Where the Worst Stock Market Declines Occurred

Here's how the 1-year $9.8 trillion decline hit 401(k)'s, pensions, and total assets.

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Because of the shift from traditional pensions to 401(k)'s and IRAs, more than half of households own stocks. So when the market tanked, these households felt it directly.

Equities have declined $9.8 trillion since last year, according to a recent paper from the Center for Retirement Research at Boston College. A portion of that decline, from $23.5 trillion in October 2007 to 13.6 trillion in October 2008, affected commercial banks and insurance companies. But $7.4 trillion hit Main Street portfolios either directly or indirectly.

Half the decline in value impacting households occurred in retirement assets. The losses were divided almost equally between defined-contribution plans (401[k]'s and IRAs) and traditional pensions. Approximately $2 trillion of the losses in the past year directly struck 401(k)'s and IRAs. Another $1.9 trillion decline hit traditional pensions. And Americans suffered an additional $3.6 trillion in losses outside their retirement funds.

Here's a look at where the declines occurred.

One-Year Equity Declines

From Oct. 9, 2007, to Oct. 9, 2008, in Trillions of Dollars

Type of holding value Oct. 9, 2007 value Oct. 9, 2008 1-year decline
Defined-contribution plans total $4.7 $2.7 $2.0
Private defined- contribution plans 2.6 1.5 1.1
IRAs 2.0 1.1 0.8
Federal government plan 0.2 0.1 0.1
Defined-benefit plans total 4.4 2.6 1.9
Private defined-benefit plans 2.1 1.2 0.9
State and local plans 2.4 1.4 1.0
Household nonpension assets total 8.5 5.0 3.6
Other 5.8 3.4 2.4
Total 23.5 13.6 9.8

Note: Other includes commercial banks, insurance companies, savings institutions, equities held by foreign residents, state and local government nonretirement holdings, closed-end funds, exchange-traded funds, and holdings of brokers and dealers. Figures may not add to totals because of rounding.

Source: Center for Retirement Research at Boston College, 2008