The deep declines in the U.S. stock market over the last three weeks has left a ...
NEW YORK - The deep declines in the U.S. stock market over the last three weeks has left a dent in retirement portfolios and brokerage accounts, costing on average each person in the United States around $16,000 as of Monday’s close before a rebound Tuesday erased some of those losses.
The U.S. retirement system no longer relies on defined benefit pension plans - which pay out a guaranteed amount until death. That means that people are mostly in charge of their own retirement, investing via 401 pension plans. Around 42% of the working-age population with a full-time job has a 401 or similar plan, and those funds are overwhelmingly invested in stocks, according to U.S. Census data.
That is greater than the 8.3% annual return on bonds over the same time according to Morningstar. Bonds, meanwhile, are unlikely to post the same returns in the future because yields, which move lower as prices rise, are at historic lows.Overall, individual stock ownership in the United States appears to be declining as more members of the outsized Baby Boom generation retire or shift their portfolio to a more conservative stance in preparation for retirement.
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