U.S. Retirement Assets Declined by $1.4 Trillion

The total value of Americans' retirement assets stood at $17 trillion at the end of September -- a drop of 7.5% from the record high of $18.4 trillion recorded on June 30, 2011.

That's according to a report by the Investment Company Institute, a national association of asset managers. The $1.4 trillion decline can be attributed in part to the troubles of the stock market: The S&P 500 lost 13.9% during the third quarter. There was a slight silver lining to this threatening cloud: Retirement account balances took less of a hit than stock indexes, because of asset diversification and continuing contributions to retirement savings plans.

The nation's individual retirement accounts held $4.6 trillion at the end of the third quarter, which represents a decline of 8.5% from the end of the second quarter. Defined contribution plan assets dropped 7.5% during the same period, and government pension plans -- federal, state, and local -- fell 7.7%.

The total value of assets held in employer-based defined contribution plans was $4.3 trillion at the end of September. Of that, 401(k) plans contained $2.9 trillion. In the previous quarter, those figures were $4.7 trillion and $3.2 trillion, respectively.

"Retirement savings accounted for 36 percent of all household financial assets in the United States at the end of the third quarter of 2011," the ICI noted.

The report comes on the heels of a series of studies calling into question Americans' readiness for retirement. But ICI senior economist Peter Brady disputes the notion of a looming crisis. "We think that there's certainly variation within the population, but a good number of people are on track to have a secure retirement," Brady told DailyFinance. "But that's sort of a huge debate, and this data" -- which is aggregate, as opposed to household-by-household, and concerns short-term fluctuations in the market -- "doesn't really have a strong bearing on it."

"People are going to have different needs," Brady explained. "The biggest asset most people are going to have is Social Security, which uses a highly progressive benefit formula The amount you have to supplement will vary greatly, depending on your lifetime earnings. What people want to do is basically maintain their standard of living. For different people that will mean different things." But his own studies, as well as his reading of the relevant literature, have persuaded Brady that no retirement disaster is in the offing.

Click here to see the full report from ICI, including charts.

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