U.S. households held $10.7 trillion in retirement assets at the end of 2010, Hearts & Wallets said, culling information from the Federal Reserve Flow of Funds and U.S. Census data. This is just above the previous high of $10.5 trillion reached in 2007, and a big climb from the $2.4 trillion loss in retirement assets in the crash of 2008, when these assets fell to $8.1 trillion.
Total U.S. household investable assets totaled $30.2 trillion at year-end, with $19.5 trillion of that money in taxable assets.
Of the approximately 120 million households with savings, about 30 million, or 25%, have as least $100,000 in investable assets. Conversely, 90 million households, or three-quarters, have not reached this milestone, up from 82 million in 2007.
“The 2008 downturn hit households very unevenly, and that may prove true again with continued market turbulence,” said Laura Varas, a principal with Hearts & Wallets. “In intuitive terms, about one in eight of the households now in the $100,000 to $250,000 segment moved down from a higher investable asset segment.”
Some of those households saw their wealth decrease as a result of individual investment decisions, and a good percentage of these people are now seeking the help of a professional financial adviser, which Hearts & Wallets has termed “Upshifters.”
Others were working with a financial adviser and now, as “‘Downshifters,’ question the value of that advice and whether they might make better choices themselves,” Varas said. “We were already seeing investors want to better understand the value of what they are paying for. This disruption is accelerating that trend.”
People in the $2 million to $5 million and $250,000 to $500,000 brackets were particularly hard hit, Hearts & Wallets added. There are 25% fewer people in the $250,000-$500,000 segment, now totaling 6.4 million households, down from eight million in 2009. Their total assets are now $2.5 trillion, nearly 14% lower than the $2.9 trillion they held before 2009.
With these two groups shrinking, the $1 million to $2 million and the $100,000 to $250,000 groups grew.
“The shifting of assets has been dramatic, illustrating the challenge in offering asset-based pricing services to investors,” said Chris Brown, a principal with Hearts & Wallets. “How much money someone has at a point in time is not a particularly insightful descriptor of their interests or concerns. The financial services industry needs to understand this when developing investor servicing models.”
The report also indicated that the most popular investing vehicles are Treasuries, mutual funds and bank deposits.
Pre- and post-retirees, as well as fully employed seniors, control one out of every two investable dollars—more than $15 trillion.
