Fidelity warns that Baby Boomers may have too much in stocks

By Tim McLaughlin

BOSTON (Reuters) - Fidelity Investments, the No. 1 administrator of U.S. retirement plans, on Thursday warned that Baby Boomers may be too heavily invested in stocks, as the average 401(k) balance has surged 50 percent over the past five years.

"Many older 401(k) account holders, including Baby Boomers close to retirement age, had stock allocations higher than those recommended for their age group," Fidelity said in its second-quarter retirement analysis.

Fidelity said it compared average asset allocations to an age-based target date fund and found 18 percent of people ages 50 to 54 had a stock allocation at least 10 percentage points or higher than recommended. For people ages 55 to 59, that figure increased to 27 percent.

An additional 11 percent of people ages 50 to 54 had 100 percent of their 401(k) assets in stocks, while 10 percent of people ages 55 to 59 had all of their 401(k) assets in stocks.

“One thing we learned from the last recession is that having too much stock, based on your target retirement age, in your retirement account can expose your savings to unnecessary risk," said Jim MacDonald, president of workplace investing at Fidelity.

"It’s the hidden danger that many workers are unaware of. This is especially true among workers nearing retirement, who should be taking steps to protect what they’ve worked so hard to save."

Fidelity, which has assets under administration of $5.2 trillion, said individual retirement account (IRA) balances increased to $96,300 at the end of June, up from $92,500 in the year-ago period. The average 401(k) balance was $91,100 at the end of June, or nearly flat from a year earlier.

(Reporting By Tim McLaughlin; Editing by Nick Zieminski)

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