Retirement assets in 2008 saw a fast and furious decline by the end of the third quarter, plunging from $16.9 trillion to $15.9 trillion between June 30 and Sept. 30, according to statistics from the Investment Company Institute released today.

The $15.9 trillion accounts for 35 percent of all household financial assets in the United States. Findings from ICI’s report, “The U.S. Retirement Market, Third Quarter 2008,” covers assets held in private-sector pension plans-both defined benefit and defined contribution plans, government pension plans, annuities and individual retirement accounts (IRAs).

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 $4.0 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 with $200 billion at the end of the second quarter. Almost 90 percent of assets in lifecycle funds were held in retirement accounts.

Combined assets of mutual funds in December saw a modest 2.7 percent increase to $9.6 trillion, up from $9.3 billion in November.