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According to a May 2025 Gallup survey, only 61% of Americans age 65 and older own stocks in any way, including IRAs, 401ks, etc. I found that a bit shocking and a little sad. I’m pretty certain HD readers and writers are not among the 39%.
If that is an accurate percentage, no wonder many retirees are in poor financial shape, no wonder social media is full of videos with seniors claiming they need and deserve higher social security benefits and higher COLA adjustments. Their message is simple, we worked and paid into social security for “our whole lives” and we deserve more.
Can the retirement system continue this way?
My investing in stocks only began when I implemented a 401k at my employer in 1982, I was 39 then and previously only dabbled with no understanding of what I was doing and no positive results. An employer match made it clear to me (but not everyone) that using the 401k was essential.
I often wonder where I would be without that 401k.
Some people find it hard to risk money, even on paper, even temporarily. Some people find it difficult to take a longterm view, especially decades in the future. I find that all understandable, but the trick is overcoming those obstacles.
So, how did you become motivated to embrace the stock market? How did you develop a longer – term mindset that allowed you to follow through to retirement?
I know I have banged on about this before, but our superannuation system here in Australia means that every employee saves 12% of their wage for their entire working life. And all superannuation funds have a fiduciary requirement, to act in the best interest of their fund members.
This should see most people well set up financially for retirement, and a significant reduction of the burden on our aged pension scheme. (An aged pension is available as a “safety net” for those without sufficient funds to service their own retirement.)
Makes sense to me, but Americans only want someone else or “government🤑” to fund their retirement. We can’t even raise the payroll tax to keep our Social Security system solvent.
There is a great disconnect between the taxes we pay and what they provide to us.
I was a rookie when the city started a 457(b) plan that I knew nothing about. Senior guys explained that I’d be foolish if I didn’t contribute the maximum so I asked my Lt. for his recommendations, which he gave me, and said I’d be a millionaire by the time I retired. I thought he was FOS but kept that to myself. He was right.
When I was in college, a family member gave me a few shares of IBM, AT&T, and something else (don’t remember now). The stocks didn’t make any sense. The price was stagnant over years and I only had a few shares anyhow.
Three things changed in 1993.
Stock trading was too expensive, but firms started phone trading at about $28/trade and I was an early adopter of internet trading.
In my late 20s I went through the tech bear market. Watching a portfolio collapse early in one’s career is psychologically scarring. At that point I didn’t have much financial capital left—only my future earning power and a mortgage to overshadow it.
That experience forced me to educate myself about inflation, risk, and compounding. By the time the Global Financial Crisis arrived, the lesson had already been internalized. I still remember the nausea of watching markets fall, but I did nothing. In hindsight, that restraint made all the difference and it was an important lesson in the psychology of investing.
Investing discipline is far harder than the influencers and financial press make it sound. For younger people who ask me about markets, I suggest holding as much as 50% in bonds until they have lived through their first real bear market. Experiencing volatility firsthand is often the only way to understand one’s true risk tolerance.
I still have very mixed feelings about the 401(k) plan versus pensions since I am skeptical a vast majority of Americans have the time and interest in this. The next bear market will be another teachable moment for all of us.
Interesting what you say about being 50% in bonds. I’ve been telling my kids to put all in stocks and don’t look at them for 25 years. Buy VT and SCHD and hold regardless of market swings. And slowly add bonds in future years.
Both my parents and my wife’s parents lost the vast majority of their retirement savings late in life due to bad investments. My parents didn’t invest in the stock market. They chose to put almost all of their savings into a small second mortgage company that paid good dividends. They got addicted to the dividends and refused to diversify. I had many talks with my dad over this but he refused to see the risks. Eventually the company got sued by one of the investors and the company declared bankruptcy. They got a small percentage of their investment back, but it took years and was a mess.
My in-laws started a small business in their mid sixties with a “friend “ who ripped them off and they walked away with very little. Watching both sets of parents lose almost everything late in life was very sobering. Fortunately we didn’t follow in either of their footsteps.
Mainly I was lucky.
My parents both invested individually, and shared their investment approaches with me. My mother’s style was to “buy and hold” individual stocks and mutual funds, and I followed her lead.
In my 20’s I was barely getting by, but started investing in an IRA.
In my early 30’s I got my first job with benefits, and that included access to a 401K, and I increased my investments.
I know so many people who didn’t have the exposure to investing I had, or didn’t have the extra income beyond their monthly expenses to invest. I know I am lucky.
I would prefer to live in a society where my taxes support a true social safety net that protects all of us, for both altruistic and selfish reasons.
On the selfish end- my dad told me when I was very young that it was better to live in a society where everyone has enough, because when people are poor and desperate no one is truly safe. I know this is true from personal experience.
I spent the first few decades of my financial journey being risk-adverse and investing in fixed income. I know now that was a contrarian strategy but it benefited me, as having a secure nest egg was important to my well being. In my forties, I began to invest modestly in equities, mostly value stocks, buy and hold. For me, the motivation was diversification and a dividend stream. My timing was right and equities subsequently grew to be the largest portion of my holdings. I largely stopped adding equities to the portfolio in my late fifties. Now in my late sixties, I rarely trade but am still holding. This odd path worked well for me and, had I to do it over again and given a similar interest rate environment, I would still begin with fixed income.
Interesting approach, but what works, works.
My parents were woefully unprepared for retirement. My dad was a sheet metal worker and my mom worked in retail. They never really made much money. When it came time to retire they had a paid for house and social security. My mom did have a very small pension. It would have been a struggle for them but both passed away in their early 60’s.
One of the reasons I chose to work for the government was the fact they had a good pension and, in some cases, health benefits for retirees. We also had the option of participating in a 457b Deferred Compensation Plan. I researched my options and thought I should start investing in the stock market and starting contributing 2% of my salary in 1991. I increased the amount regularly until retiring in 2010. At that time, I rolled over my Deferred Comp to a Traditional IRA with Vanguard.
In summary, seeing my parents struggle motivated me to explore better retirement options. I’m very glad I did.
I have a similar story, except my mother never worked a job and my father was a car salesman and most of the time I was growing up there was no pay if he didn’t sell a car.
As a youngster I dabbled in mutual funds but had no real plan. I had perhaps $10K invested.
During a fortuitous casual conversation with a co-worker in the late 80’s, he mentioned the concept of “pay yourself first” and it struck me as a fabulous idea. (Thank you Henry!)
I immediately set up an allotment to have a percentage of my pay invested in a mutual fund. Anytime I received a raise, I would increase the allotment. Not by the full amount, but most of it. And I made it a one way street – I never took any money out until after I retired at 55 in 2012.
This made “budgeting” easy. As I had already “paid myself”, anything left over could be spent without a second thought.
If I needed significant money, for a car for example, I would put in on my HELOC. At the time, the interest was deductible and I didn’t need to interrupt my retirement accumulation and compounding. I paid the HELOC off as quickly as possible.
I have access to the TSP and wish I had invested from the beginning. But being young (don’t trust anyone over 30!) I didn’t trust that it was legit for a few years. I finally did get on board when I discovered that Richard Headlee was on the TSP board. (In Michigan, Headlee is famous for the Headlee Amendment which limits property tax increases. He’s still saving me money.)
Unfortunately, I was late to the indexing game. I didn’t learn about index investing until I was nearly retired. When I did learn about it, the logic and math behind it seemed inescapable.I switched to an all index fund portfolio (on the equity side) and use the G Fund for my primary fixed income holding.
Another thing about index investing that I like is that once setup, no thought is required. No research, no stock picking, no timing decisions, etc. Makes for a much more pleasant life.
I’ve have been an index investor for the past 15 years and the stock market has had a good run the last several years. I have more assets than I ever thought possible. So, no complaints.
I can only image what I would have now if I knew in the beginning what I know now. But then wouldn’t we all?
I believe it, but as shocking as that is, how about the average IRA balance for those over 65? $250,000.
Worse yet, the median balance estimated at between $160-200,000.
That’s no way to run a railroad.
For as long as I can remember, I’ve been interested in investing. As a child, I followed stock price quotes in the newspaper and watched the evening news report the Dow Jones Industrial Average. Back then, the Dow was under 1,000 points.
I didn’t begin investing until my early 20s, when I landed my first career job and could finally afford to buy stocks. I purchased my first shares through a local bank’s brokerage department—back when they actually issued paper stock certificates. I also contributed to my company’s retirement stock plan up to the maximum allowed.
In my early 30s, I opened a brokerage account and an IRA at Fidelity. Over the years, I consistently contributed the maximum to my 401(k) and IRAs. I still remember our quarterly statements arriving in the mail—some showing losses. I would just chuckle and say, “I hope our accounts grow so we can retire someday.”
I was never afraid to invest because I always felt I had time on my side. That long-term mindset made it easier to stay the course through market ups and downs.
I eventually retired in my mid-50s. Today, I have a much deeper understanding of how the market works and how to manage my investments—but it all started with a curious kid reading stock quotes in the newspaper.
Very nice story. Retiring in your 50s is an accomplishment, is managing investments a chore or stressful in retirement?
In retirement, as you likely know, there’s a new element to investing—tax management. I’ve actually enjoyed learning how to manage our investments and distributions in the most tax-efficient way possible. I wouldn’t say it’s a chore or stressful. As odd as it may sound, I find it very interesting.
I also retired in my late 50s. If I have one regret, it’s not thinking carefully enough about how my portfolio was positioned from a tax perspective as retirement approached. I focused on tax efficiency going in — contributions, sheltering, accumulation — but didn’t give nearly enough thought to how it would unwind on the way out. It’s not a disaster, but it’s created more friction than it needed to. A bit more foresight and it could have been much cleaner. The bright side is I have quite a few years to sort it out.
A good problem to have. 🙂
I began my adult life with zero knowledge of the market, but I liked reading about personal finance, which introduced me to the concepts of saving and investing. My dad got me buying CDs in the late 70s, then the 401k got me into mutual funds in the mid 80s. I knew I was going down the right path, though nothing prepared me for Black Monday. Black Monday provided one of the best lessons of my investing life; what goes down, goes back up pretty darn fast.
Let’s hope that continues.
At the school where I worked, no pension was offered. Instead, we could choose from various TIAA investments offered in our 403(b) retirement plan. A mandatory contribution of 5% was deducted from our gross salary, AND the school contributed another 8% (10% after we’d been there enough years). Plus we could make voluntary supplemental contributions to the plan. A few years before I retired, the school also began offering a Roth 403(b).
Anyway, since these mandatory contributions were happening, planning for retirement in this way was just something normal we all did.
If I’m honest, and I’m trying hard not to gloss over the truth and make myself look good by claiming it was always the “grand plan” it started with equal parts dumb luck and stupidity.
The dumb luck came from crossing paths with a guy who sold a product similar to your IRA, who somehow persuaded me to open an account at a very young age with an automatic contribution that increased with inflation each year. The stupidity came from simply ignoring the account in those early accumulation years, because frankly I was far more interested in beers and girls.
By the time I eventually got around to paying attention, the balance was large enough that I figured I’d better start educating myself about personal finance — and it grew from there.
“I spent a lot of money on booze, birds and fast cars. The rest I just squandered” George Best when asked where all his football (soccer) earnings went.
Well at least you didn’t blow the account on beer and girls
That’s where the rule of having absolutely no excess until age 55 shows its wisdom, lol.
So that’s where I went wrong!