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September 01, 2007 at 04:00 AM
The Investment Company Institute, the mutual fund trade group, says savings and market gains have helped push U.S. retirement savings to $16.4 trillion as of the end of 2006. That is an 11 percent increase over the 2005 level and a 55 percent improvement since 2002.
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Retirement Trends
The latest ICI/EBRI report says:
Most 401(k) assets are in stocks: About two-thirds of 401(k) participants’ assets are invested in equity securities in equity funds, the equity portion of balanced funds and company stock; the remaining third is held in bond, money market funds and stable value assets; and this asset breakdown has changed little in the past decade.
Company-stock holdings in 401(k) plans keep dropping: The portion of retirement accounts held in these investments stands at 11%, a 2% drop from a year ago, continuing a trend that began in 1999.
New employees want lifecycle and lifestyle funds: Across age groups, many new or recent hires put 401(k) assets into balanced funds; these investments represent 24% of plan assets held by workers in their 20s, up from 19% in 2005 and some 7% in 1998.
401(k) loans are modest: 18% of all 401(k) participants eligible for loans are taking them, and most loans tend to be small (12% of the remaining account balance, on average).
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According to the ICI, retirement savings — money held in defined-contribution plans, individual retirement accounts, annuities, public pension plans and private defined-benefit plans — now represent about 40 percent of the financial assets owned by U.S. households vs. 24 percent two decades ago.
