The headline buries the lead.
>The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research.
Why did I have to scroll so much to find the only relevant comment in the entire thread?
This is the important info. Old people have always had a higher share of the stock market by design since being older means having more time for growth. Nothing new or unexpected here.
What's new and problematic is that today's young and middle aged folks have a smaller share than the young and middle aged people from the previous generations had.
Why is that problematic and how did it happen?
Let me answer the second part for you. The generation that had been contributing to 401Ks since the 1990s is now old.
It wasn't that the old people bought up all the stock. It's that the people who have been buying stock for three decades are now old.
It could potentially become problematic when stock prices drop due to 80% of all held stock being sold to pay for retirees living expenses over the next 2 decades. This effect will be 33% stronger than it was 20 years ago.
>80% ... Being sold... Over the next two decades.
Eh... Only if no one is buying. At worst this causes a stagnation.
What you are referencing is symptom of a bigger issue of population collapse and resource allocation.
If there were more young people working more full time jobs contributing to 401Ks, this would not be an issue.
But there are fewer younger people who wait longer to with fewer full time jobs and contribute less to retirement.
The solution could be to tell high schoolers to skip college, get jobs, get married, and have kids... Lol
The solution could also be that we return to our core values as a nation and welcome immigrants, expanding legal immigration to at least 3M new Americans every year.
Because most immigrants that are currently coming in illegally are providing low skilled work. Then companies get cheap labor for low skilled jobs. Then the price of goods drop. Then middle class people have more money to invest.
Not to mention those immigrants who are now legal are also contributing through spending. This helps scale up the production which further lowers the cost of goods due to the cheaper cost of producing in larger quantities.
Comparing us to Europe as a whole is a bad argument. Different countries have different populations and regulations (yes I know about the EU). America generally has lower taxes and lower government services. This leaves less potential for the low skilled immigrants to be a net loss to the economic system.
Literally every reputable economist ever agrees that more immigration is a plus to the economy as a whole. There will be certain populations and careers affected more than others, but a rising tide lifts all boats.
And for the middle class, low skilled immigrants aren’t the ones “taking your jobs”. The immigrants who are currently coming legally (and therefore have the money to travel and deal with all the regulations around immigration) are more educated and are actually competition with the middle class.
That's a lot of words to say slave labor is supposedly house for economy.
Because by that argument, just import more slaves..
And anyone who doesn't think those are slaves crossing the border, isn't paying attention.
Maybe it’s also paying people enough money so that they can contribute to retirement. $20/ hour is $40k per year. Not much investment power when living expenses are taken out.
Not many jobs are willing to pay more than that and I get that starting wages are low, but typically growth is no more than $1 a year. Never gonna invest a meaningful amount with that paltry amount of wiggle room.
Half a college students don't graduate, half of graduates stunt get jobs that require college.
Instead if running up debt for 4-6 years, maybe working up though a skill field worlds be better.
A plumber makes me than most people who go to college.
The problem is that millennials hold more consumer/student debt and own their homes less often… so I’m a little worried how much will be reinvested. You’ll have to excuse me for not trusting trickle down economics
two decades ago far more people were retiring on pensions than today. The number of Americans with defined benefit (pension) plans has dropped from over 30% in the 90s to almost nothing now.
This is a fair assumption, but then the question becomes where were the pensions holding all their investments? Does this mean that investments held on someone's behalf are/were not attributed to them? How do existing pension funds work?
The fact that older Americans are holding a much larger proportion of the publicly available investments means that less is available to younger investors and there's likely more price inflation due to lower availability. As price appreciates, holders need to divest less to drawn down their investments.
> 401ks started in the 90s
No, the controlling legal frameworks, the Employee Retirement Income Security Act (ERISA) and section 401(k) of the Internal Revenue Code, were passed in 1974 and 1978 respectively. Even given the need for regulatory agency rule-making and corporate adoption after that, 401ks were widespread by the early 80s. In particular [“Nearly half of all large employers in the U.S. were offering 401(k) plans to their workers by the end of 1982.”](https://www.guideline.com/blog/evolution-of-401k/)
There have been a variety of incremental improvements in access since then, to the point that [68% of workers at private employers have access to retirement plans now](https://www.bls.gov/opub/ted/2021/68-percent-of-private-industry-workers-had-access-to-retirement-plans-in-2021.htm), but it’s clearly inaccurate to describe the 401k as starting in the 90s.
Nearly half of all large employers and almost no medium and small still means a large majority did not have access to a 401k in 1990. My first was in 2004 as an example. I’d been working since 1985.
The quote was about 1982 not 1990. I’d be curious if you can find specific data about 1990. But either way, it’s clearly not true that 401ks “started in the 90s” if a large proportion of employees had access to them in the 80s.
We could go to 2021 where CBS claims 56% still don’t have access to a 401k based on census data…
https://www.cbsnews.com/news/retirement-plan-access-states-where-it-is-worst/
I think that number isn’t accurate, but that what a quick google finds
Interesting, thank you! The census might have issues due to self-reporting (it’s entirely possible some people have plans available or are even enrolled in a plan without knowing it) but I wouldn’t think it ought to be too far off… Edit: the [study quoted in the article acknowledges that the census data is problematic and potentially flawed](https://eig.org/state-retirement-coverage-2023/) (see note [1]) but uses it anyway.
The other challenge is that the various numbers we’ve found aren’t apples to apples since the reference populations are quite different. It makes sense that “large companies”, “private employers” and “all workers” would have rather different numbers.
Are you asking if you can open a 401k account but never contribute?
Technically yes but practically it would depend on your employer being willing to do that. Since it's more work for them and also likely contributes to the plan administration fees (which many employers cover) I would guess that the answer would be "no" more often than "yes."
You're technically correct, but I thought that they were not originally intended to replace SS or pensions, just supplement. But then in the 80'-90's pension system was in practice largely abandoned and over that period using 401k as primary means of personal retirement saving became commonplace. I started working in the mid 90's and the established company I was with added a retirement plan only after I was there a year or so.
How much of this is due to the shift from pension funds holding stock on behalf of old people towards the old people now owning stock in defined contribution plans?
Precisely. It like the analyses that show young people don’t have much wealth.
You don’t say! Almost like people acquire most of their wealth over time and peak wealth is right before you retire.
Define large scale. Lets say you have an older person who is fairly wealthy with a net worth of $10 million. That person has one child who inherits it all and decides taxes be damned they are going to liquidate it all at once. Does that $10 million sale move the needle in the market one iota? The answer is no.
If 1000 people with $10 Million happened to die on the same day and ALL their heirs decided to sell off at the same time then perhaps at $10 Billion dollar sell off has some short term effects on the market. What is more likely to happen is when those people die their heirs sell off some of it and keep most of it invested to grow.
There is no tax due - step up in cost basis. So honestly, there may be no reason for the heir to sell off the stock. If they do, they are likely to invest in different stocks. Most won't hold on to cash.
Not to mention there's probably a pretty big overlap of the kinds of investments the deceased have and their heirs want. If a now dead 90 year old had their kids between 20-30 years old, the kids will be 60-70 years old when they get the money. Not exactly the "VTSAX and chill" set.
And even if the money goes to grandkids in their 30s and it does go right into VTSAX, the money is merely going to get spread differently in the market, not taken out entirely (well, we sure hope not).
It's not like all of the boomers are going to die on the same day. People have been gradually dying and liquidating their portfolios or passing them on to their kids everyday.
A bit more complicated than that I think, there are quite a few studies comparing the wealth of boomers and millennials. This one for example:
https://thehill.com/homenews/4319352-are-millennials-worse-off-than-boomers-heres-how-they-stack-up-financially/
A few key findings:
-The median millennial had 30% less wealth than their boomer counterparts at 35, adjusted to today’s money.
-At age 35 62% of boomers owned a house compared to only 49% of millennials.
-At 35 14% of millennials have a negative net worth vs only 8.7% of millennials.
Wealth inequality gaps are growing and living costs are growing.
I wonder how much of this is due to a shift in demographics like people becoming more urban (and thus living in a more expensive area).
My boomer parents stayed in their small town. I moved to "the city". My kids moved to Seattle.
All of the “avocado toast” arguments ignore all of the economic trends the last few decades.
-House prices as multiple of salary have increased massively, meaning it is harder to get on the property ladder. Median house price in the US in 1970 was $23,900 vs 408,100 in 2021.
-House price rises has had a direct impact on ever increasing rents.
-The gap between the incomes of the upper middle class and the lower middle/working class have grown since boomers were young. The boomer generation without higher education could still achieve economic security through hard work, which is increasingly becoming untrue.
People shouldn’t have to move hundreds of miles away from their family and the area they grew up in to have a basic quality of life. There are reasons why low cost of living areas are cheaper, usually they have reduced economic opportunities, with lower salaries. Some industries are hyper focused in certain cities.
Regarding "hard work", what are you referring to? Hard MENTAL or hard PHYSICAL work? Because making an income from either is still very much possible without a four year degree. And actually, the combination of both mental and physical lands you in what is a "gold collar" job - these are mostly building trades, but at the rate of retirement in those industries, a new generation will be in demand.
And low COL areas are usually worth it since there are many skilled jobs that are not being met.
The US economy needs ALL jobs at all salary levels in all regions in order to function economically for the long term - mechanics, tradespeople, knowledge workers, service workers.
I don’t think it matters if it’s physical or mental work, the idea that people are arguing that someone working full time shouldn’t be able to afford to have a basic standard of living, without struggling and be to achieve modest home ownership, is wild.
I honestly don’t understand why people have this debate. People of all generations are complaining about the rising cost of living, the economic data clearly shows that house prices are outpacing wages. (Houses are up 30% since 2019). I’m not sure what there is to disagree about, or why the boomer generation takes people talking about the economic trends so personally.
There is no reason salaries need to (or should) adjust with housing prices. In fact, we don't want them to since wage inflation also contributes to the issue we have now with prices as a whole.
Affordability of housing is relevant. I'm pointing out that wages do not or should not rise consistent with housing increases. That has never been the case.
flipside, median income is better for every subsequent generation when accounting for inflation and transfers. https://www.federalreserve.gov/econres/feds/files/2024007pap.pdf
"negative net worth" = lots of unsustainable debt. Because the boomers had terrible money management skills and also held/hold similar amounts of debt, but they saved enough to mask the problem by the time they retired. Mostly. Usually.
Woahh dude that’s crazy, I guess that also means the 50-80 year old age group holds the same % of stocks today as the 50-80 year old group held in 1990, so we have nothing to worry about.
Same news flash - a shitload of it is used for retirement, sold off in chunks every year. A tremendous amount of americans have 401ks.
And also a good chunk will be left to children. Some of it by regular income people who want to hand something to their kids.
Every generation will be the same - the oldest own the most, by %.
Correct. But the unspoken problem with boomers is DEBT LEVELS that they hold, which they happen to have in common with younger counterparts. If they would pay off the mortgages, car loans, and other consumer debts, there would be less in the pot, but not as much needed in terms of risk. Risk in older age is, of course, health care. No one wants to inherit estate debts. It's the "wealth mirage".
There is a serious issue with young people today having nothing to invest. They can't afford the basics, let alone a luxury like investing. They can't even get the simplest investment there is; a house.
I would also guess that a lot of that stock is held in retirement accounts, like a 401k, which younger workers aren't offered, or are being held by investment firms like Blackrock, Berkshire Hathaway, or Vanguard.
401k’s didn’t even exist until 1978. Pre-1978 there were CODA’s. Those are not 401k’s. And that number is actually pretty close to 50%.
401k’s have a higher reach yea it’s because they’re infinitely cheaper to offer.
So older generations were not offered 401k’s because they didn’t exist and really gain popularity until the 1980’s and 90’s. They mainly relied on CODA’s and social security
It’s interesting that you say most workers would be better off with a pension than a 401k. I just started a state gov job and am deciding between a pension where it replaces 70% of my income if I’m there 32 years or a member directed plan where I put in 10% and the state puts in 7.5% along with 4% health account that takes 15 years to vest
Older workers used to be younger workers... :) I don't quite understand your opening statement. I split the difference and save basically half my salary in a 403(b) and IRAs, and have a pension. My pension does not have a COLA, so I count it along with SS to simply be a stable income base. Obviously that savings is mostly held in Roth vehicles + a brokerage account for that reason.
Still not as secure as a pension... and that's only 17.5% of income you are putting in. But we don't have enough information such as age. If you are in your early 20s, you would probably be fine with either option, so long as you invested wisely in a 90-100% stock allocation. The key is do you see yourself staying in this job for the 30+ years for full retirement? If unsure, then the self directed plan makes sense. Otherwise, although I am not entirely happy with a 70% replacement (mine is closer to 87% and I only contribute 7.5%), then I would say go with the pension.
It was a long and gradual ramp up, and many companies didn’t offer them for a long time. Some companies still don’t offer them today. I only had access to a 401k for 5-6 years, so it was just IRAs for me and that won’t get you far. Most of my retirement savings is just regular brokerage.
When you're looking into working horizons of 40+ years, social security becomes a very meaningful income and nobody who contributed 5% regularly (plus whatever match they may have had) is actually going to need to work for 52 years.
They'll need to work til the lowest bound of social security whatever it is at the time (62 currently) and supplement the SS checks with their sizeable investments, even if the investments alone would be a little short.
Contrary to popular belief based on literally nothing more than the last TWO years, most Gen Z will own a house and have it paid off or close to it by SS retirement age, on top of that 5% 401k contribution for many of them.
Are you telling me an industry that forces customers to pay their employees thru tipping doesn’t offer retirement benefits? Shocking!
Maybe the tip screen should allow customers to defer that tip into a retirement plan the worker can’t touch til they’re 59.5.
Self employed 401k’s exist. Youre right service industries aren’t offered it. It’s partially because turnover is so high in the service industry.
You also need to clarify what you mean by service industry because services are prevalent everywhere. Veterinary services, financial services. Are you talking about restaurant servicing?
>the longer people hold stocks the more they own.
Isn't that beside the point? If you only consider how long people hold stocks, you effectively assume everyone holds the same amount and it's just that older people have held them longer.
So of course that ignores the entire point that many younger people don't even hold any stocks at all.
Thats true. When that happens it lowers the age of those holding stocks. I'm guessing a lot of those funds will be in IRA or 401k buckets where their kids will have to sell within a certain number of years.
They don’t have to sell all the stock, you can take the RMD in stock. They may have to sell stock if needed to pay tax on the withdrawn stock.
A lot of younger people probably will liquidate for living expenses, etc.
You are correct. They don't have to sell all the stock but they do have to sell all of it in a certain amount of time.
[https://smartasset.com/taxes/401k-inheritance-tax](https://smartasset.com/taxes/401k-inheritance-tax)
They have to withdraw it all in the required timeframe, they don’t have to sell it all. The distinction doesn’t really matter except in the context of this post talking about stocks.
How young do you think the people getting these stocks are going to be? I'm in my early fourties and my parents are easily going to live another ten to fifteen years (at least).
Will they? Or are they going to eat up all their earnings in Healthcare costs and being put in nursing homes? Or just blow it all because they don't care?
True. And many of those children inheriting will be considered “older” or very close to it as defined by that article— age 55 or older. I don’t think there will be a large transfer to people under 45.
Nah. Retirement homes and medical facilities are going to sink their teeth into it. It's already happening (former hospice SW).
Access to quality end of life medical care is going to crash relatively soon & costs for all care (shitty and otherwise) will spike in obscene ways.
A good facility already costs into the 5 digits monthly and almost nobody can afford it. I do think there's a natural ceiling where people will not be able to or willing to pay millions of dollars for one or two slightly less shitty final years. The government also cannot just deny end of life care, so anyone with assets will still shield them through trusts and donations and let the state take care of them without burning their millions.
Some of them, yes.
The others’ estates will go toward massive healthcare bills for life-prolonging medicine and hospice care.
1 out of 3 US hospitals are owned by private equity firms.
I think you under estimate the cost of end of life care. I believe the average cost in your last month is 30-40k. Hospitals and any long term care facilities will eat them up as most seniors do not simply drop dead but rather ongoing and worsening health conditions.
20 years ago more retirees relied on company pensions
Now we've moved away from company pensions to IRAs and 401ks for retirement guess what happened? Less people have company pensions and they have more money in 401ks and IRAs.
SHOCKING!!!!
People bad with numbers lol. You can model this out. Take a group people, assume they are each age 22-80, so there are 59 people. Suppose they represent the market. Assume all of them invested $1 per year since age 22 until age 80 and achieve 7% per year. Thus the guy age 22, say has $1.07 and has 0.13% of the market. No surprise, just starting. The people age 60-80 own approx 80% of the market.
Compound returns are insane.
I agree with the premise, but someone forgot about inflation. That $1 that the 80 year old set aside 59 years ago in 1965 is the equivalent of $9.67 today.
[Don't mind me](https://media2.giphy.com/media/v1.Y2lkPTc5MGI3NjExNXl5ZG5kMWxjM3ljNGh3Njg4MGRjNWczNDcyYmx0bzZnZWQ0ZmdycyZlcD12MV9pbnRlcm5hbF9naWZfYnlfaWQmY3Q9Zw/jUwpNzg9IcyrK/giphy.gif)
I remember well being 22 years old. I graduated college and started working at what was, in the pre-dot-com-bubble, one of the largest companies in the world.
I was surrounded by people who were millionaires from their stock options (my boss kept grumbling that his wife's Suburban got more expensive every day, as he watched the stock climb). Meanwhile my options were granted at what turned out to be an all-time high.
Then the dot-com crash happened. Layoffs. Misery. My entire generation was complaining about our prospects. Woe was us, we missed the opportunity to get rich. From the time I started working, it took *15 years* for the Nasdaq to get back to where it had been.
And now my cohort are the ones with high NW and silly salaries, and the next generation is coming along, saying the same thing. Yes, of course there are differences. There always are. Housing is legitimately more expensive. A friend just got accepted into the same school I paid $30K/year for, but it's now $80K/year.
But sure as rain, in 30 years a large percentage of the now-20-year-olds are going to be worth millions (in today's dollars), and their kids will be saying that their parents climbed the ladder and pulled it up with them.
Buy gold?
Edit: I read the article. It was dumb and pointless. "Old people own lots of stock, if they sell, it could cause prices to drop. But, really, institutional investors own the majority of stock, so old people selling probably won't really be that bad."
Also, no kidding old people sell stock. That's kind of the point.
Old people sell stock. Young people buy it. Old people own less and less stock. Young people own more and more stock. Eventually the young people own all the stock, but by then they’re the old people so old people still own all the stock.
That’s so unfair. Old people always win. How can a young person get ahead?
also, it would be a great thing for young people if the prices dropped anyway. imagine being able to buy all these businesses at less than their value.
Is this news? I would imagine 75 years ago the bulk of the market was also owned by older adults? Has there been a time in history when this wasn’t the case ?
We are the first generation that is generally “sans pension”. Therefore we needed to accumulate savings so as to fund our own pensions. What did the world expect?!? Our lifestyle likely isn’t that much better it’s just how we had to structure our retirements. This was inevitable.
Americans 55 and older have a large and growing share of stock ownership, and that could prove to be a major problem for the market in the event of a downturn.
The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research. And Americans 70 and older now have an "astonishing" 30% share.
“As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — your grandma,” economist David Rosenberg said in a newsletter Wednesday.
Why should we worry about retirees owning so much of the stock market? The concern stems from the fact that older investors can’t weather a downturn in the same way as younger investors, who tend to have longer time horizons for their investments.
The S&P 500 hit a new record high earlier this month, and the index is up 22% in the past year. If the stock market takes a dip, older investors might decide it's a good time to sell equities in order to shift to less volatile investments like bonds or cash.
Older Americans own larger share of the stock market
At the end of 2019, the share of equity ownership by Americans ages 55 and over was lower — around 75%. A decade ago, it was roughly 70%, and 20 years ago it was only about 60%. This growth is a potential issue for the health of the market.
“Retirees don't have the luxury to buy and hold through a market downturn,” Rosenberg wrote. “If a downturn does materialize, demographically induced selling is a force that could exacerbate the spiral powerfully.”
The thinking goes that Americans who are at or near retirement age are more likely to sell stocks or even exit the market entirely if their portfolios start to take a hit because they’ll want to make sure they have enough money in retirement. This behavior could worsen a sell-off.
As older Americans' ownership share has risen, there's been a decline in the share of equities ownership by people ages 40 to 54. It's at about 15% currently, down from 20% a decade ago and roughly 30% in 1990, according to the report.
Keep in mind, however, that individual investors aren't the only holders of stocks. In fact, **institutional investors own a majority of public companies' equities**, according to Fed data. So while it's true that retirees have strong influence in the stock market and their behaviors are therefore important to understand, they're also not the only big players.
Imagine being in a generation that has the their net worth automatically going up 10% a year from just passive income… lecture workers who want above inflation raises… for being lazy…
No mention of 401ks specifically. Here is the article:
Americans 55 and older have a large and growing share of stock ownership, and that could prove to be a major problem for the market in the event of a downturn.
The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research. And Americans 70 and older now have an "astonishing" 30% share.
“As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — your grandma,” economist David Rosenberg said in a newsletter Wednesday.
Why should we worry about retirees owning so much of the stock market? The concern stems from the fact that older investors can’t weather a downturn in the same way as younger investors, who tend to have longer time horizons for their investments.
The S&P 500 hit a new record high earlier this month, and the index is up 22% in the past year. If the stock market takes a dip, older investors might decide it's a good time to sell equities in order to shift to less volatile investments like bonds or cash.
Older Americans own larger share of the stock market
At the end of 2019, the share of equity ownership by Americans ages 55 and over was lower — around 75%. A decade ago, it was roughly 70%, and 20 years ago it was only about 60%. This growth is a potential issue for the health of the market.
“Retirees don't have the luxury to buy and hold through a market downturn,” Rosenberg wrote. “If a downturn does materialize, demographically induced selling is a force that could exacerbate the spiral powerfully.”
The thinking goes that Americans who are at or near retirement age are more likely to sell stocks or even exit the market entirely if their portfolios start to take a hit because they’ll want to make sure they have enough money in retirement. This behavior could worsen a sell-off.
As older Americans' ownership share has risen, there's been a decline in the share of equities ownership by people ages 40 to 54. It's at about 15% currently, down from 20% a decade ago and roughly 30% in 1990, according to the report.
Keep in mind, however, that individual investors aren't the only holders of stocks. In fact, institutional investors own a majority of public companies' equities, according to Fed data. So while it's true that retirees have strong influence in the stock market and their behaviors are therefore important to understand, they're also not the only big players.
26 year old here who earns 50k a year and lives modestly and who just inherited several million. Can confirm we inherit old people’s investments.
It’s weird to say the least. Feels very unnatural. I don’t like hiding it from people but at the same time it would be way worse to talk to anyone about it. So I’m still getting used to it.
If anything it has only been motivation for me to go back to school in order to actually become wealthy on my own. Otherwise I have to carry this guilt about having so much to my name without earning anything close to that myself.
If I can earn my own millions, I will feel better about it. Obviously I’d be in a very advantaged and privileged position to go earn those millions, but I think it would still be enough to satisfy me.
You shouldn't feel guilt for it. Sounds like you are humble with a good head on your shoulders. It's a different thing if you blew the opportunity which was presented, or didn't respect it, or bragged about it. Which the fact that you are on the sub at all I have a feeling all that won't be a problem for you
I'm only guessing, that inheritance is probably more a product of compounding interest then individual success. You wanna "earn" 2 million dollars? Invest 50k in an index and wait 50 years.
Unfortunately my parents are mid 50s with six figures in debt, no retirement savings, and a small paid off house worth about 160k.
My in laws are mid 60s living off social security in a small home as well.
I dont think Ill be getting any inheritance in my life time. Even if somehow I did, I have siblings and my wife has siblings so itd be split between us.
Hold the fort
You mean to tell me that you can grow your wealth exponentially with time and that older people generally have much more wealth than people younger than them?
That’s crazy
NASDAQ hosted article since that one has a paywall: https://www.nasdaq.com/articles/older-americans-now-own-80-of-the-stock-market-heres-why-thats-a-problem
tl;dr Owning such a large portion of the market means that they can make a crash far worse as they try to move to safer assets.
Regardless of how one feels about his theories, that is not what Marx was pushing. He was pushing for workers, not solely owners, to control companies. Note that there is a significant distinction (though certainly some overlap) between workers and people who for whatever reason have not been investing money.
I feel like the buried lede is actually that their heirs are not likely to reinvest that money at a great rate due to their own financial situation being much worse, on average
The headline buries the lead. >The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research.
Why did I have to scroll so much to find the only relevant comment in the entire thread? This is the important info. Old people have always had a higher share of the stock market by design since being older means having more time for growth. Nothing new or unexpected here. What's new and problematic is that today's young and middle aged folks have a smaller share than the young and middle aged people from the previous generations had.
Demographics have changed a lot. There’s a greater percent of people above the age of 55 than ever before in the US.
Also previous generations had more pensions than 401Ks.
Why is that problematic and how did it happen? Let me answer the second part for you. The generation that had been contributing to 401Ks since the 1990s is now old. It wasn't that the old people bought up all the stock. It's that the people who have been buying stock for three decades are now old.
It could potentially become problematic when stock prices drop due to 80% of all held stock being sold to pay for retirees living expenses over the next 2 decades. This effect will be 33% stronger than it was 20 years ago.
>80% ... Being sold... Over the next two decades. Eh... Only if no one is buying. At worst this causes a stagnation. What you are referencing is symptom of a bigger issue of population collapse and resource allocation. If there were more young people working more full time jobs contributing to 401Ks, this would not be an issue. But there are fewer younger people who wait longer to with fewer full time jobs and contribute less to retirement. The solution could be to tell high schoolers to skip college, get jobs, get married, and have kids... Lol
The solution could also be that we return to our core values as a nation and welcome immigrants, expanding legal immigration to at least 3M new Americans every year.
Well that's the plan Europe tried. How does bringing in cheap labor help the middle class?
Because most immigrants that are currently coming in illegally are providing low skilled work. Then companies get cheap labor for low skilled jobs. Then the price of goods drop. Then middle class people have more money to invest. Not to mention those immigrants who are now legal are also contributing through spending. This helps scale up the production which further lowers the cost of goods due to the cheaper cost of producing in larger quantities. Comparing us to Europe as a whole is a bad argument. Different countries have different populations and regulations (yes I know about the EU). America generally has lower taxes and lower government services. This leaves less potential for the low skilled immigrants to be a net loss to the economic system. Literally every reputable economist ever agrees that more immigration is a plus to the economy as a whole. There will be certain populations and careers affected more than others, but a rising tide lifts all boats. And for the middle class, low skilled immigrants aren’t the ones “taking your jobs”. The immigrants who are currently coming legally (and therefore have the money to travel and deal with all the regulations around immigration) are more educated and are actually competition with the middle class.
That's a lot of words to say slave labor is supposedly house for economy. Because by that argument, just import more slaves.. And anyone who doesn't think those are slaves crossing the border, isn't paying attention.
Maybe it’s also paying people enough money so that they can contribute to retirement. $20/ hour is $40k per year. Not much investment power when living expenses are taken out. Not many jobs are willing to pay more than that and I get that starting wages are low, but typically growth is no more than $1 a year. Never gonna invest a meaningful amount with that paltry amount of wiggle room.
Except they won't get the jobs with 401ks without having college and the jobs they get won't pay enough to feed those kids.
Half a college students don't graduate, half of graduates stunt get jobs that require college. Instead if running up debt for 4-6 years, maybe working up though a skill field worlds be better. A plumber makes me than most people who go to college.
Lots of non degree required jobs offer a 401k match.
It's not like this money is evaporating into the void - it's getting reallocate to other sectors. Bogleheads should be fine due to diversification.
It's only worth what the next guy is willing to pay, so it absolutely can vanish into the void.
The problem is that millennials hold more consumer/student debt and own their homes less often… so I’m a little worried how much will be reinvested. You’ll have to excuse me for not trusting trickle down economics
It's a good point, but stocks will always have buyers in a cycle.
Because, Reddit. Fortunately, we're now #1! Time in the market is, has, and always will be better than timing the market.
two decades ago far more people were retiring on pensions than today. The number of Americans with defined benefit (pension) plans has dropped from over 30% in the 90s to almost nothing now.
This is a fair assumption, but then the question becomes where were the pensions holding all their investments? Does this mean that investments held on someone's behalf are/were not attributed to them? How do existing pension funds work? The fact that older Americans are holding a much larger proportion of the publicly available investments means that less is available to younger investors and there's likely more price inflation due to lower availability. As price appreciates, holders need to divest less to drawn down their investments.
There were less 401ks 2 decades ago.
Most of the Silent Generation had pension plans, 401ks started in the 90s and it will be Millenial's main source of retirement income as SS dries up.
> 401ks started in the 90s No, the controlling legal frameworks, the Employee Retirement Income Security Act (ERISA) and section 401(k) of the Internal Revenue Code, were passed in 1974 and 1978 respectively. Even given the need for regulatory agency rule-making and corporate adoption after that, 401ks were widespread by the early 80s. In particular [“Nearly half of all large employers in the U.S. were offering 401(k) plans to their workers by the end of 1982.”](https://www.guideline.com/blog/evolution-of-401k/) There have been a variety of incremental improvements in access since then, to the point that [68% of workers at private employers have access to retirement plans now](https://www.bls.gov/opub/ted/2021/68-percent-of-private-industry-workers-had-access-to-retirement-plans-in-2021.htm), but it’s clearly inaccurate to describe the 401k as starting in the 90s.
Nearly half of all large employers and almost no medium and small still means a large majority did not have access to a 401k in 1990. My first was in 2004 as an example. I’d been working since 1985.
The quote was about 1982 not 1990. I’d be curious if you can find specific data about 1990. But either way, it’s clearly not true that 401ks “started in the 90s” if a large proportion of employees had access to them in the 80s.
We could go to 2021 where CBS claims 56% still don’t have access to a 401k based on census data… https://www.cbsnews.com/news/retirement-plan-access-states-where-it-is-worst/ I think that number isn’t accurate, but that what a quick google finds
Interesting, thank you! The census might have issues due to self-reporting (it’s entirely possible some people have plans available or are even enrolled in a plan without knowing it) but I wouldn’t think it ought to be too far off… Edit: the [study quoted in the article acknowledges that the census data is problematic and potentially flawed](https://eig.org/state-retirement-coverage-2023/) (see note [1]) but uses it anyway. The other challenge is that the various numbers we’ve found aren’t apples to apples since the reference populations are quite different. It makes sense that “large companies”, “private employers” and “all workers” would have rather different numbers.
Can you enroll in a 401k without willingly allocating a percentage of your check to it?
Are you asking if you can open a 401k account but never contribute? Technically yes but practically it would depend on your employer being willing to do that. Since it's more work for them and also likely contributes to the plan administration fees (which many employers cover) I would guess that the answer would be "no" more often than "yes."
You're technically correct, but I thought that they were not originally intended to replace SS or pensions, just supplement. But then in the 80'-90's pension system was in practice largely abandoned and over that period using 401k as primary means of personal retirement saving became commonplace. I started working in the mid 90's and the established company I was with added a retirement plan only after I was there a year or so.
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How much of this is due to the shift from pension funds holding stock on behalf of old people towards the old people now owning stock in defined contribution plans?
The login wall doesn't help.
https://archive.is is your friend.
Imagine in 20-30 years, when older Americans still own most of the market
In 30 years, *I'll* be an older American and then I'll own all the stock! Wait, wasn't that the point all along?
Exactly lol cause holding and growing our investments IS the point
HODL!!!!! … a total market index fund.
Exactly
By the year 2100, I expect that the percentage of all stocks owned by people born before 2000 to be close to 0.
It’ll be anarchy!
Precisely. It like the analyses that show young people don’t have much wealth. You don’t say! Almost like people acquire most of their wealth over time and peak wealth is right before you retire.
Over 50% of stocks are owned by the highest earning 1%. I doubt that will be changing any time soon either.
I heard it's the same with Lambos
Source?
https://www.fool.com/the-ascent/buying-stocks/articles/you-might-not-guess-the-amount-of-stocks-owned-by-the-1/
That source says the wealthiest 1%, not the highest earning 1%
I am undone.
Thank you
News Flash! This just in, the longer people hold stocks the more they own.
Agreed - I’m about to have a heart attack and die from not surprise
Didn’t read the article but what happens when they pass and the accounts are liquidated at large scales?
Define large scale. Lets say you have an older person who is fairly wealthy with a net worth of $10 million. That person has one child who inherits it all and decides taxes be damned they are going to liquidate it all at once. Does that $10 million sale move the needle in the market one iota? The answer is no. If 1000 people with $10 Million happened to die on the same day and ALL their heirs decided to sell off at the same time then perhaps at $10 Billion dollar sell off has some short term effects on the market. What is more likely to happen is when those people die their heirs sell off some of it and keep most of it invested to grow.
There is no tax due - step up in cost basis. So honestly, there may be no reason for the heir to sell off the stock. If they do, they are likely to invest in different stocks. Most won't hold on to cash.
As of now yes. This could be repealed as it’s threatened all the time.
Not to mention there's probably a pretty big overlap of the kinds of investments the deceased have and their heirs want. If a now dead 90 year old had their kids between 20-30 years old, the kids will be 60-70 years old when they get the money. Not exactly the "VTSAX and chill" set. And even if the money goes to grandkids in their 30s and it does go right into VTSAX, the money is merely going to get spread differently in the market, not taken out entirely (well, we sure hope not).
Why would a 90 year old still be part of the VTSAX and chill set?
Passes to the heirs, which add it to their portfolio.
It's not like all of the boomers are going to die on the same day. People have been gradually dying and liquidating their portfolios or passing them on to their kids everyday.
medical debt probably
A bit more complicated than that I think, there are quite a few studies comparing the wealth of boomers and millennials. This one for example: https://thehill.com/homenews/4319352-are-millennials-worse-off-than-boomers-heres-how-they-stack-up-financially/ A few key findings: -The median millennial had 30% less wealth than their boomer counterparts at 35, adjusted to today’s money. -At age 35 62% of boomers owned a house compared to only 49% of millennials. -At 35 14% of millennials have a negative net worth vs only 8.7% of millennials. Wealth inequality gaps are growing and living costs are growing.
> -At 35 14% of millennials have a negative net worth vs only 8.7% of millennials.
Should that second "millenials" be boomers?
I wonder how much of this is due to a shift in demographics like people becoming more urban (and thus living in a more expensive area). My boomer parents stayed in their small town. I moved to "the city". My kids moved to Seattle.
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No one makes cars without automatic windows anymore and without flat screen controls
All of the “avocado toast” arguments ignore all of the economic trends the last few decades. -House prices as multiple of salary have increased massively, meaning it is harder to get on the property ladder. Median house price in the US in 1970 was $23,900 vs 408,100 in 2021. -House price rises has had a direct impact on ever increasing rents. -The gap between the incomes of the upper middle class and the lower middle/working class have grown since boomers were young. The boomer generation without higher education could still achieve economic security through hard work, which is increasingly becoming untrue. People shouldn’t have to move hundreds of miles away from their family and the area they grew up in to have a basic quality of life. There are reasons why low cost of living areas are cheaper, usually they have reduced economic opportunities, with lower salaries. Some industries are hyper focused in certain cities.
Regarding "hard work", what are you referring to? Hard MENTAL or hard PHYSICAL work? Because making an income from either is still very much possible without a four year degree. And actually, the combination of both mental and physical lands you in what is a "gold collar" job - these are mostly building trades, but at the rate of retirement in those industries, a new generation will be in demand. And low COL areas are usually worth it since there are many skilled jobs that are not being met. The US economy needs ALL jobs at all salary levels in all regions in order to function economically for the long term - mechanics, tradespeople, knowledge workers, service workers.
I don’t think it matters if it’s physical or mental work, the idea that people are arguing that someone working full time shouldn’t be able to afford to have a basic standard of living, without struggling and be to achieve modest home ownership, is wild. I honestly don’t understand why people have this debate. People of all generations are complaining about the rising cost of living, the economic data clearly shows that house prices are outpacing wages. (Houses are up 30% since 2019). I’m not sure what there is to disagree about, or why the boomer generation takes people talking about the economic trends so personally.
There is no reason salaries need to (or should) adjust with housing prices. In fact, we don't want them to since wage inflation also contributes to the issue we have now with prices as a whole.
In the context of affordability of housing and declining living standards I’d say it’s pretty relevant.
Affordability of housing is relevant. I'm pointing out that wages do not or should not rise consistent with housing increases. That has never been the case.
flipside, median income is better for every subsequent generation when accounting for inflation and transfers. https://www.federalreserve.gov/econres/feds/files/2024007pap.pdf
Higher Income doesn't help if buying power is down because life is significantly more expensive.
Problem is, wage inflation is real. Salaries can't continue to go up exponentially. We need demand destruction as a component to fight inflation.
why aren’t millennials being compared to gen x
"negative net worth" = lots of unsustainable debt. Because the boomers had terrible money management skills and also held/hold similar amounts of debt, but they saved enough to mask the problem by the time they retired. Mostly. Usually.
Woahh dude that’s crazy, I guess that also means the 50-80 year old age group holds the same % of stocks today as the 50-80 year old group held in 1990, so we have nothing to worry about.
A couple of factors. Boomers are a huge population increase from cohorts in 1990 and life expectancy has also increased since then.
News flash the older group of people who hold the most assets and wealth and saved for retirement have lots of stock.
Same news flash - a shitload of it is used for retirement, sold off in chunks every year. A tremendous amount of americans have 401ks. And also a good chunk will be left to children. Some of it by regular income people who want to hand something to their kids. Every generation will be the same - the oldest own the most, by %.
Correct. But the unspoken problem with boomers is DEBT LEVELS that they hold, which they happen to have in common with younger counterparts. If they would pay off the mortgages, car loans, and other consumer debts, there would be less in the pot, but not as much needed in terms of risk. Risk in older age is, of course, health care. No one wants to inherit estate debts. It's the "wealth mirage".
There is a serious issue with young people today having nothing to invest. They can't afford the basics, let alone a luxury like investing. They can't even get the simplest investment there is; a house. I would also guess that a lot of that stock is held in retirement accounts, like a 401k, which younger workers aren't offered, or are being held by investment firms like Blackrock, Berkshire Hathaway, or Vanguard.
Younger workers aren’t offered 401k’s? Since when? The older generations were offered pensions not 401k’s
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401k’s didn’t even exist until 1978. Pre-1978 there were CODA’s. Those are not 401k’s. And that number is actually pretty close to 50%. 401k’s have a higher reach yea it’s because they’re infinitely cheaper to offer. So older generations were not offered 401k’s because they didn’t exist and really gain popularity until the 1980’s and 90’s. They mainly relied on CODA’s and social security
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It’s interesting that you say most workers would be better off with a pension than a 401k. I just started a state gov job and am deciding between a pension where it replaces 70% of my income if I’m there 32 years or a member directed plan where I put in 10% and the state puts in 7.5% along with 4% health account that takes 15 years to vest
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Older workers used to be younger workers... :) I don't quite understand your opening statement. I split the difference and save basically half my salary in a 403(b) and IRAs, and have a pension. My pension does not have a COLA, so I count it along with SS to simply be a stable income base. Obviously that savings is mostly held in Roth vehicles + a brokerage account for that reason.
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Still not as secure as a pension... and that's only 17.5% of income you are putting in. But we don't have enough information such as age. If you are in your early 20s, you would probably be fine with either option, so long as you invested wisely in a 90-100% stock allocation. The key is do you see yourself staying in this job for the 30+ years for full retirement? If unsure, then the self directed plan makes sense. Otherwise, although I am not entirely happy with a 70% replacement (mine is closer to 87% and I only contribute 7.5%), then I would say go with the pension.
It was a long and gradual ramp up, and many companies didn’t offer them for a long time. Some companies still don’t offer them today. I only had access to a 401k for 5-6 years, so it was just IRAs for me and that won’t get you far. Most of my retirement savings is just regular brokerage.
Exactly... Thanks for this data. Reddit hivemind would have you believing 98% had fantastic pensions backed up by Thor himself.
When you're looking into working horizons of 40+ years, social security becomes a very meaningful income and nobody who contributed 5% regularly (plus whatever match they may have had) is actually going to need to work for 52 years. They'll need to work til the lowest bound of social security whatever it is at the time (62 currently) and supplement the SS checks with their sizeable investments, even if the investments alone would be a little short. Contrary to popular belief based on literally nothing more than the last TWO years, most Gen Z will own a house and have it paid off or close to it by SS retirement age, on top of that 5% 401k contribution for many of them.
Would not count on having it paid off, or necessarily owning a house. Zoomers don't have the same thought about home ownership.
If you are in the service industry or gig work, they aren't offered.
Are you telling me an industry that forces customers to pay their employees thru tipping doesn’t offer retirement benefits? Shocking! Maybe the tip screen should allow customers to defer that tip into a retirement plan the worker can’t touch til they’re 59.5.
Self employed 401k’s exist. Youre right service industries aren’t offered it. It’s partially because turnover is so high in the service industry. You also need to clarify what you mean by service industry because services are prevalent everywhere. Veterinary services, financial services. Are you talking about restaurant servicing?
Which workers aren’t getting 401K? It’s common with most companies
>the longer people hold stocks the more they own. Isn't that beside the point? If you only consider how long people hold stocks, you effectively assume everyone holds the same amount and it's just that older people have held them longer. So of course that ignores the entire point that many younger people don't even hold any stocks at all.
And the older they are the more disposable income they have to buy stock. 🤔
In shocking news people who have historically been saving their money their whole lives have more money.
You know what else older Americans do? They die. (Eventually) The ones who own stock are going to pass that onto their children.
Thats true. When that happens it lowers the age of those holding stocks. I'm guessing a lot of those funds will be in IRA or 401k buckets where their kids will have to sell within a certain number of years.
They don’t have to sell all the stock, you can take the RMD in stock. They may have to sell stock if needed to pay tax on the withdrawn stock. A lot of younger people probably will liquidate for living expenses, etc.
You are correct. They don't have to sell all the stock but they do have to sell all of it in a certain amount of time. [https://smartasset.com/taxes/401k-inheritance-tax](https://smartasset.com/taxes/401k-inheritance-tax)
They have to withdraw it all in the required timeframe, they don’t have to sell it all. The distinction doesn’t really matter except in the context of this post talking about stocks.
How young do you think the people getting these stocks are going to be? I'm in my early fourties and my parents are easily going to live another ten to fifteen years (at least).
Younger than their parents, and for the most part poorer since wealth inequality has been growing rapidly the past few decades.
so you would inherit at 60, seems reasonable
Or give it all to their local healthcare system.
Will they? Or are they going to eat up all their earnings in Healthcare costs and being put in nursing homes? Or just blow it all because they don't care?
Why should they care. It’s their money. That can do whatever they want with it.
True. And many of those children inheriting will be considered “older” or very close to it as defined by that article— age 55 or older. I don’t think there will be a large transfer to people under 45.
Nah. Retirement homes and medical facilities are going to sink their teeth into it. It's already happening (former hospice SW). Access to quality end of life medical care is going to crash relatively soon & costs for all care (shitty and otherwise) will spike in obscene ways.
A good facility already costs into the 5 digits monthly and almost nobody can afford it. I do think there's a natural ceiling where people will not be able to or willing to pay millions of dollars for one or two slightly less shitty final years. The government also cannot just deny end of life care, so anyone with assets will still shield them through trusts and donations and let the state take care of them without burning their millions.
Some of them, yes. The others’ estates will go toward massive healthcare bills for life-prolonging medicine and hospice care. 1 out of 3 US hospitals are owned by private equity firms.
I wonder what percentage of the 80% is held by people with net worth over $10M?
Depends on the parents, if they are like mine they are trying to spend it all as much as possible.
I think you under estimate the cost of end of life care. I believe the average cost in your last month is 30-40k. Hospitals and any long term care facilities will eat them up as most seniors do not simply drop dead but rather ongoing and worsening health conditions.
20 years ago more retirees relied on company pensions Now we've moved away from company pensions to IRAs and 401ks for retirement guess what happened? Less people have company pensions and they have more money in 401ks and IRAs. SHOCKING!!!!
People bad with numbers lol. You can model this out. Take a group people, assume they are each age 22-80, so there are 59 people. Suppose they represent the market. Assume all of them invested $1 per year since age 22 until age 80 and achieve 7% per year. Thus the guy age 22, say has $1.07 and has 0.13% of the market. No surprise, just starting. The people age 60-80 own approx 80% of the market. Compound returns are insane.
I agree with the premise, but someone forgot about inflation. That $1 that the 80 year old set aside 59 years ago in 1965 is the equivalent of $9.67 today.
7% is the average real return of the S&P, which accounts for inflation. Nominal returns average 10% annually.
[Don't mind me](https://media2.giphy.com/media/v1.Y2lkPTc5MGI3NjExNXl5ZG5kMWxjM3ljNGh3Njg4MGRjNWczNDcyYmx0bzZnZWQ0ZmdycyZlcD12MV9pbnRlcm5hbF9naWZfYnlfaWQmY3Q9Zw/jUwpNzg9IcyrK/giphy.gif)
I can't wait to be 55+ so that I too can own a lot of the stock market. Is that how that works? hehe
I’m not paying for that money article
Here you go https://web.archive.org/web/20240223161832/https://money.com/older-americans-own-most-stock-market/
This just in: when people can buy stocks at lower prices and before younger generations, they have more.
Generation alpha is going to be so jealous when they hear how cheaply you can buy stocks today.
Which is exactly what each upcoming generation will say...
I remember well being 22 years old. I graduated college and started working at what was, in the pre-dot-com-bubble, one of the largest companies in the world. I was surrounded by people who were millionaires from their stock options (my boss kept grumbling that his wife's Suburban got more expensive every day, as he watched the stock climb). Meanwhile my options were granted at what turned out to be an all-time high. Then the dot-com crash happened. Layoffs. Misery. My entire generation was complaining about our prospects. Woe was us, we missed the opportunity to get rich. From the time I started working, it took *15 years* for the Nasdaq to get back to where it had been. And now my cohort are the ones with high NW and silly salaries, and the next generation is coming along, saying the same thing. Yes, of course there are differences. There always are. Housing is legitimately more expensive. A friend just got accepted into the same school I paid $30K/year for, but it's now $80K/year. But sure as rain, in 30 years a large percentage of the now-20-year-olds are going to be worth millions (in today's dollars), and their kids will be saying that their parents climbed the ladder and pulled it up with them.
Life is really just an elaborate ponzi scheme that works
Buy gold? Edit: I read the article. It was dumb and pointless. "Old people own lots of stock, if they sell, it could cause prices to drop. But, really, institutional investors own the majority of stock, so old people selling probably won't really be that bad." Also, no kidding old people sell stock. That's kind of the point.
Old people sell stock. Young people buy it. Old people own less and less stock. Young people own more and more stock. Eventually the young people own all the stock, but by then they’re the old people so old people still own all the stock. That’s so unfair. Old people always win. How can a young person get ahead?
Grow old.
Working on it. Making good progress too.
also, it would be a great thing for young people if the prices dropped anyway. imagine being able to buy all these businesses at less than their value.
*appropriate* value…one that reflects the fundamentals of their business would be nice.
Which is what happened in 2001-2002 and 2008 -2009 when late boomers/Gen X were in their peak earning years.
Is this news? I would imagine 75 years ago the bulk of the market was also owned by older adults? Has there been a time in history when this wasn’t the case ?
Right? People who've been saving and earning compound interest for 50 years have the most savings. Film at 11.
We are the first generation that is generally “sans pension”. Therefore we needed to accumulate savings so as to fund our own pensions. What did the world expect?!? Our lifestyle likely isn’t that much better it’s just how we had to structure our retirements. This was inevitable.
That's a stupid clickbait article.
Rich people own most stocks and they are old.
Rich**er**. Rich**er**.
Americans 55 and older have a large and growing share of stock ownership, and that could prove to be a major problem for the market in the event of a downturn. The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research. And Americans 70 and older now have an "astonishing" 30% share. “As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — your grandma,” economist David Rosenberg said in a newsletter Wednesday. Why should we worry about retirees owning so much of the stock market? The concern stems from the fact that older investors can’t weather a downturn in the same way as younger investors, who tend to have longer time horizons for their investments. The S&P 500 hit a new record high earlier this month, and the index is up 22% in the past year. If the stock market takes a dip, older investors might decide it's a good time to sell equities in order to shift to less volatile investments like bonds or cash. Older Americans own larger share of the stock market At the end of 2019, the share of equity ownership by Americans ages 55 and over was lower — around 75%. A decade ago, it was roughly 70%, and 20 years ago it was only about 60%. This growth is a potential issue for the health of the market. “Retirees don't have the luxury to buy and hold through a market downturn,” Rosenberg wrote. “If a downturn does materialize, demographically induced selling is a force that could exacerbate the spiral powerfully.” The thinking goes that Americans who are at or near retirement age are more likely to sell stocks or even exit the market entirely if their portfolios start to take a hit because they’ll want to make sure they have enough money in retirement. This behavior could worsen a sell-off. As older Americans' ownership share has risen, there's been a decline in the share of equities ownership by people ages 40 to 54. It's at about 15% currently, down from 20% a decade ago and roughly 30% in 1990, according to the report. Keep in mind, however, that individual investors aren't the only holders of stocks. In fact, **institutional investors own a majority of public companies' equities**, according to Fed data. So while it's true that retirees have strong influence in the stock market and their behaviors are therefore important to understand, they're also not the only big players.
Imagine being in a generation that has the their net worth automatically going up 10% a year from just passive income… lecture workers who want above inflation raises… for being lazy…
Pay wall Can't read the article. Are they including 401ks in that figure?
No mention of 401ks specifically. Here is the article: Americans 55 and older have a large and growing share of stock ownership, and that could prove to be a major problem for the market in the event of a downturn. The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research. And Americans 70 and older now have an "astonishing" 30% share. “As the stock market breaks fresh highs, a sinister downside risk is lurking in the shadows — your grandma,” economist David Rosenberg said in a newsletter Wednesday. Why should we worry about retirees owning so much of the stock market? The concern stems from the fact that older investors can’t weather a downturn in the same way as younger investors, who tend to have longer time horizons for their investments. The S&P 500 hit a new record high earlier this month, and the index is up 22% in the past year. If the stock market takes a dip, older investors might decide it's a good time to sell equities in order to shift to less volatile investments like bonds or cash. Older Americans own larger share of the stock market At the end of 2019, the share of equity ownership by Americans ages 55 and over was lower — around 75%. A decade ago, it was roughly 70%, and 20 years ago it was only about 60%. This growth is a potential issue for the health of the market. “Retirees don't have the luxury to buy and hold through a market downturn,” Rosenberg wrote. “If a downturn does materialize, demographically induced selling is a force that could exacerbate the spiral powerfully.” The thinking goes that Americans who are at or near retirement age are more likely to sell stocks or even exit the market entirely if their portfolios start to take a hit because they’ll want to make sure they have enough money in retirement. This behavior could worsen a sell-off. As older Americans' ownership share has risen, there's been a decline in the share of equities ownership by people ages 40 to 54. It's at about 15% currently, down from 20% a decade ago and roughly 30% in 1990, according to the report. Keep in mind, however, that individual investors aren't the only holders of stocks. In fact, institutional investors own a majority of public companies' equities, according to Fed data. So while it's true that retirees have strong influence in the stock market and their behaviors are therefore important to understand, they're also not the only big players.
Old people die and young people inherit their investments.
26 year old here who earns 50k a year and lives modestly and who just inherited several million. Can confirm we inherit old people’s investments. It’s weird to say the least. Feels very unnatural. I don’t like hiding it from people but at the same time it would be way worse to talk to anyone about it. So I’m still getting used to it. If anything it has only been motivation for me to go back to school in order to actually become wealthy on my own. Otherwise I have to carry this guilt about having so much to my name without earning anything close to that myself. If I can earn my own millions, I will feel better about it. Obviously I’d be in a very advantaged and privileged position to go earn those millions, but I think it would still be enough to satisfy me.
You shouldn't feel guilt for it. Sounds like you are humble with a good head on your shoulders. It's a different thing if you blew the opportunity which was presented, or didn't respect it, or bragged about it. Which the fact that you are on the sub at all I have a feeling all that won't be a problem for you
I'm only guessing, that inheritance is probably more a product of compounding interest then individual success. You wanna "earn" 2 million dollars? Invest 50k in an index and wait 50 years.
Unfortunately my parents are mid 50s with six figures in debt, no retirement savings, and a small paid off house worth about 160k. My in laws are mid 60s living off social security in a small home as well. I dont think Ill be getting any inheritance in my life time. Even if somehow I did, I have siblings and my wife has siblings so itd be split between us.
Old people convert their stocks to lower risk products like cash and bonds, then they die, then younger people inherit them.
It depends on the person.
Should be moving towards treasury bonds when you’re near retirement, poor financial planning if you’re entire net worth is tied up in stocks
Hold the fort You mean to tell me that you can grow your wealth exponentially with time and that older people generally have much more wealth than people younger than them? That’s crazy
NASDAQ hosted article since that one has a paywall: https://www.nasdaq.com/articles/older-americans-now-own-80-of-the-stock-market-heres-why-thats-a-problem tl;dr Owning such a large portion of the market means that they can make a crash far worse as they try to move to safer assets.
That’s funny. I’m old now and I own 80% more stock.
We will all be old one day.
Shit like this is why I don't take 90% of financial media seriously. If you're getting it for free, it probably sucks.
lol and then when the market crashes and their retirement goes up in smoke it’s gonna be on you g people to bail them out
Of course. 23 year old college grads should be sticking their toes into the water with the first 401k contributions.
We should take money from people who have been investing all their life and give it those who have not been. - Karl Marx I do not endorse this.
Regardless of how one feels about his theories, that is not what Marx was pushing. He was pushing for workers, not solely owners, to control companies. Note that there is a significant distinction (though certainly some overlap) between workers and people who for whatever reason have not been investing money.
One example is student loan forgiveness. It will be paid for by everyone, including those that paid their own way already.
They still half to pay taxes on their portfolios . By the time their stint in long term care is over assets and cash gone .
I feel like the buried lede is actually that their heirs are not likely to reinvest that money at a great rate due to their own financial situation being much worse, on average