American retirement savings drop $1.4 trillion

The total value of Americans' retirement assets declined by $1.4 trillion in the most recent quarter, depressed in part by a sharp drop in the stock market, according to a new report.

The total U.S. retirement market fell 7.5 percent to $17 trillion at the end of the third quarter, down from a record $18.4 trillion at the end of the second quarter, the Investment Company Institute (ICI), a national association of mutual funds, exchange-traded funds and other investment firms, said in media release. 

The drop in retirement assets was driven in part by a falling stock market, as the S&P 500 lost nearly 14 percent during the third quarter, ICI said. However, retirement account balances held up better than the stock market because of asset diversification and ongoing contributions to retirement savings plans.

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The most recent quarter marked the first decline in retirement assets since the depths of the recession three years ago. But at $17 trillion, total U.S. retirement assets aren't just down sharply from their recent all-time high, they're also once again below their pre-recession peak of $17.8 trillion in 2007. See the chart, courtesy of ICI, below:

Within the total retirement market, assets in individual retirement accounts (IRAs) totaled $4.6 trillion at the end of the third quarter, a drop of 8.5 percent from the end of the prior period, ICI said.

Americans held $4.3 trillion in all employer-based defined contribution retirement plans at the end of the third quarter, of which $2.9 trillion was held in 401(k) plans. Those assets are down from $4.7 trillion and $3.2 trillion, respectively, from the previous quarter, according to ICI.