Summary
Financial asset accumulation, specifically accumulation in retirement plans, is a primary focus of retirement preparedness analysis. The past 30 years have seen significant shifts in the financial asset landscape regarding both the amount of total financial assets held and the distribution of these assets among the different types of financial assets, particularly due to the increased prevalence of defined contribution (DC) plans.
This Issue Brief, using the Federal Reserve’s Survey of Consumer Finances, examines the trends from 1992–2022 in not only the quantity of financial assets American families have accumulated, but also how the financial assets are distributed among the various sources of these assets. This study focuses on families in the middle 60 percent of net worths.
- Retirement assets grew as a share of financial assets in every demographic group studied from 1992–2022.
- Among families in the middle 60 percent of net worths, the average values of financial assets and retirement assets reached 30-year highs in 2022, fully recovering from declines in 2010 due to the financial crisis.
- Families in the third net worth quintile with family heads eligible for a DC plan had a higher average value of financial assets than all families in this net worth quintile.
- The average values of retirement assets and stocks and bonds dramatically increased between 1992 and 2022 for families with heads ages 35–44. The average value of stocks and bonds sharply increased in 2022, bringing these assets to their highest share of financial assets despite the increase in retirement assets in 2022.
- The average financial assets of families with Black family heads were hit hard by the financial crisis of 2008, and they have struggled to recover, not reaching prerecession levels including a decline in 2022. These families have also have not been able to accumulate financial assets as quickly as families with White family heads, as families with Black family heads’ average total financial assets in 2022 were less than 15 percent of those of families with White family heads.
Retirement assets have been the driver of financial asset wealth from 1992–2022, as defined contribution plans became the dominant source of retirement savings among private-sector workers. Overall, retirement assets are the most important source of financial assets across many demographic groups, and recent rises in liquid assets and stocks and bonds signify that Americans are increasingly utilizing these other financial asset sources as well. Given the importance of retirement assets to families’ wealth, any changes to the treatment of retirement assets could have a widespread impact on not only families’ finances, but also financial markets and the overall economy.