As economic uncertainty persists months into President Donald Trump’s second term, many baby boomers in the United States are navigating a changed financial landscape, with some making missteps that could endanger their retirement security. Financial experts say a mix of outdated strategies, emotional responses to market shifts, and inadequate planning is exposing the generation to heightened risks, especially amid volatile markets, rising healthcare costs, and policy changes.

According to a recent Yahoo Finance report published on March 29, 2025, and corroborated by nasdaq.com, baby boomers are contending with six major pitfalls as they manage their finances in the current economy.

Outdated Investment Approaches

Some boomers continue to rely on traditional investment practices, clinging to a “set it and forget it” mentality developed over past decades. However, market and tax policy shifts anticipated over the next decade require a more proactive approach. Financial advisors recommend revisiting asset allocations regularly to adapt to changing economic conditions, emphasizing diversification to protect against volatility.

Holding Excessive Cash

The instinct to hold large amounts of cash as a safe haven can backfire, experts warn. With inflation steadily eroding purchasing power, boomers who are risk-averse and depend heavily on bonds or stock dividends—without adjustments for today’s market realities—may find their nest eggs failing to keep pace with rising costs.

Retirement Savings Shortfalls

Unlike previous generations, today’s boomers carry higher average credit card debt and face greater market uncertainty, which amplifies the risks of undersaving for retirement. As a result, many may find themselves dependent on alternative payment methods or forced to tap into retirement funds earlier than planned.

Emotional Reactions to Market Turbulence

Trade tensions and tariffs have led some older investors to abruptly transition their portfolios toward conservative assets. While a cautious approach has merits, experts urge retirees not to make snap decisions based on short-term news cycles or panic, as drastic portfolio changes can undermine long-term goals.

Delaying Retirement Planning

Recent research suggests that over half of older Americans feel uncertain about their ability to retire as planned this year. High housing and healthcare costs frequently drive decisions to postpone retirement, but experts advise individuals to weigh these decisions against personal health and long-term lifestyle aspirations.

Underestimating Healthcare Costs

With inflation—and, potentially, new tariffs—likely to drive up everyday and healthcare expenses this year, boomers are encouraged to reassess their budgets. Advisors suggest options such as delaying Social Security benefits to maximize eventual payouts, exploring investments in diverse asset classes, and considering cost-saving measures like downsizing homes or eliminating discretionary spending.

Policy Proposals and Healthcare Funding Challenges

Amid a proposal to eliminate federal taxes on Social Security benefits—a move that would mostly benefit wealthier retirees—there are concerns about the potential depletion of the Social Security trust fund and a risk of reduced future benefits. Most retirees currently do not pay these taxes, limiting the positive effect for the majority. Experts further caution that many boomers have yet to seriously explore alternative healthcare funding methods, such as health savings accounts and long-term care insurance, despite rising costs outpacing overall inflation.

Expert Recommendations

In response to these challenges, financial planners recommend that baby boomers maintain calm and discipline in their financial decisions. They advocate building diversified portfolios, maintaining emergency funds, and supplementing Social Security and pension income with annuities or other stable investments. Careful planning for healthcare and unexpected expenses is strongly advised to ensure resilience during economic uncertainty.

For further reading on these trends and financial tactics, the original article is available on Yahoo Finance.