- The retirement aspirations of baby boomers are under threat due to a declining stock market.
- Older adults may need to postpone retirement, return to work, or reduce their spending habits.
- Experts in retirement planning have proposed various tactics to safeguard their financial resources.
Baby boomers’ expectations for a comfortable retirement are increasingly at risk with the faltering stock market jeopardizing their plans.
The S&P 500 index recorded a 10% decline between February 19 and March 13, marking a seven-month low, primarily driven by concerns that current economic policies could lead the country into a recession. As of now, the market remains in negative territory for 2025.
This downturn has impacted the investment portfolios of older Americans, diminishing their savings and heightening concerns about meeting their envisioned retirement standards. Most boomers, now in their 60s and 70s, are either approaching the end of their careers or are already retired. They possess stocks valued at nearly $20 trillion—close to half of the U.S. stock market—across direct holdings and 401(k) plans, according to David Rosenberg, president of Rosenberg Research and former chief North American economist at Merrill Lynch.
Many of these individuals have not diversified or balanced their investments, leaving them vulnerable to market fluctuations with little time for recovery. As they withdraw funds to support their living expenses while the market declines, they face the risk of not fully rebounding even if the market improves—a threat referred to as “sequence of return risk.”
Rosenberg cautioned that if this trend continues, numerous retirees may be compelled to re-enter the workforce, potentially taking on jobs with less prestige, like at local grocery stores. Those who hesitate to sell their stocks may find themselves significantly cutting back on their retirement lifestyle—foregoing luxuries like cruises and cosmetic surgeries, according to his research notes.
Experts are urging both current and future retirees not to make hasty investment decisions driven by fear. Judith Ward, director of thought leadership at T. Rowe Price, emphasized that reactive measures can disrupt years of diligent planning. A diversified income approach would help, wherein essentials are covered by guaranteed income sources like Social Security while discretionary spending is kept separate, allowing for adjustments in non-essential areas if needed.
As markets frequently recover within a few years, the fear of selling at a loss and later buying back into the market can lead to detrimental financial decisions. Experts recommend gradually moving away from high-risk investments, focusing instead on cash, bonds, and gold to secure nest eggs. Maintaining a long-term perspective and regularly reassessing financial goals will afford older investors the best chance for a secure retirement.
