Zero Savings Rate in America? What About That $17.6 Trillion?
September 7, 2008
Americans, who on average sport a close-to-zero savings rate, had aggregated tax-deferred retirement savings of $17.6 trillion in 2007—an increase of 7% over 2006, according to the Investment Company Institute (ICI).
Averages, clearly, can be misleading. Some people must be saving a lot while others are simply over-spending. And some probably borrow as much as they save.
Retirement assets now account for nearly 40% of all U.S. household financial assets, up from 25% two decades ago, the ICI said. Over half of retirement assets are held in defined contribution (DC) plans and IRAs. Those assets grew 11% in 2007, compared to 3% asset growth for other retirement plans.
IRAs represent the largest single portion of the retirement market, with $4.7 trillion or 27% of the total, while DC plans contain about $4.5 trillion. DC plan assets represent 40% of all employer-sponsored plan assets, a 27% increase since 1985.
Defined benefit (DB) plans held $2.4 trillion, accounting for 21% of employer-sponsored assets, a 43% drop since 1985. An additional $1.7 trillion, or 9% of the total tax-deferred savings, is invested in variable or fixed annuity contracts.
Mutual funds held about $4.6 trillion in retirement assets, of which about 47% was held in IRAs and the rest in DC plans. More data is available at ici.org.
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