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
It’s Worth Paying Extra for These 14 Items
It’s Worth Paying Extra for These 14 Items

Here’s where to find the sweet spot at the intersection of price and quality.

3 Easy Ways to Get Laundry Soap for Nearly Nothing
3 Easy Ways to Get Laundry Soap for Nearly Nothing

Not using any of these methods for saving on laundry detergent? Then, you are washing money down the drain.

10 Products That Upgrade Your Home for Less Than $45
10 Products That Upgrade Your Home for Less Than $45

Make a fresh start with these affordable Amazon buys.

How Much of My Social Security Benefit Can My Ex Take From Me?
How Much of My Social Security Benefit Can My Ex Take From Me?

A man wonders if his ex-wife will siphon away his Social Security benefit.

12 Ways to Never Pay Full Price for Anything
12 Ways to Never Pay Full Price for Anything

Stop paying retail prices. Here are plenty of ways around that.

View this page without ads

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

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

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.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

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.