Total U.S. Retirement Assets Dip Slightly in Q3

Latest Investment Company Institute data shows half-percent decline to $37.4 trillion as of the end of September
U.S. retirement assets
Image credit: © Chase4concept | Dreamstime.com

Total U.S. retirement assets were $37.4 trillion as of September 30, 2021, down 0.5% from June 30, 2021, according to the Investment Company Institute’s latest Quarterly Retirement Market Data report.

Total retirement assets had grown 4.8% during the second quarter of the year per ICI’s previous report.

Retirement assets accounted for 33% of all household financial assets in the United States at the end of the third quarter of 2021.

Defined contribution (DC) plan assets were $10.4 trillion as of September 30, down 0.8% from June 30, 2021. Assets in individual retirement accounts (IRAs) totaled $13.2 trillion at the end of the third quarter of 2021, a decrease of 0.6% from the end of the second quarter of 2021.

Government defined benefit (DB) plans—including federal, state, and local government plans—held $7.6 trillion in assets as of the end of September 2021, a 0.3% increase from the end of June 2021. Private-sector DB plans held $3.7 trillion in assets at the end of the third quarter of 2021, and annuity reserves outside of retirement accounts accounted for another $2.5 trillion.

ICI Q3 2021 chart
U.S. Total Retirement Market Assets, trillions of dollars, end-of-period, selected periods. Chart courtesy Investment Company Institute, The U.S. Retirement Market, Third Quarter 2021.

Defined Contribution Plans

Americans held $10.4 trillion in all employer-based DC retirement plans on September 30, 2021, of which $7.3 trillion was held in 401k plans. In addition to 401k plans, at the end of the third quarter, $660 billion was held in other private-sector DC plans, $1.2 trillion in 403b plans, $408 billion in 457 plans, and $797 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).

Mutual funds managed $4.8 trillion, or 65%, of assets held in 401k plans at the end of Q3. With $2.8 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.

Individual Retirement Accounts

IRAs held $13.2 trillion in assets at the end of the third quarter of 2021. Forty-five percent of IRA assets, or $5.9 trillion, was invested in mutual funds. With $3.4 trillion, equity funds were the most common type of funds held in IRAs, followed by $1.1 trillion in hybrid funds.

Other Developments

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 U.S. 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.

As of September 30, 2021, total U.S. retirement entitlements were $43.0 trillion, including $37.4 trillion of retirement assets and another $5.7 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 38% of the financial assets of all U.S. households at the end of September.

Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. As of the end of the third quarter of 2021, unfunded liabilities were 41% of benefit entitlements for state and local government DB plans, 45% of benefit entitlements for federal government DB plans, and 3% of benefit entitlements for private-sector DB plans.

SEE ALSO:

• Investment Company Institute Names New President and CEO

• 401k Assets Rise Sharply in Second Quarter

Brian Anderson Editor
Editor-in-Chief at  | banderson@401kspecialist.com | + posts

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.

1 comment

Comments are closed.

Total
0
Share