Investing July 25, 2007

Retirement Assets Reach $16.4 Trillion

July 25, 2007 (PLANSPONSOR.com) - Assets of the nation's retirement savings plans reached a record $16.4 trillion in 2006, an 11% increase over 2005 and a 55% increase since 2002, according to data from the Investment Company Institute (ICI).
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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.

Retirement assets now account for nearly 40% of household financial assets, up from about 24% two decades ago, ICI said. Nearly two-thirds of Americans’ retirement assets are 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.

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Additional findings from ICI’s annual study include:

  • 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.
  • 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.
  • 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  here .

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