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June 22, 2020 at 07:15 PM
Despite a published report and social media posts to the contrary, most retirees “stayed the course” with their investments earlier this year when the market crashed, according to Fidelity Investments.
Plus, the limited share of those 65 and up who did make changes generally just shifted some holdings from stocks to non-equity investments, the fund giant says.
Confusion around investor behavior during this year’s market weakening stems from a report in The Wall Street Journal last week, which initially said nearly a third of older investors, and 18% of all investors, sold all their stock holdings between February and May.
Citing that report, Michael Batnick, director of research at Ritholtz Wealth Management, tweeted the following morning that “31% of investors at Fidelity between the ages of 65-69 sold all of their stocks between February and May.”
More than 500 people then retweeted that message. (Also, Batnick referred to the same data in an online post for The Irrelevant Investor two days later.)
Wall Street Journal Correction
On Thursday, though, The Journal corrected the report, explaining: “An earlier version of this article, and a chart that was published with it, incorrectly said that nearly a third of investors ages 65 and up and 18% of all investors sold all of their stock holdings sometime between February and May.”
In addition, “of the 6.9% of investors across all age groups who made a change to their portfolio between February and May, 18% moved some money out of stocks,” it added.
As it turned out, Fidelity had “provided an incomplete data set that unfortunately inaccurately portrayed whether retirees were ‘staying the course’ or not,” Fidelity spokesman Michael Shamrell told ThinkAdvisor Monday.
The “complete data set” showed that from late February to mid-May, “less than 1 in 10 retirees (7.4%) made a change to the allocation within their 401(k) or 403(b) retirement accounts. Of that 7.4%, less than a third (31%) moved some of their savings from an equity fund(s) to non-equity fund(s) – so it wasn’t necessarily their entire account,” Shamrell said.
It’s also “important to note that this was money that was being moved within a workplace retirement account (not a retail investment portfolio), and that even the retirement savers that made a shift to non-equity funds within their retirement savings account didn’t necessarily move all their savings,” he explained.
