Study: U.S. Retirement Assets Now Worth More than GDP
The 2008 Global Pensions Asset Study, conducted by consulting firm Watson Wyatt Worldwide found that assets in U.S. pension funds, 401(k)s, individual retirement accounts, and other retirement savings vehicles have increased from $7.9 trillion in 1997 to $15 trillion in 2007. As of the start of the year, these U.S. retirement assets were worth more than the gross domestic product ($14 trillion) based on a compound annual growth rate of 6.7 percent since 1997 compared with GDP growth of 4.8 percent during the same period.
In the United States, most retirement plan assets (59 percent) are invested in equities, while less than a quarter (23 percent) are in bonds and 17 percent in alternative assets, which include hedge funds, private equity, real estate, commodities, and infrastructure. While the amount in equities has remained relatively stable over the last 10 years, the portion in alternatives has grown (from 9 percent in 1997) and the share in bonds has declined (from 33 percent in 1997).
The makeup of U.S. retirement assets has changed considerably over the last 10 years. The share of assets in defined contribution plans, such as 401(k)s, and individual retirement accounts has increased, from 47 percent to 56 percent with defined benefit assets diminishing accordingly.