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

livemint.com:

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. Having significant exposure to stocks later in life can be risky, advisers and economists say, if only because if the market were to tumble, retirees needing cash might have no choice but to sell their shares at bargain prices. Many changes over the past half-century have contributed to older Americans’ reliance on stocks, including the 1978 tax-law change that ushered in the 401(k) and several decades where stocks have bested bonds.

During financial or economic crises—including in 1987, 2001, 2008 and 2020—the Federal Reserve or Congress often stepped in to support the economy. “The spirit of the times is ‘Don’t worry about the markets crashing. They will come back up and set new highs,’" said Robert Shiller, a Nobel Prize-winning economist at Yale University.

Catching up Toby Bloom, 63, tried investing 60% of his retirement savings in stocks and 40% in bonds. But five years ago, the Albuquerque, N.M., resident realized his returns weren’t high enough to achieve his goal of retiring by 2026 with at least $40,000. So he moved 80% of his money into