America's Retirees Are Investing More Like 30-Year-Olds

[question everything]

Older Americans keep rolling the dice in the stock market, ignoring the conventional wisdom to protect their nest eggs by shifting more of their investments to bonds.

Nearly half of Vanguard 401(k) investors actively managing their money and over age 55 held more than 70% of their portfolios in stocks. In 2011, 38% did so. At Fidelity Investments, nearly four in 10 investors ages 65 to 69 hold about two-thirds or more of their portfolios in stocks. And it isn’t just baby boomers. In taxable brokerage accounts at Vanguard, one-fifth of investors 85 or older have nearly all their money in stocks, up from 16% in 2012. The same is true of almost a quarter of those ages 75 to 84.

(snip)

Many older investors remain bullish on stocks for one simple reason: returns. Since 1982, the S&P 500 has returned 10.1% a year, on average. That is significantly more than the index’s long-term average annual return of 7.4% a year since 1928, according to Dow Jones Market Data.

(snip)

As the beneficiaries of high stock-market returns, baby boomers tend to report a greater willingness to take financial risks than those who lived through the Great Depression, according to research by Ulrike Malmendier, a professor of economics and finance at the University of California, Berkeley, and Stefan Nagel, a professor of finance at the University of Chicago. In contrast to younger Americans, boomers are also more likely to take a do-it-yourself approach to managing their money. Among baby boomers with 401(k) accounts at Fidelity Investments, 53% pick their own investments, compared with 42% in Generation X and 25% of millennials.

More..

https://archive.is/DUhlY

[Silent Type]

1. Millions of retirees know they don't have enough to make it to 95.

[Skittles]

2. depends on what other assets they have

for example, if they can comfortably live without proceeds from their 401K, then there's no problem investing like a 30yr old

[BOSSHOG]

3. My wife and I are a combined 140 years old

We are creeping out of the market and piling up the cash in the local bank on Main Street. Still got a little diversity but like the peace of mind. And now the interest statements every quarter on savings are nice.

[NoRethugFriends]

4. Right now can get 4.5% return on CD that you can buy for tour IARa or 401K on Vanguard.

Not bad at all.

[BOSSHOG]

6. Passbook Savings rates are attractive

Not so for mortgages but way back when we paid that high rate to own a home. Economy goes up, economy goes down. Youngins have to be attuned and patient. Old folks not so much.

[Joinfortmill]

5. At 74, I just made a big change..

Put half my money in FDIC insured money market account. Put the other half in S&P500 and let it roll.

[bucolic_frolic]

7. Technology, demographics, liquidity, internet have created growth

The two problems we have are inflation and supply chain constraints. All components made in China is a worry. You buy when you see opportunity. No one is worried, and that should be a worry. Not even gold and silver are worried.

You can slice, dice, vivisect your targeted investments. 20 years ago you couldn't even understand them. You get the same advice with free asset allocation models online with your broker or advisors, or you can pay $2000 for boutique advice, or 3% annual fee for advisors, or 25% for a hedge fund if you can afford one, and aren't there ETF hedge funds now?

Buy a little of everything, climate and inflation could kill you but we're all on the same plane now and it's running out of fuel.

The article by the way features a man who sells options against his stocks to produce income. This is known as a covered call strategy. It's low risk. Basically stocks have their ups and downs. You go short at tops and either hold to expiration or cover the short when the stock retreats. But it's very hands on. There are a few ETFs that do the same thing, but most of them use index options.