Retirement Accounts Make Most Americans Hostage to Stock Market Risk

Full analysis

More than 60% of Americans now own stock, mostly through workplace retirement accounts, and about one-third of the $75 trillion U.S. stock market is estimated to be held in IRAs or defined-contribution plans — a total of roughly $32 trillion as of early 2026. Economist and Bloomberg Opinion columnist Allison Schrager argues this concentration creates a new kind of systemic risk: if the stock market drops sharply and does not recover, the wealth shock hits more than 60% of households at once, potentially deepening recessions and leaving more people poorer in retirement than expected.

Schrager notes that the average equity allocation in a Vanguard defined-contribution plan was 75% in 2025, and that much of this money sits in passive index funds — meaning millions of retirement savers keep buying regardless of market conditions. That passivity puts a partial floor under falling prices but also means more Americans are exposed to a concentrated bet on the technology sector, which now dominates U.S. indexes. For anyone within a decade of retirement, the article is a prompt to check how much of their portfolio is in U.S. equities and whether that level of concentration matches their actual risk tolerance.