NEW YORK (Reuters) - The deep declines in the U.S. stock market over coronavirus fears the last three weeks have left a dent in retirement portfolios and brokerage accounts, costing on average each person in the United States around $16,000 as of Monday’s close before a rebound Tuesday erased some of those losses.

A person wearing a face mask walks along Wall Street after further cases of coronavirus were confirmed in New York City, New York, U.S., March 6, 2020. REUTERS/Andrew Kelly

Americans are mostly exposed to stocks via their 401(k) retirement plans.

That does not account for wealth disparity and spread of ownership of stock. According to an analysis of 2016 Federal Reserve data by Edward Wolff, an economics professor at New York University, 84% of stocks owned by U.S. households are owned by the wealthiest 10% of Americans.

Here is a breakdown of stock ownership and how much risk ordinary investors face:

WHY ARE AMERICANS SO EXPOSED TO THE STOCK MARKET?

The U.S. retirement system no longer relies on defined benefit pension plans - which pay out a guaranteed amount until death. That means that people are mostly in charge of their own retirement, investing via 401(k) plans.

It also means financial pain is personal. When the market fell 7.6% on Monday, the average person became poorer by $5,682, according to calculations by S&P Dow Jones Indices senior index analyst Howard Silverblatt.

Around 42% of the working-age population with a full-time job has a 401(k) or similar plan, and those funds are overwhelmingly invested in stocks, according to U.S. Census data.

According to the Investment Company Institute there are $5.9 trillion in assets in 401(k) plans overall, with $3.8 trillion in mutual funds. According to Morningstar, $1.7 trillion is invested in target-date funds which have a target on when a person retires and are typically heavily weighted to stocks.

WHY THE FOCUS ON STOCKS?

Investors - either through their own choosing or through target-date funds or on the suggestions of financial advisers - focus heavily on stocks because they can pay rich rewards. Stocks have returned an average of 10.5% a year since 1970, according to Morningstar.

That is greater than the 8.3% annual return on bonds over the same time according to Morningstar. Bonds, meanwhile, are unlikely to post the same returns in the future because yields, which move lower as prices rise, are at historic lows.

WHAT DO PEOPLE OWN OUTSIDE THEIR PENSIONS?

Overall, individual stock ownership in the United States appears to be declining as more members of the outsized Baby Boom generation retire or shift their portfolio to a more conservative stance in preparation for retirement.

Approximately 55% of Americans reported that they owned stock in April 2019, down from the average 62% who reported owning equities in surveys conducted between 2001 and 2008, according to Gallup data.

However, the popularity of exchange-traded funds, which allow investors to bet on a trend or sector, has surged. There was $4.42 trillion in ETFs listed in the United States overall at the end of 2019, according to ETGI. That has grown by an average of 18.8% a year over the last 10 years.

Individuals who own stocks outside of their retirement plans often focus on popular large-cap names such as Walt Disney Co DIS.N, Microsoft Corp MSFT.O, and Amazon.com Inc AMZN.O, according to data from TD Ameritrade. Those who opt for exchange-traded funds often gravitate toward those that invest based on a theme, such as marijuana or automation, said Todd Rosenbluth, director of mutual fund research at CFRA. (Graphic: tmsnrt.rs/2Q3L4BT)

WHAT CAN INVESTORS DO?

Overall, investors pulled $13.6 billion out of funds that hold U.S. equities last week, the sharpest pullback from the domestic stock market since September, according to ICI data.

During Monday's market rout, individual investors turned to technology companies such as Apple Inc AAPL.O, Microsoft, and Amazon, according to data from Fidelity. Walt Disney, meanwhile, had more than 5,000 buy orders through the brokerage firm compared with 1,094 sell orders.

“It’s really about finding ports in the storm right now,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.

WHAT DID PEOPLE DO AFTER THE 2008 FINANCIAL CRASH?

Worker participation in 401(k) accounts fell by 3 percentage points between 2007 and 2009, during which the United States suffered the deepest recession since the Great Depression, according to a 2015 study in the Journal of Pension Economics and Finance.

Savings rates among those who continued contributing to their plans, meanwhile, fell by 5 percentage points. Those changes in contribution rates are likely to lower the 401(k) balance of a typical 30-year-old by 8% by the time they reach the age of 62, the study found.

HOW DOES THE STOCK MARKET FALL AFFECT THE ECONOMY?

Slightly more than half of all U.S. households have any exposure to the stock market. Those people may feel less inclined to make big purchases during a prolonged market rout. In addition, the larger concern for the economy now is that the pullback in travel combined with a collapse of oil prices will sink business and consumer confidence and lead to a recession.

“It’s very hard to tell people to stick to their plans and don’t be emotional because it’s money, and everyone is emotional about money,” said JJ Kinahan, chief market strategist at TD Ameritrade.

(This refile omits ‘pension’ plan in fifth paragraph, changes to ‘401(k) plans’ from ‘401(k) pension plans’)