70+ investors control 39% of the US stock market

While younger investors chase memes and quick trades, retirees now hold a large portion of U.S. equities – nearly 39% of all stocks and mutual funds, according to The Economist. That’s almost twice as much as it was 15 years ago. And here’s the catch: when the market falls, this cohort could amplify the crash.

How retirees became stock market headliners

The numbers speak for themselves. The stock market has grown by $24 trillion over the past five years. And almost half of that growth belongs to investors over 70. Demographics have nothing to do with it: the share of elderly Americans has only grown by 3%, but their market presence has doubled.

What’s happening? The Economist identifies three factors:

Bonds no longer work. From 1980 to 2005, Treasury bonds returned an average of 3.8% above inflation annually. After 2005 – less than 0.5%. The inflationary shock of 2020–2022 finally killed appetite for bonds. Why settle for 4% when the S&P 500 has averaged over 10%?

Accumulated wealth provides freedom. “Unless I live to 120, I have enough money to last the rest of my life. So I can take risks,” explains 77-year-old Jay Gourley, who keeps 92% of his portfolio in stocks and index funds.

FOMO has no age. Financial advisors tell stories of clients who invested in Nvidia while in hospice. One of them died at 90 with a $20 million portfolio stuffed with tech giant stocks. When everyone around you is making money in the market, it’s hard to stay on the sidelines.

Does the “100 Minus Age” rule still work?

Classic advice: subtract your age from 100 – that’s the percentage of stocks in your portfolio. For example, at 75 you should have 25% in stocks, and the rest in bonds and cash. This logic underlies target-date funds that automatically reduce equity exposure with age.

But research shows otherwise. In 2014, Wade Pfau and Michael Kitces proved that increasing stock allocation throughout retirement can be more profitable than decreasing it. Why? Because timing matters. If you sell stocks during a downturn and move to bonds, you lock in losses and miss the rebound.

An even more radical conclusion came from scientists at Emory, Arizona, and Missouri: a portfolio of 100% stocks (1/3 US, 2/3 global) gives only a 7% probability of running out of money when withdrawing 4% annually.

What about bonds? The chance of going broke reaches 39%!

The problem: they might sell

Aggressive portfolios work for individual investors. But what happens to the market as a whole when these $9 trillion start moving?

In an optimistic scenario, boomers will hold stocks for their children and grandchildren. They survived the crashes of ’87, the dotcom bubble, and 2008 – and they know the market always recovers. A Schroders survey shows that during the pandemic crash of 2020, only 25% of investors over 71 changed their risk level – the smallest share among all age groups.

But there’s also a pessimistic scenario. While young investors can wait out prolonged corrections (because they have decades to recover losses), retirees don’t have that luxury package. If the market falls for two years straight and you’re 75, the question “Wait for recovery or lock in losses” becomes existential.

Those who went into stocks because of FOMO can reverse course just as quickly. And when money is needed for medical bills or care – selling becomes practically inevitable. If there are many such sales simultaneously, it could turn a correction into a crash sale.

What this means for the rest of the market

1. Volatility could become higher. When a significant portion of capital is controlled by a group with a limited time horizon and sensitivity to cash flow, the market becomes less stable.
2. The liquidity question. Young investors typically hold positions longer. Retirees can sell faster – especially if they need funds for living expenses.
3. This is another example of how traditional investing rules are breaking down. Bonds are no longer a “safe” alternative. Classic allocations don’t work in a world where inflation can devour your bond-built portfolio in a couple of years.

Well, you weren’t expecting anything from them anymore, but boomers rewrote the rules. They proved that aggressive portfolios can work even at 70+. But they could also become the trigger for the next massive market dump.

The real question isn’t whether older investors have diamond hands – it’s how much time they have to keep holding on.