Newly released data from the Investment Company Institute confirms that retirement assets rebounded from most of their first-quarter losses in the second quarter of the year.
As of June 30, 2020, total U.S. retirement assets were $31.9 trillion, up 11.2% from March 31, 2020, when total assets were $28.7 trillion and down 11.9% from the beginning of the year. Retirement assets accounted for 34% of all household financial assets in the U.S. at the end of June 2020, according to the ICI’s “The U.S. Retirement Market, Second Quarter 2020.”
DC Plans
DC plan assets stood at $8.9 trillion at the end of the second quarter, up 11.6% from March 31, 2020. Of this amount, $6.3 trillion was held in 401(k) plans.
In addition to 401(k) plans, the second-quarter data shows that $555 billion was held in other private-sector DC plans, $1.1 trillion in 403(b) plans, $345 billion in 457 plans, and $641 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $3.8 trillion or 61% of assets held in 401(k) plans at the end of June 2020. With $2.2 trillion, the ICI notes that equity funds were the most common type of funds held in 401(k) plans, followed by $1.1 trillion in hybrid funds, which include target date funds.
DB Plans
Private-sector DB plans held $3.4 trillion in assets at the end of the second quarter of 2020, while annuity reserves outside of retirement accounts accounted for another $2.3 trillion.
Total U.S. retirement entitlements as of June 30, 2020 were $38 trillion, including $31.9 trillion of retirement assets and another $6.2 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 40% of the financial assets of all U.S. households at the end of June, the ICI further notes.
As has been the case, unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. At the end of the second quarter, unfunded liabilities were 5% of private-sector DB plan entitlements, 48% of state and local government DB plan entitlements, and 47% of federal DB plan entitlements. By comparison, as of the end of the first quarter, unfunded liabilities were 11% of private-sector DB plan entitlements, 55% of state and local government DB plan entitlements and 46% of federal DB plan entitlements.
IRAs
Assets in IRAs totaled $10.8 trillion at the end of the second quarter, an increase of 13.5% from the end of the first quarter of 2020, the ICI notes.
Consistent with the first quarter, 43% of IRA assets, or $4.7 trillion, was invested in mutual funds. With $2.5 trillion, equity funds were the most common type of funds held in IRAs, followed by $935 billion in hybrid funds.
