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Stock Ownership and Value by Income Group 1989-2001

Stock market gains through the 1990s were not realized by most Americans

U.S. corporations have been doing away with "defined benefit" retirement plans and replacing them with "defined contribution" 401k or similar investment programs that typically include stocks and mutual funds. In some cases, the retirement benefits have been dropped all together.

The data shown in the graph below reflect the increase in individual stock portfolio values from 1989 to 2001. The different lines represent mean values for different income groups. The top red line is the $90,000 to $100,000 income group, which did pretty well. The vast majority of Americans, those earning less than $60,000 accumulated little if any wealth in stocks during that period.

Graph showing the rise in stock portfolio values by income group in thousands of U.S. Dollars. (Source: The Federal Reserve System quoted in The World Almanac and Book of Facts, 2005.) The top two lines (red and purple) on the above graph approximately correspond to the top 20-percent income group in the United States. Income quintile groups are shown on the Income Inequality page.

The ardent capitalists like to quote President Kennedy's remark "a rising tide lifts all boats." Obviously, some rise a lot higher than others.

Experts such as George Will and Glenn Hubbard have claimed that Social Security is not long for this world, that people can not depend on it for their retirement future, even though they are paying into it now. Looking at the above graph, I just have one question for those who believe privatizing Social Security is a good idea: how will the other 80-percent of the retirees live?

Dumpster diving, anyone?

Keywords: stock value appreciation, growth in portfolio, personal stock wealth, ownership society