Recent research by the Investment Company Institute (ICI) found that despite a 40% drop in the U.S. stock markets last year, the vast majority of U.S. workers who invest for retirement via 401(k) plans are staying the course and want to preserve the 401(k). Meanwhile, findings from the ICI report, The U.S. Retirement Market, Second Quarter 2008, shows that American savers held $16.9 trillion in retirement assets at the end of the second quarter of 2008, accounting for nearly 36% of all household financial assets in the United States. The report covers assets held in private-sector pension plans, both defined benefit and defined contribution; government pension plans; annuities; and Individual Retirement Accounts (IRAs). Between March 31, 2008, and June 30, 2008, retirement assets remained largely unchanged from a revised finding of $16.9 trillion in the first quarter, ICI says. During the second quarter, total return on equities was -2.7%, while bonds returned -1.2%, according to the Standard & Poor’s 500 stock index and the Citigroup Broad Investment Grade Bond Index.
At the end of the second quarter, the ICI research found that IRAs held $4.5 trillion of retirement market assets; another $4.3 trillion was held in employer-sponsored defined contribution plans, of which $2.9 trillion was held in 401(k) plans. Mutual funds accounted for 47% of IRA assets and 51% of defined contribution plan assets.
Lifecycle funds continued their growth during the second quarter: assets in those funds reached $205 billion, compared to $190 billion at the end of the first quarter. Almost 90% of assets in lifecycle funds were held in retirement accounts.