Retirement assets took a big leap in the second quarter, up almost 5%. Total U.S. retirement assets were $37.2 trillion as of June 30, up 4.8% from March, according to the Investment Company Institute (ICI). Retirement assets accounted for 33% of all household financial assets in the United States at the end of June.
Assets in individual retirement accounts (IRAs) totaled $13.2 trillion at the end of the second quarter, an increase of 5.4% from the end of the first quarter.
Defined contribution (DC) plan assets were $10.4 trillion at the end, up 5.3%. Government-defined benefit (DB) plans— including federal, state, and local government plans—held $7.5 trillion in assets as of the end of June, a 4% increase. Private-sector DB plans held $3.5 trillion in assets, and annuity reserves outside of retirement accounts accounted for another $2.5 trillion.
Defined Contribution Plans
Americans held $10.4 trillion in all employer-based DC retirement plans, of which $7.3 trillion was held in 401k plans. In addition to 401k plans, at the end of the second quarter, $645 billion was held in other private-sector DC plans, $1.2 trillion in 403(b) plans, $410 billion in 457 plans, and $802 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $4.8 trillion, or 66%, of assets held in 401(k) plans. With $2.9 trillion, equity funds were the most common type of funds held in 401k plans, followed by $1.3 trillion in hybrid funds, which include target-date funds.
Other Developments
As of June 30, 2021, total U.S. retirement entitlements were $42.8 trillion, including $37.2 trillion of retirement assets and another $5.6 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 38% of the financial assets of all US households at the end of June.
Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. As of the end of the second quarter of 2021, unfunded liabilities were 41% of benefit entitlements for state and local government DB plans, 46% of benefit entitlements for federal government DB plans, and 2% of benefit entitlements for private-sector DB plans.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
