Retirement Accounts Help Propel Total US Invested Assets Past $100 Trillion

Now that’s a lot of cheddar. 

US household investable wealth is now more than $100 trillion, according to new research from H&W (formerly Hearts & Wallets), an amount of money that has tripled since 2012. It’s an astonishing level of growth, but there are more interesting findings under the surface, H&W founder Laura Varas said. Defined contribution accounts like 401(k)s are closing the gap with individual retirement accounts, for example, while in-plan retirement income strategies and annuities are gaining greater attention. It’s all a reminder for advisors that clients have a lot of choice about where to park their assets as they save for the long-term future. 

“IRA rollovers are still happening at an amazing rate,” Varas said. “Our estimate is that rollover flows into IRAs topped $1 trillion last year across as many as 8 million transactions, which are both impressive milestones. DC plans held their own, though.”

Catching Up 

Taxable accounts still hold the lion’s share of investable assets, at $66 trillion, remaining both bigger and faster-growing than consumer-controlled retirement accounts, which stand at $36.5 trillion (excluding pensions). But that’s not the whole story: 

• The 10- and 5-year compound annual growth rate for taxable accounts are 9.2% and 8.7%, respectively, both higher than or equal to the same period CAGRs for consumer-controlled retirement accounts (8.1% and 8.7%). 
• For the 3-year period, however, retirement accounts outpaced taxable accounts, at 15.2% and 12.9%, respectively.  

Within the consumer-controlled retirement accounts category, IRAs and Keogh accounts hold $19.1 trillion compared with DC plans’ $13.4 trillion, and the growth rate for those accounts is higher over 1-, 3-, 5- and 10-year periods. 

“We are seeing signs that people are becoming more willing to leave money in their former employers’ retirement plans as more options for income planning enter the DC plan system,” Varas said. “But rollovers will remain strong, we suspect, as many people like the idea of consolidating their wealth in retirement.” 

Data Support. Over half of near-retirees expect to move workplace savings elsewhere at retirement, while seven in 10 want both income protection and control of their investments, recent survey research from Allspring shows.

“Participants trust their employer, but many still plan to move their savings,” the report said. “What motivates participants to stay in plan? Lower costs, retirement-focused investment options and simple withdrawal flexibility are top reasons they’ll stay.”