were $6.6 trillion and $4.5 trillion, respectively, as of September 30. In addition to 401(k) plans, at the end of the fourth quarter, $560 billion was held in other private-sector DC plans, $951 billion in 403(b) plans, $261 billion in 457 plans, and $427 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP). 

Mutual funds managed $3.7 trillion, or 55%, of assets held in DC plans at the end of December.

The IRAs asset total of $7.4 trillion is up from $7.3 trillion at the end of the third quarter of 2014. Forty-eight percent of IRA assets, or $3.5 trillion, is invested in mutual funds, ICI says.

Other findings show retirement entitlements have increased in the past year as well. As noted by ICI, entitlements include both retirement assets and the unfunded liabilities of DB plans. To the extent that pension plan assets are insufficient to cover accrued benefit entitlements, a DB pension plan has a claim on the plan sponsor.

As of December 31, U.S. total retirement entitlements were $27.8 trillion, including $24.7 trillion of retirement assets and another $3.1 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 41% of the financial assets of all U.S. households at the end of December, ICI finds.

Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans, ICI says. As of the end of the fourth quarter, unfunded liabilities were 1% of private-sector DB plan entitlements, 25% of state and local government DB plan entitlements, and 56% of federal DB plan entitlements.