Retirement Assets Reach Record $14.5 Trillion; 40% Increase Since 2002
nation's retirement nest eggs reached a record $14.5 trillion in
representing a 7% increase over the prior year and a 40% increase since
2002, according to the latest research published today by the Investment
Company Institute, the national association of the American investment
Saving for retirement is becoming an increasingly important priority as the first wave of Baby Boomers approaches retirement age. Retirement assets now account for more than one-third of household financial assets, up from about 23% in 1985.
The majority of retirement savings, 51%, is now invested in defined contribution (DC) plans and Individual Retirement Accounts (IRAs), in which the investor makes the investment choices. Over the past two decades, DC plans and IRAs have been growing more rapidly than other retirement accounts. In 2005, DC and IRA assets grew nearly 9% while other retirement vehicles grew less than 5%.
Mutual funds remain important stewards of retirement assets, representing about $3.4 trillion of the total stockpile. Mutual funds' share of the retirement market continued to increase given their prevalence in rapidly growing DC plans and IRAs. Funds now manage 48% of assets in DC plans and 45% of IRA assets.
The annual study, " The U.S. Retirement Market, 2005 (pdf)", represents the most authoritative examination of the size and composition of the U.S. retirement market, combining ICI's extensive data collection with data from the U.S. Department of Labor, Federal Reserve Board, the Internal Revenue Service, and other trade associations.
Other highlights of the study include: