U.S. RETIREMENT ASSETS DROP IN THIRD QUARTER, ACCORDING TO ICI REPORT

Posted February 19, 2009

WASHINGTON, D.C. -- Americans held $15.9 trillion in retirement assets at the end of the third quarter of 2008, accounting for 35 percent of all household financial assets in the US, the Investment Company Institute (ICI) reports today.

The finding is from The US Retirement Market, Third Quarter 2008, an ICI report covering assets held in private-sector pension plans — both defined-benefit and defined- contribution plans, government pension plans, annuities, and Individual Retirement Accounts (IRAs).

Between June 30, 2008 and September 30, 2008, retirement assets fell 5.9 percent, from $16.9 trillion to $15.9 trillion. During the third quarter, total return on equities was -8.4 percent, while bonds returned -0.1 percent, according to the Standard & Poor’s 500 stock index and the Citigroup Broad Investment Grade Bond Index.

At the end of the third quarter, IRAs held $4.1 trillion of retirement market assets; another $4 trillion was held in employer-sponsored defined-contribution plans, of which $2.7 trillion was held in 401(k) plans. Forty-six percent of IRA assets and 47 percent of defined contribution plan assets were invested in mutual funds.

Lifecycle, or target-date, mutual funds managed $187 billion at the end of the third quarter, compared to $200 billion at the end of the second quarter. Almost 90 percent of assets in lifecycle funds were held in retirement accounts.