Fidelity Warns That Boomers Are Too Invested in Stocks

Photo (cc) by wsilver

One of the biggest administrators of U.S. retirement plans is warning baby boomers that they might have too much retirement money invested in stocks.

Fidelity Investments’ quarterly analysis of its customers’ 401(k) accounts and individual retirement accounts (IRAs) shows that many older 401(k) account holders have stock allocations higher than recommended for their age group.

The findings of the analysis, which were released Thursday, include:

  • 18 percent of people ages 50-54 had a stock allocation at least 10 percent higher than recommended, and 11 percent had 100 percent of their 401(k) assets in stocks.
  • 27 percent of people ages 55-59 had a stock allocation at least 10 percent higher than recommended, and 10 percent had all of their 401(k) assets in stocks.

Fidelity’s president of workplace investing, Jim MacDonald, states in a press release:

“One thing we learned from the last recession is that having too much stock, based on your target retirement age, in your retirement account can expose your savings to unnecessary risk — it’s the hidden danger that many workers are unaware of. This is especially true among workers nearing retirement, who should be taking steps to protect what they’ve worked so hard to save.”

Fidelity did not offer precise recommendations for how much stock baby boomers should hold.

Instead, it simply noted that a booming stock market over the past five years has left many investors with a greater percentage of their 401(k) plans invested in stocks. That leaves such investors more vulnerable to the ravages of a stock market downturn.

If you’re unsure how much of your savings should be in stocks, start with the formula that Money Talks News founder Stacy Johnson suggests as a guideline:

  1. Decide how much you can put into long-term savings. “Long-term” means money you won’t need for at least five years.
  2. Subtract your age from 100 and put that percentage of your long-term savings into a simple, unmanaged stock index fund. So if you’re 40, that’s 60 percent of your savings.
  3. Take the remaining part of your long-term savings and divide it equally. Leave half in an interest-bearing, risk-free savings account, and put the other half into a bond mutual fund.

To learn more about investing your retirement savings wisely, check out:

Do you feel you’re over-invested in stocks right now? Let us know what you think below or on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
What is the Cheapest Grocery Store?
What is the Cheapest Grocery Store?

Aldi, Kroger and Walmart: Which grocery store is the cheapest?

8 Things You Should Never Put in a Microwave
8 Things You Should Never Put in a Microwave

A microwave can be a busy cook’s best friend. But heating certain things in a microwave can cause disaster.

Retiree Households Lose $111,000 to This Social Security Misstep
Retiree Households Lose $111,000 to This Social Security Misstep

A study finds 96% of retirees make this mistake when claiming Social Security benefits.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

6 Investing Tools That Help You Diversify
6 Investing Tools That Help You Diversify

Here’s how you can lend to startup businesses, fund social causes or get in on investments once available only to the very rich.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

9 Mistakes People Make When Cleaning With Vinegar
9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

4 States Where Taxes on Social Security May Fall Soon
4 States Where Taxes on Social Security May Fall Soon

These states are considering reducing — or even eliminating — income taxes on Social Security benefits.

10 Things Successful Retirees Do Differently
10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.