Americans' FY 2007 Retirement Assets Up $1.1 Trillion from 2006

Americans held $17.6 trillion in retirement assets at the end of 2007, up $1.1 trillion from year-end 2006, the Investment Company Institute reported. In the first comprehensive look at the scope of the nation's retirement market for the full year, ICI found that strong growth in Individual Retirement Accounts (IRAs) and employer-sponsored defined contribution plans, including 401(k) accounts, powered the 7 percent increase. At year-end 2007, investors held $9.2 trillion in IRAs and defined contribution plans, accounting for about half of the entire retirement market. Institute researchers combine their data on IRAs and DC plans with publicly available data on defined benefit plans, government employees' plans, and annuities to produce an authoritative measure of Americans' overall retirement savings. IRAs continue to serve as a pillar of individuals' retirement preparedness.

The retirement market statistics are reported in the 2008 Investment Company Fact Book, which also shows that mutual funds managed $4.6 trillion or 26 percent of retirement market assets. The remaining $13 trillion were managed by pension funds, insurance companies, and brokerage firms. The $4.6 trillion of retirement assets invested in mutual funds represented 38 percent of the $12 trillion that funds managed at year-end 2007. More than 90 percent of mutual-fund owning households reported that they are saving for retirement.

Three-fifths of mutual-fund owning households invest in funds through an employer-based retirement plan such as a 401(k), and 57 percent of the households that own mutual funds purchased their first fund through an employer-sponsored retirement plan, according to the report, which also says that net new cash flow into lifestyle and lifecycle funds reached a record $92 billion in 2007. Assets in lifecycle funds rose 61 percent to $183 billion, and 88 percent of these assets were held in retirement accounts. Assets in lifestyle funds reached $238 billion, of which 45 percent were held in retirement accounts. The report notes that 401(k) assets invested in mutual funds are concentrated in lower-cost funds. For example, more than three-quarters of the 401(k) assets invested in stock funds are invested in funds with expense ratios of less than 1 percent.

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  • OHS Magazine Digital Edition - October 2020

    October 2020

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