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August 17, 2025Open Access

Household Portfolios and Retirement Saving over the Life Cycle

Key Points

The share of investable wealth held in the stock market has risen by 10% since the 1990s, showing notable age-dependency.
Post-PPA changes in target date funds led younger workers to invest more in stocks, while older employees invested less, aligning with TDF glidepaths.
Contribution rates have changed little despite the significant influence of target date funds in retirement plans since the PPA.
The analysis leverages account-level data from millions of U.S. middle-class investors, covering 2006 to 2018 for a comprehensive view.

Abstract

ABSTRACT Using account‐level data on millions of U.S. middle‐class investors over 2006 to 2018, we characterize the share of investable wealth that they hold in the stock market over their working lives. Relative to the 1990s, this share has both risen by 10% and become age‐dependent. The Pension Protection Act (PPA)—which allowed target date funds (TDFs) to be default options in retirement plans—played an important role: younger (older) workers starting at a firm after TDFs became the default option post‐PPA invested more (less) in stocks, in line with the TDF glidepath. In contrast, contribution rates changed little following the PPA.

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The Journal of Finance

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