Whether it's a case of the comparatively small number of "haves" simply socking away a lot more money or a jump in smaller contributions by a larger group of middle class investors, Americans' total retirement investment assets surged to more than $17.5 trillion in the fourth quarter of 2010, up 9.1% for the year.
Either way, it bodes well for the future economic health of Baby Boomers and other retirees and speaks to the growing demand for financial advisors specializing in retirement planning and retirement income investments.
According to the Investment Company Institute, retirement savings accounted for 37% of all U.S. household financial assets by year's end.
The $17.5 trillion marked a 5.2 percent increase from the prior quarter.
Assets stashed away in individual retirement accounts rose 5.3% sequentially to more than $4.7 trillion. Defined contribution plan assets jumped 5.1% to $4.5 trillion and government pension plans, which includes federal, state and local plans, moved up 6.9% from the third quarter to $4.4 trillion in assets.
These increases come in the wake of a troubling report last month from the Employee Benefit Research Institute which found that more than half of Baby Boomers are either "not at all confident" or "not too confident" they'll have the necessary reserves stowed away to enjoy the retirement they want.
In fact, the survey of more than 1,200 Boomers found that 43% of those with savings of less than $25,000 said they are not confident they'll have enough money to afford a decent retirement, up from 19% in 2007. Meanwhile, 22 percent of those with between $25,000 and $100,000 in savings remained less-than-confident about their retirements, more than triple the 7% who felt the same way in 2007.
Despite those nagging concerns, the fourth-quarter data provides at least some measure of hope, particularly for workers contributing to private-sector defined benefit plans which closed out the year at $2.2 trillion in assets. Meanwhile, annuity reserves outside of retirement accounts checked in at $1.6 trillion.
Of the $4.5 trillion set aside in employer-based defined contribution plans, $3.1 trillion was invested in 401k plans, up from $4.3 trillion and $2.9 trillion, respectively, at the end of the third quarter.
Mutual funds managed $2.5 trillion in assets held in 401k, 403b and other defined contribution plans at year's end, up from $2.3 trillion in the third quarter. Mutual funds managed more than 54% of defined contribution plans in 2010.
Forty-seven percent, or just over $2.2 trillion of IRA assets were invested in mutual funds, the report said.
Finally, assets in target date mutual funds rose 11% to more than $340 billion by the end of the year and 91% of those assets were held through defined contribution plans and IRAs.