US Retirement Assets Rise for 4th Straight Quarter Through Q2

Defined contribution plans grew at a rate of 12% to $10.2 trillion, according to ICI, even as separate Escalent research shows retirement plan participants lack know-how to manage retirement savings.


Total U.S. retirement assets marked their fourth consecutive quarter of growth through the year’s second quarter, according to the most recent data from the Investment Company Institute.

Defined contribution savings rose 12% over the last four quarters from Q2 2022 through the same period this year, hitting $10.2 trillion, according to data released September 14. That figure is still lower than the $11.2 trillion in retirement assets at the end of 2021, the largest since the ICI began tracking in 2000.

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Individual retirement accounts grew even more through Q2, up 7% to $13 trillion, also getting closer to a $14.5 trillion record set at the end of 2021, according to the data.

Meanwhile, government defined benefit plans rose 5% to $8 trillion, annuity reserves rose 9% to $2.3 trillion and private sector DB plans grew 5% to $3.2 trillion in the period.

Of the assets held in DC plans, according to ICI, holdings broke down as follows:

  • 401(k) plans: $7.2 trillion
  • Private sector DC plans: $580 billion
  • 403(b) plans: $1.2 trillion
  • 457 government plans: $420 billion
  • Federal Employees’ Retirement System’s Thrift Savings Plan: $794 billion

Within those assets, mutual funds managed $4.5 trillion, or 62%. Equity funds were the most common type of holdings at $2.6 trillion, followed by $1.3 trillion in hybrid funds, which include target-date funds, ICI reported.

Money Management

The results of a growing retirement pool come even as a separate research report reiterated consistent findings that participants lack the proper education and financial wellness tools to manage their accounts. Four out of 10 participants (40%) admit to estimating retirement savings goals off the top of their head, according to research released September 20 from a Cogent Syndicated report from Escalent.

The survey, which encompassed 4,000 DC plan participants with at least $5,000 saved in an employer’s plan, found that popular methods for calculating retirement savings are online calculators (30%), detailed plans with financial advisers (25%) and do-it-yourself customized spreadsheets (22%).

The research, however, is not leading to realistic goals for what participants will need in retirement, the researchers found.

“It’s both the amount and the methods being used to calculate retirement savings goals across all cohorts that’s concerning,” says Sonia Davis, senior product director at Escalent and lead author of the report. “[Retirement plan] providers must work diligently to promote their online retirement planning tools and educational offerings to help participants better articulate their savings goals and ensure they are on track to achieving them.”

Goals vs. Reality

The overall mean retirement savings goal for the participants in the survey was $946,000, ranging from a low of $498,000 among Generation Z participants (born 1997 through 2012) to a high of $1.2 million among Baby Boomers (born 1946 through 1964).

“Estimates for ESRPs [Employee Sponsored Retirement Plans], IRAs, brokerage accounts and other vehicles are markedly higher among 2nd-wave Boomers versus Gen Zers and Gen Xers, underscoring the opportunity to educate younger cohorts on how much is required to live comfortably in retirement,” Davis says.

Long-term retirement assets may continue to be bolstered by returns from higher interest rates through the year, with the Federal Reserve last week announcing it would hold the federal funds rate in the range of 5.25% to 5.5%, while signaling another potential hike this year to continue combatting inflation.

The Fed also noted that “economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.”

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