The Investment Company Institute released its quarterly report on the state of the retirement market on February 19, and the total amount lost in the third quarter of 2008 was staggering, even if not quite as bad as the overall equity market. For the quarter ended September 30, the mutual fund group said total retirement assets fell from $16.9 trillion as of June 30 to $15.9 trillion, a 5.9% drop. By comparison, the S&P 500 index fell 8.4% in the quarter, while bonds, as measured by the Citigroup Broad Investment Grade Bond Index, fell 0.1% in the quarter.

Retirement savings accounted for 35% of all household financial assets in the country, ICI said, with $4.1 trillion in IRAs, $4.0 trillion in all employer-based defined contribution plans, $2.3 trillion in private defined benefit plans, $3.9 trillion in federal, state, and local government pension plans, and $1.5 trillion in fixed and variable annuities.

Mutual funds accounted for 46% of the total invested in IRAs (or $1.88 trillion), while mutual funds accounted for 47% of the assets in defined contribution plans. Securities held in brokerage accounts amounted to $1.54 trillion, or 37% of the assets held in IRAs.

As of the end of the third quarter, there was $187 billion invested in lifecycle funds, ICI reported, noting that nearly 90% of those assets were held in retirement accounts.