Total U.S. Retirement Assets Down 1.6% in Q1 2025; IRAs Growing Faster than DC
Total U.S. retirement assets were $43.4 trillion as of March 31, 2025, down 1.6% from December 31, according to the Investment Company Institute’s latest quarterly retirement market data, released on June 18.
IRAs held about $16.8 trillion at the end of Q1 2025 (down 1.3% from Q4 2024), while DC plans including 401(k), 403(b) and 457 plans held about $12.2 trillion (down 1.9%).
Declines in assets can be attributed to stock market performance in Q1 as the S&P 500 fell about 4.3%, but it’s important to note that contributions remained strong, with retirement savers maintaining—or even boosting—their savings rates despite volatile market conditions.
Retirement assets accounted for 34% of all household financial assets in the United States at the end of March 2025. ICI reported that Individual Retirement Accounts (IRAs) held approximately $16.8 trillion at the end of Q1 2025 (down 1.3% from Q4 2024), while employer-based DC plans including 401(k), 403(b) and 457 plans collectively held about $12.2 trillion (down 1.9%). That means IRAs outsized DC plan assets by roughly $4.6 trillion. While 401(k) plans alone held around $8.7 trillion, the broader DC plan category still falls short of IRA totals—which are buoyed by rollovers from DC plans.
ICI’s data shows that government defined benefit (DB) plans—including federal, state, and local government plans—held $8.9 trillion in assets as of the end of March 2025, while private-sector DB plans held $3.2 trillion. Annuity reserves outside of retirement accounts accounted for another $2.4 trillion.
In addition to 401(k) plans, at the end of the first quarter, $735 billion was held in other private-sector DC plans, $1.4 trillion in 403(b) plans, $477 billion in 457 plans, and $936 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $5.3 trillion, or 61%, of assets held in 401(k) plans at the end of March 2025. With $3.2 trillion, equity funds were the most common type of funds held in 401(k) plans, followed by $1.4 trillion in hybrid funds, which include target date funds.
IRAs growing faster than DC
Rollovers from workplace retirement plans naturally get the credit for IRAs continuing to be the biggest component of retirement assets, and a new report released today by data and benchmarking firm Hearts & Wallets finds that IRAs are growing more quickly than defined contribution (DC) or annuities.
According to the report, which pulls aggregated U.S. government data and then adds in Hearts & Wallets data for a more nuanced understanding of wealth in America, IRAs account for more than half (52%) of retirement accounts and 1 in 5 (19%) dollars of investable assets overall.
The Hearts & Wallets report says 132.2 million U.S. households controlled $88.2 trillion of investable assets, representing 58% of household wealth, as of year-end 2024. Within the $88.2 trillion, a 2-to-1 taxable-retirement split occurs at the national level with $56.2 trillion in taxable accounts and $32.1 trillion in consumer-controlled retirement accounts.
“Financial services firms should ensure advice and investment solutions are as robust for taxable accounts as for retirement,” Laura Varas, CEO and founder of Hearts & Wallets, said. “Furthermore, beyond investable assets, real estate should be an important aspect of advice since many households have equity in their homes and other real estate that is equal or greater than their investable assets.”
Investable assets are the leading component of total household wealth of $150.8 trillion, followed by net equity in real estate (No. 2 at $34.7 trillion or 23%), and private business and promised future DB pension benefits. In percentage terms, net equity in real estate has grown in relative importance to other components of household wealth, up from 17% in 2015. Of the 4 components, net equity in real estate is also growing fastest at a 7-year CAGR of nearly 14%.
The Hearts & Wallets report also found household awareness of allocation of savings across account types is rising. Two thirds (67%) of households save annually and know how they allocate their savings across account types, up 7 percentage points from 60% in 2019. Today, 1 in 3 households (32%) saves 10%-plus of household income.
At the national level, bank savings/certificates of deposit (CD) account types are the most common destinations for saving, used to some degree by 55% of households, followed by employer-sponsored retirement plans and IRAs, used by 42% and 30% of households, respectively.
The 5-year trend at the national level shows rising incidence of saving into ESRPs and IRAs, both up 5 percentage points, and bank savings/CDs, up 4 percentage points.
Rollovers fuel IRA growth
A study released by ICI back in March shows how rollovers from employer-sponsored retirement plans have fueled growth in IRAs, and that 44% of U.S. households reported that they owned IRAs as of mid-2024, up from 34% a decade ago.
In mid-2024, 59% of traditional IRA-owning households indicated that their traditional IRAs contained rollovers from employer-sponsored retirement plans. Among households with rollovers in their traditional IRAs, 85% recognized the importance of preserving their work nest egg, indicating that they had rolled over the entire retirement account balance in their most recent rollover.
Further building their savings, 41% percent of traditional IRA-owning households with rollovers had also made contributions to their traditional IRAs at some point.
The study, “The Role of IRAs in US Households’ Saving for Retirement, 2024,” found that Traditional IRAs were the most common type of IRA, owned by 33% of U.S. households in mid-2024, followed by Roth IRAs (owned by 26%) and employer-sponsored IRAs (4%). Nearly 9 in 10 IRA-owning households also had employer-sponsored retirement plan accumulations or defined benefit plan coverage, showing that they are being used in concert with 401(k)s or pension plans.
“IRAs, often in tandem with retirement plans at work, are helping millions of people of all ages secure their financial future. The survey results show that a majority of Americans, nearly three-quarters of U.S. households, have tax-advantaged retirement savings through work or IRAs,” said Sarah Holden, ICI Senior Director of Retirement and Investor Research. “Both traditional and Roth IRAs have become increasingly popular over time, with younger households focusing on Roth IRAs and older households more likely to own traditional IRAs.”
The three most common reasons for rolling over were not wanting to leave assets behind at the former employer, wanting to consolidate assets, and wanting more investment options (23%, 19%, and 14% of traditional IRA-owning households with rollovers, respectively).
SEE ALSO:
• IRA Use Up 10% in Past Decade: Study
• 7 in 10 Retirees Over 70 Receive Income from 401(k)s or IRAs
• Consumers Show Positive Response to In-Plan Annuity Solutions
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
