As economic uncertainty grows months into President Donald Trump’s second term, many baby boomers are making money moves that could jeopardize their retirement.
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From overreacting to market volatility to underestimating healthcare costs, these financial missteps are often fueled by short-term thinking or outdated advice.
Here are six mistakes boomers are making with their money in the Trump economy.
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Clinging to Outdated Strategies
Christopher Stroup, the founder and CEO of Silicon Beach Planning, said outdated investment strategies could cause some boomers to make financial missteps.
“Boomers must shift from a ‘set it and forget it’ mindset to proactive financial planning,” Stroup said. “The next decade will bring market fluctuations, tax policy changes and shifting retirement landscapes.”
He explained, “Many boomers are holding too much cash, assuming it’s ‘safe,’ while inflation erodes their purchasing power. Others are clinging to outdated investment strategies, such as relying on bonds or dividends without adjusting for market volatility.”
Experts said not saving enough for retirement and depending on alternative payment methods could hurt boomers.
“They have higher credit card debt than previous generations,” explained Chad Gammon, owner of Custom Fit Financial.
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Overacting to Market Volatility
Recent stock market fluctuations in response to Trump’s tariffs have unsettled many investors, particularly baby boomers who hold substantial equity.
Some boomer investors are shifting towards conservative investments. While caution is understandable, it’s crucial to avoid panic-driven decisions that could cost boomer investors long-term growth.
“It’s easy to get caught up in near-term uncertainty and market volatility,” said Tom Buckingham, chief growth officer at Nassau Financial Group. “But it is risky to make significant changes to your long-term financial plan and investment strategy based on the latest headlines.”
Delaying Retirement
According to recent research by Indeed Flex, an online marketplace for flexible and temporary work, over one-third of older adults are unsure whether they will retire this year due to the current economy and inflation.
Researchers said, “With only 10% retired, the three highs — the cost of living, housing prices and healthcare costs — may force the aging population to rethink retirement. Factor in economic uncertainty with Trump’s proposed new tariffs on imports; boomers may need to delay retirement even longer.”
For some boomers, delaying retirement is the smart move. However, older adults should consider whether delaying retirement aligns with their health and personal goals.
Ignoring Inflation Risks
Prices for everyday items could increase this year due to Trump’s tariffs.
“Some near-term measures of inflation have recently moved up,” said Federal Reserve Chairman Jeremy Powell at a recent press conference. “We see this in both market- and survey-based measures, and survey respondents, both consumers and businesses, are mentioning tariffs as a driving factor.”
Erika Kullberg, a personal finance expert, said boomers should reassess their budgets to account for inflation. She also suggested delaying Social Security to maximize benefits and exploring tax-efficient investment strategies.
“Beyond that, things like downsizing to reduce housing costs, cutting unnecessary expenses and diversifying investments to include assets that tend to perform well in different economic conditions can help,” Kullberg said.
Relying Solely on Social Security
Trump’s proposal to eliminate federal taxes on Social Security benefits would primarily benefit wealthy older adults, since most middle-class taxpayers don’t pay taxes on Social Security. Experts predict eliminating the Social Security tax could deplete the trust fund that pays for benefits and lead to a 30% decrease in benefits overall.
“Take a deep breath, stay calm and remain disciplined and well-diversified,” Buckingham said. “Consider including low-risk investments and products as part of a well-rounded investment portfolio. Consider supplementing Social Security and pension benefits with annuities that guarantee income benefits for life.”
Underestimating Healthcare Costs
The Trump administration said the Department of Government Efficiency (DOGE) proposals to eliminate “waste and fraud in entitlement spending” would not reduce Social Security, Medicare or Medicaid benefits.
However, experts said retirees should plan for emergency savings or explore supplemental insurance options to buffer against unforeseen events.
“Boomers are not taking sufficient notice of alternative funding strategies for healthcare,” said Neal Shah, CEO of CareYaya, an online caregiving platform serving older adults with dementia. “With potential modifications to Medicare on the horizon, many aren’t preparing for the costs of healthcare.”
Shah explained, “Health savings accounts (HSAs) and long-term care insurance should be priority considerations, as out-of-pocket healthcare expenses rise faster than general inflation.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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Sources
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PR Newswire, Boomers Are Forced to Rethink Retirement
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This article originally appeared on GOBankingRates.com: 6 Mistakes Boomers Are Making With Their Money in the Trump Economy
