Retirement Assets Top $14 Trillion

According to an ICI news release, the 6% growth in retirement assets during the year was mostly attributable to strong growth in individual retirement accounts (IRAs) and employer-sponsored defined contribution plans. Investors held $7.3 trillion in IRAs and DC plans at year-end 2005, accounting for more than half of the entire retirement market, the release said.

Of the total retirement assets, $3.4 trillion were invested in mutual funds, ICI data showed. Brian Reid, ICI Chief Economist, said in the release, “Retirement assets make up well over one-third of household financial assets at the end of 2005. Today’s workers face a range of potential challenges as they move toward retirement. But the data indicate that they are also building up their retirement savings and that mutual funds are a key vehicle through which households have accumulated and are accumulating wealth.”

Other key facts found in the publication include:

• Ninety-one million individuals, comprising 54 million US households, owned mutual funds in 2005. The median fund-owning household held $48,000 in mutual funds in 2005.
• Nearly 90% of fund shareholders invest through employer-sponsored plans (which generally offer menus of selected funds) or through financial advisors.
• Investors are increasingly turning toward hybrid funds designed to meet their risk preferences (lifestyle funds) or to rebalance as investors age (lifecycle funds). In 2005, assets held in lifestyle funds grew by 67%; lifecycle fund assets grew by 59%.
• Registered investment companies managed a record $9.5 trillion at year-end 2005. (That figure climbed to $10 trillion by March 2006.)
• ETF assets grew 31% to $296 billion by year end.
• Closed-end funds maintained their share of the investment market, rising 9% to $276 billion.
• 529 college savings plan assets were $68.7 billion at the end of 2005.

The 2006 Investment Company Fact Book is here .