How much money would you guess is held in the collective retirement accounts of everyone throughout the United States? Billions? Trillions? I recently came across some data from the Investment Company Institute that answers that question. I thought my readers would find it quite interesting. I know I was surprised at the amount.
The ICI is the investment company industry’s primary source for
statistical data and research on investors and retirement plans.
According to their research, as of September 30, 2013, the total value
of retirement assets in the United States was $21.7 trillion, which
accounted for 34 percent of all household financial assets.
$21.7 trillion is a staggering sum of money. Especially when you
consider that taxes have not been paid on most retirement dollars. In
other words, there’s roughly $5 trillion in future tax revenues that
Uncle Sam is waiting to scoop up.
Unfortunately, it probably won’t do Uncle Sam much good. More than
likely, it’s already been spent before it ever lands in the government
Exactly where can this $21.7 trillion be found? In Individual Retirement
Accounts, defined contribution plans, government pension plans and
private sector defined benefit plans.
The largest amount, $6 trillion, is held in Individual Retirement
Accounts. In the category of defined contribution plans, which includes
401(k) plans, there’s $5.6 trillion, of which an astounding $4 trillion
is in the 401(k) plans. Nearly 60 percent of the $5.6 trillion is
invested in mutual funds.
In the pension category, federal state and local governments account for
$5.4 trillion, while private sector defined benefit plans held $2.9
trillion. If you’re doing the math, annuity reserves outside of
retirement accounts accounted for the other $1.9 trillion.
The bottom line is that there’s a lot of money in our nation earmarked
for retirement. And every one of those dollars needs to be watched
carefully and managed prudently. That being said, everybody has to start
So, where should you start? Well, consider that an enormous snow boulder
begins with a small snowball. If you don’t have any money in this
staggering sum, or if you want to increase your share of the pot of
retirement dollars, let me suggest two relatively simple ideas for 2014.
Only two things are needed. The easy one is a bucket or piggy bank. The difficult one is dedication.
One plan of action is flat line saving. That simply means you save a
specified amount every week throughout the year. For example, by
routinely saving $25 a week, believe it or not, you’ll have $1,300 by
the end of the year. And that’s not counting any interest.
Another idea, one that requires you to keep an eye on the calendar, is
to save the amount of dollars to match the week of the year. For
example, for the first week of January, you only have to save $1. That’s
easy! And so is saving $2 for week number two.
By week 20, you’re saving $20 and by week 40, you’re putting $40 into
the piggy bank. Surprisingly, this method actually surpasses the $25
week routine because at the end of 52 weeks you’ll have $1,378 in
You have to start somewhere and these methods are simple. Small amounts
can grow into significant amounts. It simply takes dedication.