By Joseph Adinolfi
As baby boomers retire, they will go from buyers of stocks to sellers. At some point, this could overpower inflows into retirement accounts from working-age adults.
&#34;The U.S. is aging and older folks have different risk tolerances.&#34;
If you asked an investor this week for their thoughts on the biggest risks facing stocks right now, they would probably say the collapse of the Iran cease-fire, or the potential that artificial intelligence disrupts the business models of historically profitable firms.
But there is another more long-term risk that investors should probably be paying attention to - one that could upend a decades-long trend of rising valuations, particularly for large-cap U.S. equities.
As more members of the baby-boomer generation retire, they will increasingly start to liquidate their investments to finance their retirements. This could sap a key source of demand for stocks, according to Steve Blitz, chief U.S. economist at TSLombard, who highlighted this risk in commentary shared with MarketWatch on Thursday.
&#34;The U.S. is aging and older folks have different risk tolerances,&#34; Blitz said.
Over the past few decades, investors betting on stocks via defined-contribution retirement plans like 401(k) s have been a major force helping to push stock prices, and valuations, persistently higher. Data from Fidelity Investments showed that the average 401(k) account balance in the U.S. had risen 11% between the fourth quarter of 2024 and the fourth quarter of 2025.
But as the ratio of Americans over age 65 to those in the prime working-age years of 25 to 54 continues to climb, more investors will likely shift from continuing to accumulate stocks in their retirement portfolios to selling down their holdings - either to shift into less risky fixed-income investments, or to pull cash to finance their lifestyles.
To an extent, this shift has already started, according to data collected by the Federal Reserve and analyzed by Blitz. Defined-contribution pension plans - a definition used by the Fed that includes 401(k) s and other types of retirement accounts - have recently become net sellers of stocks, while redeeming money from mutual funds.
If there is a silver lining, however, it is that aging Americans are poised to shift more money into Treasury bills and other kinds of U.S. government debt. That could ease the pressure on the U.S. government to find new sources of capital as the share of U.S. debt held by foreign investors declines. Persistent inflation and widening federal budget deficits push up yields, making fixed income that much more attractive.
&#34;The baby-boomer generation is at the cusp of swapping equities for debt,&#34; Blitz said.
U.S. stocks continued to climb on Thursday, with the S&amp;P 500 SPX and Nasdaq Composite COMP each tallying a seventh straight session in the green. The Dow Jones Industrial Average DJIA also finished higher.
-Joseph Adinolfi
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
04-10-26 1119ET

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As baby boomers retire, they will transition from stock buyers to sellers, potentially impacting stock demand and valuations. This demographic shift may lead to increased liquidations of investments to fund retirements, as older individuals typically have different risk tolerances. Recent data indicates that defined-contribution plans have started to sell stocks, while aging Americans may invest more in U.S. government debt, easing capital pressure on the government. Despite these concerns, U.S. stocks have shown resilience, with major indices continuing to rise.

- As baby boomers retire, their transition from stock buyers to sellers may eventually lead to decreased demand for equities, impacting stock valuations.  
- Aging investors are shifting their portfolios, moving away from stocks towards less risky investments like Treasury bills, influenced by changing risk tolerances.  
- This trend of aging Americans as net sellers of stocks could ease pressure on U.S. government capital needs amid rising fixed-income attractiveness due to inflation and budget deficits.

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A major long-term risk for investors today is baby boomers liquidating their investments