401(k) assets continue their climb. The Investment Company Institute put the latest tally at $4.9 trillion.
Overall, total retirement assets for U.S. savers rang in at a whopping $24.5 trillion as of June 30, 2016, up 1.3 percent from the end of March. Of that, American workers held $7 trillion in all employer-based DC retirement plans.
Retirement assets accounted for 34 percent of all household financial assets in the United States at the end of the second quarter of 2016, according to ICI.
In addition to 401(k) plans, at the end of the second quarter:
- $527 billion was held in other private-sector DC plans,
- $893 billion in 403(b) plans,
- $271 billion in 457 plans, and
- $441 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $2.9 trillion, or 59 percent, of assets held in 401(k) plans. With $1.7 trillion, equity funds were the most common type of funds held in 401(k) plans, followed by $793 billion in hybrid funds, which include target date funds.
Retirement entitlements include both retirement assets and the unfunded liabilities of DB plans. Under a DB plan, employees accrue benefits to which they are legally entitled and which represent assets to US households and liabilities to plans. To the extent that pension plan assets are insufficient to cover accrued benefit entitlements, a DB pension plan has a claim on the plan sponsor.
Retirement entitlements, on the other hand, were $28.8 trillion, including $24.5 trillion of retirement assets and another $4.4 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 40 percent of the financial assets of all households.
Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. Unfunded liabilities were 17 percent of private-sector DB plan entitlements, 35 percent of state and local government DB plan entitlements, and 56 percent of federal DB plan entitlements.
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.
