US Retirement Assets Hit Record $40T

Total U.S. retirement assets climbed to $40 trillion as of June 30, marking a 1.3% increase from March and the highest since the Investment Company Institute started tracking the figure in 2000. Retirement assets represented 32% of all household financial assets in the U.S., reflecting a steady rise in the nation’s long-term savings, the firm noted.

Individual retirement accounts led the growth, gaining $14.5 trillion in assets in the second quarter, a 1.5% increase from the first quarter of 2024. Defined contribution plans followed closely, growing $11.3 trillion, up 1.9% from Q1.

Government defined benefit plans, which include federal, state and local government pensions, gained $8.5 trillion in Q2, representing a modest 0.5% uptick since March. Private sector DB plans reported $3.2 trillion in assets over the quarter, while annuity reserves outside retirement accounts totaled an additional $2.4 trillion.

US Total Retirement Market Assets

Source: ICI

Of the $11.3 trillion gained in employer-based DC retirement plans, $8 trillion of that came from 401(k) plans. Among other DC plans, $625 billion was added in private sector funds, $1.3 trillion in 403(b) plans, $465 billion in 457 plans and $911 billion in the Federal Employees Retirement System’s Thrift Savings Plan.

Mutual funds continue to play a critical role in managing U.S. retirement savings in Q2, particularly in DC plans like 401(k)s, which had $5.2 trillion—65%—of their assets managed by mutual funds at the end of June, the ICI noted. Equity funds remained the dominant investment choice within those funds, holding $3.1 trillion, followed by $1.4 trillion in hybrid funds, which include target-date funds.

IRAs, similarly, saw a significant portion of their $14.5 trillion in assets allocated to mutual funds, with 43%—or $6.3 trillion—invested in these vehicles. Equity funds accounted for $3.7 trillion, while hybrid funds managed $1.1 trillion.

Overall, mutual funds made up nearly half—49%—of the combined assets in IRAs and DC plans, totaling $12.8 trillion. They also played a role in variable annuities, which offer similar tax advantages to retirement plans. In June 2024, variable annuity mutual fund assets outside retirement accounts reached $1.4 trillion.

Mutual funds have started to be overtaken in DC retirement plan investing by collective investment trusts, which face lighter regulation and can be offered with lower fees to employer-sponsored plans. According to recent Morningstar data, CIT target-date funds now have more assets than mutual fund TDFs.