Monday, June 29, 2009

Retirement Assets Decline in 2008

Time to get technical.

A report released recently by the Washington based Investment Company Institute shows that U. S. retirement assets were down 22% at the end of 2008 compared with year-end 2007. This news is not surprising in light of the market downturn and the high unemployment rate in 2008.

The market downturn had an impact on most aspects of the market as individual retirement accounts assets fell 24%, defined contribution plan assets were down 22%, private sector defined benefit plan assets dropped 27%, and state and local pension plan assets declined 27%. The only category that posted an increase was federal government pension assets, which gained 2% last year. These assets are invested primarily in non-marketable government securities.

The numbers also show that IRAs represent the single largest component of the U. S. retirement market.

With the decline in retirement assets in 2008, it is extremely important that individuals continue to make their annual contributions to their IRAs to help fund their retirement goals. The contribution to an IRA is based on earned income. The maximum contribution to a traditional IRA in 2009 is $5,000. If you are age 50 or older by 12/31/09 you can add an additional $1,000.

-By Jared Trexler
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