OK boomer, says Fidelity, stop piling into risky stocks in case the market tanks

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  • Fidelity Investments says that baby boomers are over invested in stocks and exposing themselves to potential market declines.
  • More than one-third of boomers were investing more than 70% of their allocation in stocks, a risky position, it said.
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Fidelity Investments says 55- to 75-year-old investors are over-investing in stocks.

“While the market’s performance over the last few years has had a positive effect on many retirement account balances, it may have also contributed to some individuals having more stock than is recommended,” Kevin Barry, president of workplace investing at Fidelity Investments, said in the firm’s third-quarter retirement report.

“Maintaining the right balance of stocks, bonds and cash can help ensure investors are not exposing their savings to any unnecessary risk, especially if the market was to trend downward,” Barry added.

The stock market is in a decade-long bull run, and some market watchers warn that a crash is inevitable.

Fidelity calculates ideal risk investments via its “Fidelity Equity Glide Path,” which the firm says is “designed to become more conservative as participants approach retirement and beyond.” The path “begins with 90% equity holdings within a retirement portfolio at age 25 continuing down to 19% equity holdings 10 to 19 years after retirement.”

The report added:

“Among baby boomers, the over-allocation of stock was even higher – 37.6% have too much equity, including 7.9% who are in 100% equities. This is in addition to the 5% of boomers who have zero exposure to equities in their 401(k),” retirement account.

The baby boomer generation was born at the dusk of World War II, between 1944 and 1964.

Barry added, “While market swings like the kind we experienced in Q3 can be unnerving, it’s encouraging to see that most retirement savers didn’t have an emotional reaction and did not take any steps that could harm their long-term savings efforts.”

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