Total retirement assets in the U.S. fell 7.4% in the remaining months of 2018, as fourth-quarter market volatility took its toll.
Overall, retirement assets fell 4.7% to $27.1 trillion for the year, and accounted for 32 % of all household financial assets in the United States at the end of December, the Investment Company Institute reports.
ICI finds Americans held $7.5 trillion in all employer-sponsored DC plans on December 31, down 8% from September 30, of which $5.2 trillion was held in 401k plans.
In addition to 401k plans, at the end of the fourth quarter, $500 billion was held in other private-sector DC plans, $930 billion in 403(b) plans, $309 billion in 457 plans, and $570 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $3.3 trillion, or 64%, of assets held in 401k plans. With $1.9 trillion, equity funds were the most common type of funds held in 401k plans, followed by $932 billion in hybrid funds, which include target date funds.
Target Date Funds
Target date mutual fund assets totaled $1.1 trillion, down 8.6% from the end of September 2018 and down 1.3 % for the year. Retirement accounts held the bulk (86%) of target date mutual fund assets, with 67% held through DC plans and 19% held through IRAs.
Individual Retirement Accounts
IRAs held $8.8 trillion in assets at the end of the fourth quarter of 2018, a decrease of 8.1% from the end of the third quarter of 2018. Forty-five percent of IRA assets, or $4 trillion, was invested in mutual funds.
With $2.2 trillion, equity funds were the most common type of funds held in IRAs, followed by $862 billion in hybrid funds.
Government DB Plans
Government defined benefit (DB) plans—including federal, state, and local government plans—held $5.7 trillion in assets as of the end of December 2018, a 5.7% decrease from the end of September 2018.
Private-sector DB plans held $2.9 trillion in assets at the end of the fourth quarter of 2018, and annuity reserves outside of retirement accounts accounted for another $2.1 trillion.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.