Baby boomers, heavily invested in stocks, are putting retirement at risk

Mar 2012
58,994
40,424
New Hampshire
Americans are more financially prepared for retirement than they were just a few years ago, recent research found.
One of the reasons for that good news might be bad.

Many people approaching retirement age today are heavily invested in stocks, potentially leaving their savings vulnerable to the next recession.

"If there was a market downturn, they could lose a significant chunk of what they've worked so hard to save," said Meghan Murphy, the vice president of thought leadership at Fidelity. Roughly half of baby boomers have their 401(k) plans invested in riskier allocations than Fidelity suggests for their age group, Murphy said.

In 2015 nearly 30 percent of individual retirement accounts were more than 90 percent invested in equities — what the Employee Benefit Research Institute diagnoses as an "extreme allocation." Roth IRA accounts among people 65 to 84 were more than 63 percent invested in equities, according to the Institute.

The S&P 500 index rose more than 200 percent over the last decade. As a result, stocks have taken on a greater role in many portfolios. "People love to see the market go up," Murphy said, "but you need to watch your equity exposure, too."
For some older investors, the decision to stay in the market in a significant way is likely deliberate, said retirement savings expert Ed Slott. "Baby boomers are more likely to live to 90 or 100," Slott said. "Some may feel, 'I'm getting close to retirement, but I'm still in it for the long haul.'"

Baby boomers, heavily invested in stocks, are putting retirement savings at risk: study
 
Jun 2014
50,600
52,024
United States
Americans are more financially prepared for retirement than they were just a few years ago, recent research found.
One of the reasons for that good news might be bad.

Many people approaching retirement age today are heavily invested in stocks, potentially leaving their savings vulnerable to the next recession.

"If there was a market downturn, they could lose a significant chunk of what they've worked so hard to save," said Meghan Murphy, the vice president of thought leadership at Fidelity. Roughly half of baby boomers have their 401(k) plans invested in riskier allocations than Fidelity suggests for their age group, Murphy said.

In 2015 nearly 30 percent of individual retirement accounts were more than 90 percent invested in equities — what the Employee Benefit Research Institute diagnoses as an "extreme allocation." Roth IRA accounts among people 65 to 84 were more than 63 percent invested in equities, according to the Institute.

The S&P 500 index rose more than 200 percent over the last decade. As a result, stocks have taken on a greater role in many portfolios. "People love to see the market go up," Murphy said, "but you need to watch your equity exposure, too."
For some older investors, the decision to stay in the market in a significant way is likely deliberate, said retirement savings expert Ed Slott. "Baby boomers are more likely to live to 90 or 100," Slott said. "Some may feel, 'I'm getting close to retirement, but I'm still in it for the long haul.'"

Baby boomers, heavily invested in stocks, are putting retirement savings at risk: study

Most folks are still trying to climb out of the hole in which the last Republican President left our economy back in 2008. They have two choices:

1. Retire with inadequate funding.
2. Take a wild-eyed chance that we'll not have another major economic downturn before they either cash out their retirement savings or die.
 
Mar 2012
58,994
40,424
New Hampshire
Most folks are still trying to climb out of the hole in which the last Republican President left our economy back in 2008. They have two choices:

1. Retire with inadequate funding.
2. Take a wild-eyed chance that we'll not have another major economic downturn before they either cash out their retirement savings or die.
I also wonder how many older people pay attention to what happens in their portfolios? I keep hearing some say "you can never go wrong in real estate." Others probably hope we will have another dot.com type bubble before they retire.
 
Jun 2014
50,600
52,024
United States
I also wonder how many older people pay attention to what happens in their portfolios? I keep hearing some say "you can never go wrong in real estate." Others probably hope we will have another dot.com type bubble before they retire.

Desperate times demand desperate measures.
 

Libertine

Moderator
Apr 2015
15,905
3,078
Katmandu
Most folks are still trying to climb out of the hole in which the last Republican President left our economy back in 2008. They have two choices:

1. Retire with inadequate funding.
2. Take a wild-eyed chance that we'll not have another major economic downturn before they either cash out their retirement savings or die.
Luckily things are looking up after eight years of the last dem POTUS working to tamp down recovery.

With the best economy in 17 years maybe folks can start putting a little back for retirement.
 

Libertine

Moderator
Apr 2015
15,905
3,078
Katmandu
Americans are more financially prepared for retirement than they were just a few years ago, recent research found.
One of the reasons for that good news might be bad.

Many people approaching retirement age today are heavily invested in stocks, potentially leaving their savings vulnerable to the next recession.

"If there was a market downturn, they could lose a significant chunk of what they've worked so hard to save," said Meghan Murphy, the vice president of thought leadership at Fidelity. Roughly half of baby boomers have their 401(k) plans invested in riskier allocations than Fidelity suggests for their age group, Murphy said.

In 2015 nearly 30 percent of individual retirement accounts were more than 90 percent invested in equities — what the Employee Benefit Research Institute diagnoses as an "extreme allocation." Roth IRA accounts among people 65 to 84 were more than 63 percent invested in equities, according to the Institute.

The S&P 500 index rose more than 200 percent over the last decade. As a result, stocks have taken on a greater role in many portfolios. "People love to see the market go up," Murphy said, "but you need to watch your equity exposure, too."
For some older investors, the decision to stay in the market in a significant way is likely deliberate, said retirement savings expert Ed Slott. "Baby boomers are more likely to live to 90 or 100," Slott said. "Some may feel, 'I'm getting close to retirement, but I'm still in it for the long haul.'"

Baby boomers, heavily invested in stocks, are putting retirement savings at risk: study
After a decade of near zero interest rates, anemic economic growth in the US, and most all private employers pushing all employees pensions into 401ks, a grossly overvalued stock market is a concern.

I have been buying rental property as an income stream for retirement in case the market tanks, but managing it on the side is a pain.
 
Jan 2016
57,388
54,198
Colorado
Luckily things are looking up after eight years of the last dem POTUS working to tamp down recovery.

With the best economy in 17 years maybe folks can start putting a little back for retirement.
Things are NOT "looking up". What's WRONG with you?!?? Things are looking DOWN. That's a FACT. Economic growth is SLOWING DOWN. Around the entire world. And most certainly in the United States, too. Do let me know if you are seriously trying to dispute that, Libertine. And the vast majority of economists and business forecasters are expecting a RECESSION in 2020, as we have discussed before. Virtually NO ONE expects economic growth in 2019 to be as strong as it was in 2018. Essentially, Trump blew a giant hole in the budget in exchange for a few QUARTERS (2018 Q2 and 2018 Q3) of above-trend growth, and now we are reverting to what will be the future of sub-2.0% growth.

Fed Chief Jerome Powell was EXPLAINING this in his last Congressional testimony on February 27th, and former Fed Chairwoman Janet Yellen was also just commenting on it yesterday, saying that the ~3.0% of 2018 was simply "not sustainable". Don't you EVER listen to them?!??
 

Libertine

Moderator
Apr 2015
15,905
3,078
Katmandu
Things are NOT "looking up". What's WRONG with you?!?? Things are looking DOWN. That's a FACT. Economic growth is SLOWING DOWN. Around the entire world. And most certainly in the United States, too. Do let me know if you are seriously trying to dispute that, Libertine. And the vast majority of economists and business forecasters are expecting a RECESSION in 2020, as we have discussed before. Virtually NO ONE expects economic growth in 2019 to be as strong as it was in 2018. Essentially, Trump blew a giant hole in the budget in exchange for a few QUARTERS (2018 Q2 and 2018 Q3) of above-trend growth, and now we are reverting to what will be the future of sub-2.0% growth.

Fed Chief Jerome Powell was EXPLAINING this in his last Congressional testimony on February 27th, and former Fed Chairwoman Janet Yellen was also just commenting on it yesterday, saying that the ~3.0% of 2018 was simply "not sustainable". Don't you EVER listen to them?!??
Powell and Yellen called for 2% in 2018 a few years ago, still better than the 1.59% average annual real growth we experienced under Obama.
 

HCProf

Council Hall
Sep 2014
29,300
18,822
USA
After a decade of near zero interest rates, anemic economic growth in the US, and most all private employers pushing all employees pensions into 401ks, a grossly overvalued stock market is a concern.

I have been buying rental property as an income stream for retirement in case the market tanks, but managing it on the side is a pain.
I would love to get into rental property but our first experience with it tainted the whole idea. We both had homes when we first got married and tried the rental thing. My condo was rented to a lovely elderly lady and she ended up buying it but my husbands house was a nightmare. We had one renter, a woman with 5 kids. She did not pay us one dime for almost 2 years for rent and we could not evict her easily. We ended up selling it to get her out. Never again. LOL
 

Libertine

Moderator
Apr 2015
15,905
3,078
Katmandu
I would love to get into rental property but our first experience with it tainted the whole idea. We both had homes when we first got married and tried the rental thing. My condo was rented to a lovely elderly lady and she ended up buying it but my husbands house was a nightmare. We had one renter, a woman with 5 kids. She did not pay us one dime for almost 2 years for rent and we could not evict her easily. We ended up selling it to get her out. Never again. LOL
We've had some bad experiences as well. To make things worse in the are were the property the market is for low cost housing, there isn't a long term market for nice housing. Most of the renters are on the government dole and you have to be there on the day the checks come before they spend it. They don't have bank accounts so it is an all cash business. Have a major remodel on one right now, but good renters in all the other properties.