This Is Your Father's Stock Market

Issue 12-04-17   |   Reviewer:   Delvin D. Hawley, Ph.D.


In almost every age group, the share of families owning equities declined from 2007 to 2016. There's one prominent exception: households headed by someone 75 or older. Almost 49 percent of those households own stocks, up from 40 percent in 2007 and about 35 percent in 2013, as many Americans were still recovering from the financial meltdown. It's the highest number since the Fed began tracking it in 1989.

While stocks can provide larger returns over the long-term, they're prone to dramatic crashes, and the elderly can't wait decades for a rebound; they often rely on their investments for income and emergency expenses. Even so, there aren't many alternatives now. Yields on bonds are at near-record lows, and most banks pay savers less than 1 percent per year. As a result, dividend-paying stocks have become popular among seniors because they generate income.

Younger Americans less likely to own stocks today than in 2007 for a number of reasons, likely including the lingering trauma of the financial crisis, sluggish wage growth, and record levels of student debt. While median wealth for the oldest cohort of Americans is up 7 percent from 2007, it's down 20 percent for the youngest, after adjusting for inflation.

If a retiree's goal is passing on an inheritance or giving to charity, taking risks in the stock market may be appropriate. For many seniors, however, leaving a legacy ought to be a secondary goal to providing for their own livelihood. Older Americans may be taking too much risk in the stock market. At some point, the markets are going to plunge, a financial planner predicts, and they may not recover as quickly as they did after the last two crashes.

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