The Changing Investment Behavior of U.S. Seniors

Over the next quarter century there will be a dramatic shift in the percentage of the U.S. population that is retired. This will strain entitlement programs such as social security and will potentially impact capital markets. In this paper I present evidence of changes in the asset holdings of investors over the age of 65 during the last two decades. The percentage of seniors with stock investments and loans collateralized by their primary residence increased, and among participants the stock share of financial assets and loan balances increased. I find evidence that these trends are the result of decreasing risk aversion, both over time and for successive birth-year cohorts