Retirement Market

IRAs play an increasingly important role in saving for retirement.

With $3.7 trillion in assets by mid-2009 and $4.2 trillion at year end, individual retirement accounts (IRAs) represented more than one quarter of U.S. total retirement market assets, compared to only 15% just 20 years ago.  IRAs have also become an important factor on household balance sheets; in June 2009 IRAs represented 9% of household financial assets, up from just 5% 20 years ago.  In May of 2009, 46.1 million (almost 40% of) U.S. households reported owning IRAs.

Where are these assets being invested?  Looking for an alternative to Mutual Funds?  Retirement funds can be invested elsewhere.

                                     Mutual Funds                Bank & Thrift Deposits             Life Insurance Co.'s           Securites in Brokerage

 

assets (b)

share (%)

 

assets (b)

share (%)

 

assets (b)

share (%)

 

assets (b)

share (%)

 

Total Assets

2008:Q1

$2,164

48

 

$351

8

 

$321

7

 

$1,709

38

 

$4,545

2008:Q2

$2,154

48

 

$359

8

 

$320

7

 

$1,700

37

 

$4,534

2008:Q3

$1,924

46

 

$370

9

 

$322

8

 

$1,526

37

 

$4,143

2008:Q4

$1,592

44

 

$391

11

 

$310

9

 

$1,286

36

 

$3,579

2009:Q1

$1,497

44

 

$410

12

 

$309

9

 

$1,212

35

 

$3,428

2009:Q2

$1,684

45

 

$424

11

 

$309

8

 

$1,341

36

 

$3,757

2009:Q3

$1,879

46

 

$429

10

 

$311

8

 

$1,475

36

 

$4,093

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Key Data:

  • Total U.S. retirement assets were $16 trillion as of December 31, 2009, up 14 percent, or $2 trillion from year end 2008. Retirement savings continued to account for 35 percent of all household financial assets in the United States.
  • IRAs held $4.2 trillion at the end of the fourth quarter of 2009, up from $3.8 trillion at the end of the second quarter. Forty-six percent of IRA assets, or $1.953 trillion, was invested in mutual funds, up from $1.87 trillion in the third quarter.
  • Americans held $4.1 trillion in all employer-based defined contribution (DC) retirement plans, of which $2.754 trillion was held in 401(k) plans, on December 31, 2009. Those figures are up from $3.6 trillion and $2.4 trillion, respectively, on June 30, 2009.
  • Mutual funds managed $2.102 trillion of assets in 401(k), 403(b), and other DC plans at the end of the third quarter, up from $1.8 trillion at the end of the second quarter. Mutual funds managed 76 percent of 401(k) plan assets.
  • Lifecycle mutual funds managed $256 billion at the end of the fourth quarter of 2009, up from $194 billion at the end of the second quarter. More than 84 percent of assets in lifecycle mutual funds was held in retirement accounts.

 

  • For the Calendar year 2009 the majority of U.S. Retirement Assets were held in IRA’s, reaching $4.2 trillion dollars in Q4.
    • 46% of assets held in IRA’s were invested in mutual funds
    • 36% were invested in Securities through brokerage accounts
    • Despite recent rises in the stock market in Q3 2009, equities have been a losing proposition for over 12 months, with a 37 point drop to begin 2008.
    • Q4 2008 saw another 21.9 point drop on the S&P 500
  • Retirement Assets Represented 35% of Household Financial Assets
  • IRA’s have become the preferred method of retirement investing with more than 46 million American households holding some type of IRA plan (that is almost 40% of U.S. households).
  • IRA's accounted for 26 percent of U.S. retirement market assets at year end 2009.