6.9% of 401(k) Savers in Their 50s Have Every Dollar in Stocks. A Bad Market the Year They Retire Can Cost Them More Than Any Other Year Ever Will

Imagine how many 401(k) savers near retirement keep every dollar in stocks, and why a market drop’s timing matters more in the first years of retirement than at almost any other point. Some savers in their late 50s have stayed fully invested in stocks for decades, and that approach has produced gains in recent years. The S&P 500 is up about 13% so far in 2026 and around 263% over the past 10 years on a price basis, so little in recent memory has driven anyone to change course.

How Many Savers in Their 50s Are Fully in Stocks

Fidelity’s fourth-quarter 2025 401(k) data covers 24.8 million participants as of December 31, 2025, and according to its platform, 6.6% of savers have a 100% equity allocation, meaning the account holds no bonds or cash.

For savers in their 50s, that share is slightly higher at 6.9%. Fidelity also notes that many participants age 55 and older hold more in stocks than their age would suggest. One reason may be how older workers signed up. More than 40% of workers in their 50s and early 60s pick their own investments, since many enrolled before automatic target-date options became common.

Why the Order of Bad Years Can Matter More Than the Average

This is called sequence-of-returns risk. Two people can earn the same average return over a retirement and still end up with very different balances, depending on when the bad years show up. While someone is still working, a crash mostly delays progress. Once withdrawals start, a drop means selling shares at low prices to pay bills, and those sold shares aren’t around for the recovery.

Here’s a simple example with stated assumptions. Two retirees each start with $500,000 and take $30,000 at the start of each year for five years, with no fees, taxes, or inflation adjustments.

• Retiree A: -20%, -10%, +10%, +15%, and +25%, in that order.
• Retiree B: the same returns in reverse order.

Both retirees average 4% a year, but retiree A, who hit the losses first, ends with $364,339. Meanwhile, retiree B ends with $438,411, a gap of about $74,072 created only by the order of the same five returns.

This has happened in real markets. Federal Reserve data show stock and mutual fund holdings of households ages 55 to 69 fell about 47% between the third quarter of 2007 and the first quarter of 2009.

Volatility has risen this year as well. The VIX, a gauge of expected market swings, reached 31 on March 27, 2026, a level linked to high fear, before falling to 18 in late October.

Common Ways Retirees Handle the Risk

Retirees tend to use a few approaches, often in combination:

• A cash buffer. Some keep a few years of spending in cash or short-term bonds, so they don’t have to sell stocks during a downturn.
• A gradual shift. Others slowly shift toward bonds in the years leading up to retirement. Target-date funds do this automatically, and Fidelity reports that 45.4% of Boomers hold all their 401(k) savings in one fund, compared with 63.0% of savers overall.
• Flexible withdrawals. Some retirees take less out after a bad year, leaving more shares in place to recover.
• Delaying Social Security. According to the Social Security Administration, benefits rise 8.0% for each year you delay past full retirement age for people born in 1943 or later, up to age 70. A larger check means less has to come out of the portfolio.

Risks That Come With Holding Too Little in Stocks

There’s a risk on the other side as well. Retirement can last 30 years or more, and a portfolio that’s mostly cash and bonds may not keep up with inflation over that stretch. That’s how people can slowly run out of money, even without a crash. Stocks have been a source of long-term growth for many retirees, and that need for growth may continue after someone retires.

So most planning discussions focus on the mix for the specific years around the retirement date. Stocks are still part of the picture, but we usually treat the portion needed for the first few years of withdrawals differently from money you won’t use for a decade or longer (we walked through how to protect those opening years in a free guide on sequence-of-returns risk, here).

A Question Planners Often Raise Before Retirement

For savers in that 6.9% group, planning discussions often center on one question: if stocks fell sharply in the first year of retirement, how many years of spending could they cover without selling any of them? Depending on the answer, the current mix may already fit the retirement window, or the account may still be set up for a saver who’s decades away from needing the money.

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