US Retirement Assets Grow to $35.4 Trillion in Q1

The total amount of retirement assets in the U.S. grew 3.5% quarter-over-quarter to $35.4 trillion as of the end of the year’s first quarter, according to data released Wednesday by the Investment Company Institute.

Assets in defined contribution plans hit $9.8 trillion at the end of Q1, up 5% from December 31, 2022, according to the Washington-based institute. Assets in individual retirement accounts totaled $12.5 trillion, an increase of 4.3%, and 31% of all household financial assets were in retirement savings of some kind.

“In any given quarter, a significant driver of changes in retirement assets is market returns, which moved assets up in the first quarter of 2023,” Peter Brady, a senior economic adviser at ICI, said via email. “Additionally, over the first quarter, target-date funds, which are often held in DC plans, experienced net inflows.”

Of the funds in employer-based DC retirement plans, $6.9 trillion was held in 401(k) plans. Another $1.2 trillion was in 403(b) plans, $560 billion in other private sector DC plans, $405 billion in 457 plans and $759 billion in the Federal Employees Retirement System’s Thrift Savings Plan.

Mutual funds managed $4.3 trillion, or 62%, of assets held in 401(k) plans at the end of March, according to ICI. Equity funds were the most common type of funds in 401(k) plans at $2.5 trillion, followed by $1.2 trillion in hybrid funds, which include target-date funds.

Of all IRA assets, 42%, or $5.2 trillion, were invested in mutual funds. Equity funds were again the most common type of funds held in IRAs, followed by $1 trillion in hybrid funds. The IRA market usually gets a boost from rollovers, but as the data tends to lag, the ICI could only point to a trend toward increased rollovers pushing IRAs upward.

“Historically, DC plan participants tend to stay the course with their contributions, and rollovers tend to provide a boost to IRA assets,” noted Sarah Holden, ICI’s senior director of retirement and investor research, via email. “The IRS SOI Division reported record rollovers into IRAs of $618 billion in 2020 [the latest data available], continuing their upward trend.”

Government defined benefit plans— including federal, state and local government plans—held $7.7 trillion in assets, a slim increase from the end of December 2022. Private sector DB plans were only up slightly as well to $3.2 trillion in assets, and annuity reserves outside of retirement accounts were also up slightly to $2.2 trillion.

The data was drawn from the Investment Company Institute, Federal Reserve Board, Department of Labor, National Association of Government Defined Contribution Administrators, American Council of Life Insurers and IRS Statistics of Income Division, according to the ICI.