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May 11, 2006

Americans are increasing the size of their nest eggs, despite concerns that the country as a whole is not saving enough.

On Wednesday the Investment Company Insitute, which represents the mutual fund industry, anncounced that Americans held a record $14.3 trillion in retirement assets, of which $3.4 trillion were invested in mutual funds, at the end of 2005. The 6 percent growth in retirement assets during 2005 was powered by strong growth in individual retirement accounts (IRAs) and employer-sponsored defined contribution plans.

Investors held $7.3 trillion in IRAs and Defined Contribution plans such as 401(k)’s at year-end 2005, accounting for more than half of the entire retirement market. Institute researchers combine their data on IRAs and defined contribution plans with publicly available data on defined benefit plans and annuities to produce an authoritative overall measure of Americans' retirement savings.

"New data continue to show that the wealth of U.S. households is growing and that a significant portion is dedicated to funding retirement," says Brian Reid, ICI Chief Economist. "Retirement assets make up well over one-third of household financial assets at the end of 2005. Today's workers face a range of potential challenges as they move toward retirement. But the data indicate that they are also building up their retirement savings and that mutual funds are a key vehicle through which households have accumulated and are accumulating wealth."