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.