HOME

PDF VERSION

A LETTER FROM ICI'S
CHIEF ECONOMIST

ICI RESEARCH:
STAFF AND PUBLICATIONS

SECTION 1:
OVERVIEW OF
U.S.-REGISTERED INVESTMENT COMPANIES

SECTION 2:
RECENT MUTUAL FUND TRENDS

SECTION 3:
EXCHANGE-TRADED FUNDS AND INDEX MUTUAL FUNDS

SECTION 4:
CLOSED-END FUNDS

SECTION 5:
MUTUAL FUND FEES AND EXPENSES

SECTION 6:
CHARACTERISTICS OF MUTUAL FUND OWNERS

SECTION 7:
THE ROLE OF MUTUAL FUNDS IN RETIREMENT AND EDUCATION SAVINGS

DATA TABLES

APPENDIX A:
HOW MUTUAL FUNDS AND INVESTMENT COMPANIES OPERATE

APPENDIX B:
ICI STATISTICAL RELEASES AND RESEARCH PUBLICATIONS

TIMELINE:
SIGNIFICANT EVENTS IN FUND HISTORY

FACT BOOK ARCHIVE

National policies that have created or enhanced tax-advantaged savings accounts have proven integral to helping Americans prepare for retirement and other long-term savings goals. Because many Americans use mutual funds in tax-advantaged accounts to reach these long-term goals, ICI studies funds' role in the retirement and education savings markets, and the investors who use IRAs, 401(k) and 529 plans, and other long-term savings vehicles.

The U.S. Retirement Market

U.S. retirement assets topped $17.6 trillion in 2007, up 7 percent from 2006 (Figure 7.1). Retirement market assets are held in a variety of tax-advantaged plan types. The largest components are Individual Retirement Accounts (IRAs) and employer-sponsored defined contribution plans, holding $4.7 trillion and $4.5 trillion, respectively, at year-end 2007.

Other employer-sponsored pensions include private defined benefit pension funds (with $2.4 trillion in assets), state and local government employee retirement plans (with $3.2 trillion in assets), and federal government defined benefit plans and the federal employees' Thrift Savings Plan (with $1.2 trillion in assets). In addition, there were $1.7 trillion in annuity reserves outside of retirement plans at year-end 2007.

Eighty-two million, or 71 percent of, U.S. households report they had employer-sponsored retirement plans, IRAs, or both in May 2007 (Figure 7.2). Sixty-one percent of U.S. households report that they had assets in defined contribution plan accounts, were receiving or expecting to receive benefits from defined benefit plans, or both. Forty percent of households report having assets in IRAs. Thirty percent of households had both IRAs and employer-sponsored retirement plans.

Figure 7.1

U.S. Retirement Assets Top $17 Trillion

(trillions of dollars, year-end, selected years)

Download an Excel file of this data.

1Other plans include: all fixed and variable annuity reserves at life insurance companies less annuities held by IRAs, 403(b) plans, 457 plans, and private pension funds; private-sector defined benefit plans; and federal, state, and local pension plans. Federal pension plans include U.S. Treasury security holdings of the civil service retirement and disability fund, the military retirement fund, the judicial retirement funds, the Railroad Retirement Board, and the foreign service retirement and disability fund. These plans also include securities held in the National Railroad Retirement Investment Trust and Federal Employees Retirement System (FERS) Thrift Savings Plan (TSP).
2Defined contribution plans include private employer-sponsored defined contribution plans (including 401(k) plans), 403(b) plans, and 457 plans.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, National Association of Government Defined Contribution Administrators, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division

Figure 7.2

Many U.S. Households Have Tax-Advantaged Retirement Savings

(percent of U.S. households, 2007)

Download an Excel file of this data.

1IRAs include traditional IRAs, Roth IRAs, and employer-sponsored IRAs (SIMPLE IRAs, SEP IRAs, and SAR-SEP IRAs).
2Employer-sponsored retirement plans include defined contribution and defined benefit retirement plans.
Sources: Investment Company Institute and U.S. Census Bureau (Fundamentals, "The Role of IRAs in U.S. Households' Saving for Retirement")

Individual Retirement Accounts

At year-end 2007, IRA assets totaled $4.7 trillion, up 12 percent from year-end 2006 (Figure 7.3). Mutual fund assets held in IRAs were $2.2 trillion at year-end 2007, an increase of $266 billion, or 13 percent, from 2006. Assets managed by mutual funds are the largest component of IRA assets, followed by securities held directly through brokerage accounts ($1.8 trillion at year-end 2007). The mutual fund industry's share of the IRA market has increased from 22 percent in 1990 to 47 percent at year-end 2007.

Since 1990, assets in IRAs have grown primarily due to the investment performance of the securities held in IRA portfolios and rollovers into IRAs from employer-sponsored retirement plans. Various laws enacted since 1996 introduced new types of IRAs. Furthermore, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), enacted in 2001, increased the amount investors—especially those age 50 or older—can contribute to IRAs. The Pension Protection Act (PPA), enacted in 2006, made these EGTRRA enhancements permanent. ICI household survey data and Internal Revenue Service Statistics of Income Division tabulations of IRA contributions indicate households responded to these increased opportunities to save.

Figure 7.3

IRA Assets

(billions of dollars, year-end, 1990–2007)

Download an Excel file of this data.

1Data are preliminary.
2Bank and thrift deposits include Keogh deposits.
3Life insurance company IRA assets are annuities held by IRAs, excluding variable annuity mutual fund IRA assets, which are included in
mutual funds.
4Category excludes mutual fund assets held through brokerage accounts, which are included in mutual funds.
eData are estimated.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division

IRA Investors: Traditional, Roth, and Employer-Sponsored IRAs

Judging by the incidence of IRA ownership in U.S. households, IRAs are an important component in America's retirement savings strategy. Created in 1974 under the Employee Retirement Income Security Act (ERISA), IRAs were designed with two goals. First, they provide individuals not covered by workplace retirement plans with an opportunity to save for retirement on their own. They also allow workers changing jobs a means to preserve the tax benefits and growth opportunities that employer-sponsored retirement plans provide.

Nearly four out of 10 U.S. households, or 46.2 million, owned IRAs as of mid-2007 (Figure 7.4). An ICI survey finds that these IRA households generally are headed by middle-aged individuals with moderate household incomes. IRA owners are more likely to hold mutual funds, especially long-term mutual funds, in their IRA portfolios than any other type of investment.

Figure 7.4

Millions of Households Own IRAs

Download an Excel file of this data.

Note: Multiple responses are included.
Sources: Investment Company Institute and U.S. Census Bureau (Fundamentals, "The Role of IRAs in U.S. Households' Saving for Retirement")

As of mid-2007, 37.7 million U.S. households owned "traditional" IRAs—defined as those IRAs first allowed under ERISA—while 17.3 million U.S. households owned Roth IRAs, first made available in 1998 under the Taxpayer Relief Act of 1997. An estimated 9.2 million U.S. households owned employer-sponsored IRAs (SIMPLE IRAs, SEP IRAs, or SAR-SEP IRAs).

Traditional IRAs. Households owning traditional IRAs held a median of $42,500 in these accounts in 2007, and had median household income of $78,000. Fifty-nine percent of these households had traditional IRAs that included assets "rolled over" from employer-sponsored retirement plans. Traditional IRA households with rollovers typically had two accounts; traditional IRA households without rollovers typically had one account. Thirty-one percent of traditional IRA-owning households also owned Roth IRAs and 15 percent also owned employer-sponsored IRAs. Individuals heading households with traditional IRAs had a median age of 56 years, and 67 percent were employed.

Roth IRAs. The majority of households with Roth IRAs owned one Roth IRA account with a median balance of $14,500 in 2007, and these households had median income of $87,500. About 26 percent of Roth IRA-owning households opened a Roth IRA as their first IRA. Sixty-eight percent of households with Roth IRAs also owned traditional IRAs, and 16 percent also owned employer-sponsored IRAs. Individuals heading households with Roth IRAs had a median age of 50 years, and 82 percent were employed.

Nearly three-quarters of all households owning traditional or Roth IRAs have IRA assets invested in mutual funds, usually stock mutual funds (Figure 7.5). Far fewer households own other types of investments in their IRAs: two-fifths hold stocks, one-third hold annuities, and about 30 percent hold bank deposits.

Figure 7.5

Households Invest Their IRAs in Many Types of Assets

(percent of U.S. households owning a traditional or Roth IRA, 2007)

Download an Excel file of this data.

*Multiple responses are included.
Source: Fundamentals, "Appendix: Additional Data on IRA Ownership in 2007"

Defined Contribution Plans

At the end of 2007, employer-sponsored defined contribution plans, which include 401(k) plans, 403(b) plans, 457 plans, Keoghs, and other defined contribution plans, held an estimated $4.5 trillion in assets (Figure 7.6). With $3.0 trillion in assets at year-end 2007, 401(k) plans held the largest share of employer-sponsored defined contribution plan assets. Two types of plans similar to 401(k) plans—403(b) plans, which allow employees of educational institutions and certain nonprofit organizations to receive deferred compensation, and 457 plans, which allow employees of state and local governments and certain tax-exempt organizations to receive deferred compensation—held another $910 billion in assets. The remaining $513 billion in defined contribution plan assets were held by other defined contribution plans without 401(k) features.

At the end of 2007, $1.7 trillion of 401(k) plan assets were invested in mutual funds (Figure 7.7). Mutual funds' share of the 401(k) market increased from 9 percent in 1990 to an estimated 55 percent at year-end 2007.

Figure 7.6

Defined Contribution Plan Assets by Type of Plan

(billions of dollars, year-end, selected years)

Download an Excel file of this data.

eData are estimated.
*Other defined contribution plans include Keoghs and profit sharing, thrift savings, stock bonus, and money purchase plans without 401(k) features.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, National Association of Government Defined Contribution Administrators, and American Council of Life Insurers

Figure 7.7

401(k) Plan Assets near $3.0 Trillion

(billions of dollars, year-end, 1990–2007)

Download an Excel file of this data.

*Data are preliminary.
eData are estimated.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, and Department of Labor

401(k) Participants: Asset Allocations, Account Balances, and Loans

For many American workers, 401(k) plan accounts have become an important part of retirement planning. The income these accounts provide in retirement depends, in part, on the asset allocation decisions of plan participants.

According to research conducted by ICI and the Employee Benefit Research Institute (EBRI), the asset allocations of 401(k) plan participants vary depending on a variety of demographic and other factors. For example, younger participants tend to allocate a larger portion of their account balances to equity securities (which include equity mutual funds and other pooled equity investments and the company stock of the employer), while older participants are more likely to invest in fixed-income securities such as money funds, bond funds, and guaranteed investment contracts (GICs) and other stable value funds. On average, at year-end 2006, individuals in their twenties invested 60 percent of their assets in equity securities, 18 percent in fixed-income securities, and 19 percent in balanced funds (Figure 7.8). By comparison, individuals in their sixties invested 49 percent of their assets in equity securities, 36 percent in fixed-income securities, and 12 percent in balanced funds.

Figure 7.8

401(k) Asset Allocation Varies With Participant Age

(average asset allocation of 401(k) account balances, percent, year-end 2006)

Download an Excel file of this data.

*Funds include mutual funds and other pooled investments.
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project (Perspective, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006")

The median age of 401(k) plan participants was 44 years old at year-end 2006, and the average account balance, excluding plan loans, was $61,346. Account balances tend to be higher the longer 401(k) plan participants have been working for their current employers and the older the participant. Workers in their sixties with at least 30 years of tenure at their current employers had an average 401(k) account balance of $190,593 (Figure 7.9).

Most 401(k) participants do not borrow from their plans. At year-end 2006, only 18 percent of those eligible for loans had loans outstanding. The average unpaid loan balance for these participants represented about 12 percent of their remaining account balances (net of the unpaid loan balances).

Figure 7.9

401(k) Balances Tend to Increase With Age and Job Tenure

(average 401(k) account balance, year-end 2006)

Download an Excel file of this data.

Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project (Perspective, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006")

Services and Expenses in 401(k) Plans

In deciding whether or not to offer 401(k) plans to their workers, employers must decide if the benefits of offering a plan (in attracting and retaining quality workers) outweigh the costs of providing the plan and plan services (both the compensation paid to the worker and any other costs associated with maintaining the plan and each individual plan participant account).

401(k) plans are complex to maintain and administer, and are subject to an array of rules and regulations that govern their operation. Employers offering 401(k) plans typically hire service providers to operate these plans, and these providers charge fees for their services.

As with any employee benefit, the employer generally determines how the costs will be shared between the employer and employee. Fees can be paid directly by the plan sponsor (i.e., the employer), paid directly by the plan participant (i.e., the employee), paid indirectly by the participant through fees or other reductions in returns paid to the investment provider, or by some combination of these methods (Figure 7.10).

Figure 7.10

A Variety of Arrangements May Be Used to Compensate 401(k) Service Providers

Note: In selecting the service provider(s) and deciding the cost-sharing for the 401(k) plan, the employer/plan sponsor will determine which combinations of these fee arrangements will be used in the plan.
Source: Fundamentals, "The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2006"

As noted, 55 percent of 401(k) assets at year-end 2007 were invested in mutual funds. 401(k) plan participants holding mutual funds tend to invest in low-cost funds with below-average portfolio turnover. Both characteristics help to keep down the costs of investing in mutual funds through 401(k) plans. For example, at year-end 2006, 23 percent of 401(k) stock mutual fund assets were in funds that had total annual expense ratios below 0.50 percent of fund assets, and another 54 percent had expense ratios between 0.50 percent and 1.00 percent (Figure 7.11). On an asset-weighted basis, the average total expense ratio incurred on 401(k) participants’ holdings of stock mutual funds through their 401(k) plans was 0.74 percent, compared with an average total expense ratio of 0.88 percent for stock mutual funds industrywide.

Figure 7.11

401(k) Stock Mutual Fund Assets Are Concentrated in Low-Cost Funds

(percent of 401(k) stock mutual fund assets, year-end 2006)

Download an Excel file of this data.

*The total expense ratio, which is reported as a percentage of fund assets, includes fund operating expenses and 12b-1 fees.
Note: Figures exclude mutual funds available as investment choices in variable annuities.
Sources: Investment Company Institute and Lipper (Fundamentals, "The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2006")

Distributions from Defined Contribution Plans and IRAs

With participant-directed defined contribution plans and IRAs representing an increasing share of household retirement assets, the decisions participants make about distributing those assets in retirement has become an issue of increasing interest to plan sponsors, financial institutions, and policy makers.

In late 2007, ICI surveyed recent retirees who had actively participated in defined contribution plans about how they used plan proceeds at retirement. Seventy-one percent of respondents report having more than one option for how their plan assets are distributed at retirement, including the options to take out the entire balance as a lump sum, to take installment payments from the plan, to purchase an annuity, or to leave the assets in the plan and delay taking any distribution. One-fifth of participants who reported having more than one distribution option chose to delay taking some or all of their balance; about one-fifth annuitized some or all of their balance; 11 percent chose to take installment payments from the plan; and 57 percent took some or all of their balance as a lump-sum distribution (Figure 7.12). Of those that chose a lump-sum distribution, only 14 percent spent all the proceeds of the distribution. The remaining participants rolled over some or all of the balance to an IRA or otherwise reinvested the assets.

Figure 7.12

Given the option, more than half of retirees choose lump-sum distribution1,2

(percent of respondents who had multiple distribution options from their defined contribution plans)

Download an Excel file of this data.

1Based upon respondents' recall. Seventy-one percent of respondents indicated they had multiple distribution options at retirement. Responses are from a survey of employees retiring between 2002 and 2007 who were interviewed in the fall of 2007.
2Multiple responses are included.
3Distributions must begin no later than April 1 of the year following a retired person's attainment of age 70½.

Households that own IRAs tend to preserve their IRA assets as long as possible. In May 2007, ICI surveyed households that owned IRAs and asked a series of questions about withdrawals. Of households with a traditional IRA in 2007, 19 percent reported taking a withdrawal in 2006. Withdrawals were typically modest: the median withdrawal is $7,500 and nearly 20 percent of withdrawals totaled less than $2,500. The median ratio of withdrawals to account balance was 6 percent. The most common reason for taking a withdrawal, cited by over 60 percent of individuals who took withdrawals, was to meet minimum distribution requirements. Traditional IRA owners age 70½ or older must withdraw a minimum amount each year or pay a penalty for failing to do so. The required minimum distribution (RMD) is a percentage of the IRA account balance, with the percentage based on life expectancy.

Because current withdrawal activity may not be a good indicator of future withdrawal activity, ICI also asked about future plans. Among traditional IRA-owning households in 2007 that did not take a withdrawal in tax-year 2006, 70 percent said that they were unlikely to take a withdrawal before age 70½ (Figure 7.13). Among all traditional IRA-owning households, 80 percent said they had a strategy for managing income and assets in retirement, and 71 percent of these households said the plan involved preserving traditional IRA assets as long as possible.

Figure 7.13

Likelihood of Withdrawing from Traditional IRA Before Age 70 1/2

(percent of traditional IRA households that did not take a withdrawal in tax-year 2006)

Download an Excel file of this data.

Source: Fundamentals, "The Role of IRAs in U.S. Households' Saving for Retirement"

Mutual Funds' Role in Households' Retirement Savings

At year-end 2007, mutual funds accounted for $4.6 trillion, or 26 percent, of the $17.6 trillion U.S. retirement market (Figure 7.14). The remaining $13.0 trillion of year-end 2007 retirement market assets were managed by pension funds, insurance companies, banks, and brokerage firms.

The $4.6 trillion in mutual fund retirement assets represented 38 percent of all mutual fund assets at year-end 2007. Retirement savings accounts are a significant portion of long-term mutual fund assets (47 percent), but are a relatively minor share of money market mutual fund assets (12 percent).

Mutual fund retirement assets primarily come from two sources: IRAs and employer-sponsored defined contribution plans, such as 401(k) plans. Investors hold roughly the same amount of mutual fund assets in IRAs as they do in employer-sponsored defined contribution plans. At year-end 2007, IRAs held $2.2 trillion in mutual fund assets and employer-sponsored defined contribution plans had $2.4 trillion (Figure 7.15). Among defined contribution plans, 401(k) plans are the largest holder of mutual funds, with $1.7 trillion in assets (Figure 7.16). At year-end 2007, 403(b) plans held $392 billion in mutual fund assets, 457 plans held $78 billion, and other defined contribution plans held $206 billion.

Figure 7.14

Mutual Funds Account for 26 Percent of Retirement Market Assets

(trillions of dollars, year-end, 2000–2007)*

Download an Excel file of this data.

*Data are preliminary.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, National Association of Government Defined Contribution Administrators, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division

Figure 7.15

Mutual Fund Retirement Account Assets

(billions of dollars, year-end, 1991–2007)1

Download an Excel file of this data.

1Data are preliminary.
2Defined contribution plans include 401(k) plans, 403(b) plans, 457 plans, Keoghs, and other defined contribution plans without 401(k) features.
Note: Components may not add to the total because of rounding.
Sources: Investment Company Institute, Federal Reserve Board, and Department of Labor

Types of Mutual Funds Used by Retirement Plan Investors

Of the $4.6 trillion in mutual fund retirement assets held in IRAs, 401(k) plans, and other retirement accounts at year-end 2007, $3.1 trillion, or 68 percent, were invested in domestic or foreign equity funds (Figure 7.16). Domestic equity funds alone constituted about $2.4 trillion, or 52 percent, of mutual fund retirement assets. By comparison, about 54 percent of overall fund industry assets—including retirement and nonretirement accounts—were invested in domestic and foreign equity funds at year-end 2007.

Figure 7.16

Bulk of Mutual Fund Retirement Account Assets Invested in Equities

(billions of dollars, year-end 2007)1

Download an Excel file of this data.

1Data are preliminary.
2Hybrid funds invest in a mix of equities and fixed-income securities. The bulk of lifecycle and lifestyle funds is counted in this category.
3Other defined contribution plans include 457 plans, Keoghs, and other defined contribution plans without 401(k) features.
Note: Components may not add to the total because of rounding.

At year-end 2007, $780 billion, or 17 percent, of mutual fund retirement assets were invested in fixed-income funds (bond or money market funds). Bond funds held $407 billion, or 9 percent, of mutual fund retirement assets, and money market funds accounted for $373 billion, or 8 percent. The remaining $696 billion, or 15 percent, of mutual fund retirement assets were held in hybrid funds, which invest in a mix of equity and fixed-income securities.

Lifestyle and Lifecycle Funds. Lifestyle and lifecycle funds, generally included in the hybrid fund category, have grown in popularity among investors and retirement plan sponsors in recent years. Lifestyle funds maintain a predetermined risk level and generally use words such as "conservative," "moderate," or "aggressive" in their names to indicate the fund's risk level. Lifecycle funds follow a predetermined reallocation of risk over time to a specified target date, and typically rebalance their portfolios to become more conservative and income-producing by the target date, which is usually indicated in the fund's name.

Assets in lifestyle and lifecycle funds totaled $421 billion at the end of 2007 (Figure 7.17), up from $303 billion at year-end 2006. Lifestyle funds' assets were up 26 percent in 2007, increasing from $189 billion to $238 billion. Assets of lifecycle funds were up 61 percent in 2007, increasing from $114 billion to $183 billion. The bulk (88 percent) of lifecycle fund assets is held in retirement accounts, compared with 45 percent of lifestyle fund assets.

Figure 7.17

Lifecycle and Lifestyle Fund Assets by Account Type

(billions of dollars, year-end, 1996 –2007)1

Download an Excel file of this data.

1Data are preliminary.
2A lifecycle mutual fund is a hybrid fund that typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually included in the fund’s name, approaches.
3A lifestyle mutual fund maintains a predetermined risk level and generally uses words such as "conservative," "aggressive," or "moderate" in the fund's name.
*Components not labeled are less than $1 billion.
Note: Components may not add to the total because of rounding.

Mutual Funds' Role in Households' Education Savings

According to the Federal Reserve Board's 2004 Survey of Consumer Finances, about 12 percent of all U.S. households consider future education expenses their most important motivation for saving, compared with 11 percent of households in 2001.

In addition, ICI research finds that 26 percent of households owning mutual funds in 2007 cite education as a financial goal for their fund investments. Nevertheless, the demand for education savings vehicles has been historically modest since their introduction in the 1990s, partly because of their limited availability and investors' lack of familiarity with them. The enactment of EGTRRA in 2001 enhanced the attractiveness of both Section 529 plans and Coverdell Education Savings Accounts (ESAs)—two education savings vehicles—by allowing greater contributions and flexibility in the plans. The enactment of the PPA in 2006 made permanent the EGTRRA enhancements to Section 529 plans.

Assets in Section 529 savings plans grew 25 percent in 2007, increasing from $90.1 billion at year-end 2006 to $112.5 billion by year-end 2007 (Figure 7.18). The number of accounts rose to 8.3 million, and the average account size was approximately $13,500 at year-end 2007.

Figure 7.18

Section 529 Savings Plan Assets Continue to Grow

(billions of dollars, year-end, 1998–2007)

Download an Excel file of this data.

Note: Data were estimated for a few individual state observations in order to construct a continuous time series.
Sources: Investment Company Institute and College Savings Plans Network

Mutual funds accounted for almost all of the $112.5 billion Section 529 savings plan market at year-end 2007. Funds also managed $6 billion in Coverdell ESA—formerly Education IRA—assets at year-end 2007.

A 2003 ICI survey of households with children age 18 or younger found that households use a variety of investments to save for college. Indeed, 93 percent of households saving for college used taxable investments to achieve this financial goal (Figure 7.19). Forty-two percent of parents saving for college used U.S. Savings Bonds. Twenty percent of parents saving for college used education-targeted savings programs, such as state-sponsored 529 prepaid tuition plans, state-sponsored 529 college savings plans, and Coverdell ESAs. Most of the parents using education-targeted savings programs were also saving for college with taxable investments.

Figure 7.19

Households Use Multiple Investments to Save for College

(percent of respondents saving for college, 2003)1

Download an Excel file of this data.

¹Multiple responses are included.
²Education-targeted savings programs include state-sponsored 529 prepaid tuition plans, state-sponsored 529 college savings plans, and Coverdell ESAs.
Source: Profile of Households Saving for College