Industry Updates

Cerulli Projects U.S. Retirement Market to Reach $22tln by 2016, IRAs to Comprise 33%

Monday, January 30, 2012

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Opalesque Industry Update - Total asset levels in the U.S. retirement market have grown 9.6% from 2009 to 2010, totaling $15.8 trillion as of end of year 2010. Cerulli estimates total retirement markets to grow modestly (around 1%) to $16 trillion in 2011 with continuing market recovery, and will total nearly $22 trillion in 2016. Total IRA assets represent 29.7% of total retirement market assets currently, and as large DC plan rollovers continue to fuel asset levels, IRAs will encompass 33% of the total retirement market by 2016.

"The decisions Baby Boomers make regarding DC plan balances as they enter retirement continue to greatly impact DC and IRA balances. While much of the industry has discussed in-plan retirement income solutions, few of these solutions have been implemented by DC plans. Since there has been little to entice Baby Boomers to stay in-plan, they continue to roll large balances into IRAs," comments Alessandra Hobler, analyst in Cerulli's retirement practice.

The research explains that without action to prevent these distributions, rollovers will continue to fuel IRA assets, furthering their significant marketshare of the total market, beyond 2016.

When considering the other segments of the retirement landscape, the increased focus on individual retirement savings buoy both public and private DC markets as the process of saving for retirement is continually simplified with features such as automatic enrollment, auto escalation, and simplified investment options such as target-date funds. On the other hand, the shift away from private DB plans will continue to decrease its marketshare. However, increased use of LDI strategies is putting money into motion for asset managers, which presents interesting opportunities.

Cerulli's annual analysis of the retirement landscape, which has been in circulation for a decade, provides firms with a single resource for data and analysis on the entire U.S. retirement market, including private and public DC and DB, and IRA. Cerulli's complex modeling, which requires multiple inputs ranging from proprietary survey sources to regulatory filings, provides reliable projections and sizings for business planning and strategy development.

(press release)

These findings and more are from The Cerulli Quantitative Update: Retirement Markets 2011.. CLICK HERE to request a copy of this research.

Headquartered in Boston with offices in London and Singapore, Cerulli Associates provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.

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