Boston College’s Center for Retirement Research Director Alicia Munnell published her estimates of the losses Tuesday. Her estimates are based on the assumption that markets have been down by 20% recently. The S&P 500 is down 21%, with the Nasdaq composite down by 30% and the Dow Jones down 16% since the year began.
IRA accounts have lost $2 trillion, while 401(k) accounts have lost $1.4 trillion, according to Munnell. Most of the investments in 401(k)s are rolled over into IRA accounts, so Munnell claimed both reflect the overall economic outlook.
Investment management company Vanguard reported that currently, about 72% of its 401(k) plans are invested in equities. Individuals have also turned to holding equities instead of retirement accounts. However, even these have been affected, with 2021’s holdings of $32.2 trillion decreasing by $6.4 trillion, according to Munnell’s calculations.
Vanguard also reported that people with lower income owned more high-risk equities than their higher-income counterparts. Those with incomes less than $30,000 had 81% of their investments in equities, while those with incomes greater than $150,000 had 76% of their investments in equities. Typically, those with higher incomes take on the higher risk.