New data published by the Investment Company Institute (ICI) shows total U.S. retirement assets grew to $34.9 trillion as of December 31, which is up 7.5% from the end of the third quarter of the year and up 9.3% overall for last year.

With such strong growth for the year, the ICI reports, retirement assets accounted for a third of all household financial assets in the United States at the end of December. The ICI update shows that assets in individual retirement accounts (IRAs) totaled $12.2 trillion at the end of the fourth quarter of 2020, while defined contribution (DC) plan assets were $9.6 trillion, up 6.8% from September 30.

According to the ICI, government defined benefit (DB) plans—including federal, state and local government plans—held $7.1 trillion in assets as of the end of December, marking a 7.6% increase from the end of September. Private-sector DB plans held $3.4 trillion in assets at the end of the fourth quarter of 2020, while annuity reserves outside of retirement accounts accounted for another
$2.5 trillion.

Such growth figures would have been impressive in a “normal” year for the markets and the U.S. and global economies. But in the context of the ongoing coronavirus pandemic, which has killed well in excess of 500,000 Americans and caused historic surges in unemployment, the figures are even more notable. As various sources have discussed with PLANADVISER, the past year has made doubly clear the fact that the markets and the economy are not one and the same thing.

Furthermore, the past year has also clearly demonstrated just how severe income and overall wealth inequality are in the United States. To be sure, since the global financial crisis of 2007 and 2008, U.S. households in the aggregate have come a long way in strengthening their balance sheets. Yet the distribution of wealth is highly unequal—about as unequal as it has ever been—and research shows not everyone is able to participate in the growth of retirement plan assets.

According to data published by PGIM Fixed Income, each household in the top 1% of the wealth distribution has, on average, $25 million in assets, including nearly $10 million of equities. The next 9% of the distribution holds an average of $3.5 million each, supported by more than $1 million of pension entitlements, including DC and DB plans. In marked contrast, the bottom half of households has only $20,000 of net worth, on average, less than 0.1% of the assets of a household at the top.

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