Baby Boomers: If You Own These 3 Asset Classes, You Don’t Need to Worry About What Happens Next

For baby boomers who are thinking about retirement, one’s thought process may be much more complicated today than it was just weeks or months ago. When the market is in decline, as it has been of late (with two of the three major indices recently dipping into correction territory from fresh all-time highs in one of the fastest downswings in history), plenty of investors in this age cohort may be losing sleep over the value of their portfolios.

To be fair, the past few years since the onset of the pandemic have been excellent for asset owners. Those with sizable retirement portfolios have watched as their numbers got larger and larger each year. However, when that trend changes, some investors may look to recalibrate their portfolios, and put more of their capital to work in more defensive asset classes.

For baby boomers thinking about doing just that, the good news is there are plenty of assets out there which have low correlation (or negative correlation) to asset prices over time. The three assets I’m going to discuss here are among the best for long-term investors to own in order to sleep well at night. 

Bonds 

Bonds remain a top investment choice for baby boomers in 2025 due to their stability, income potential, and risk management benefits. As retirees or near-retirees, baby boomers prioritize capital preservation, and bonds provide a guaranteed repayment of principal at maturity, ensuring financial security. Unlike the volatility of stocks, bonds offer a predictable income stream through regular interest payments, making them ideal for those relying on steady cash flows.

Bond market volatility surged in December 2024, with rising yields and widening credit spreads. The U.S. aggregate bond index returned 1.25% for the year, underperforming expectations, while high-yield corporate debt outperformed. Economic data complicated the Fed’s easing cycle, raising uncertainty for 2025.

Additionally, bonds serve as a critical diversification tool, often moving inversely to stocks, helping to stabilize portfolios during market downturns. Inflation-protected bonds further enhance security by adjusting payments based on inflation, safeguarding purchasing power. With lower volatility and high liquidity, particularly in government bonds, baby boomers can confidently access funds when needed.

Gold

Gold prices have continued to surge as investors seek safe harbors amid growing uncertainty in the market. Of course, there are some warning that gold performs well as an inflation hedge over the long-term, but can act more like any asset that can be sold in a true downturn. But for investors with a reasonably long investing time horizon, the ability to retain one’s purchasing power is generally viewed as a net positive. And gold’s ability to offer protection against inflation, economic uncertainty, and market volatility is worth examining.

As an inflation hedge, gold retains its purchasing power when fiat currencies lose value, ensuring financial security during rising costs and economic shifts. In times of geopolitical instability or financial crises, gold serves as a safe-haven asset, helping investors preserve their wealth when other markets decline.

Moreover, gold’s low correlation with stocks and bonds makes it an excellent diversification tool, reducing overall portfolio risk. Additionally, its high liquidity and global recognition allow baby boomers to buy and sell gold easily, offering financial flexibility. Unlike fiat currencies, gold is independent of government policies, making it a stable, long-term investment.

With strong demand across industries, gold remains a valuable asset for preserving wealth, making it an ideal choice for baby boomers seeking stability, security, and diversification in an uncertain financial landscape.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) offer baby boomers a stable income stream, diversification, and inflation protection, making them an ideal asset class in 2025. Since REITs must distribute at least 90% of their taxable income as dividends, they provide consistent passive income, which is crucial for retirees. Unlike direct real estate investments, REITs are highly liquid, allowing investors to buy and sell shares easily on stock exchanges without the complexities of property management.

REITs are rebounding from their post-pandemic slump, still trailing the stock market and offering attractive discounts. With 7%+ dividend yields on the rise, REIT-focused closed-end funds present a strong opportunity. Historically, REITs have outperformed the S&P 500, despite recent underperformance.

Moreover, REITs are undervalued despite stable housing price trends, diverging from past patterns. While home prices rose 7.2% annually over the last decade, REITs gained just 3.7%. With high mortgage rates and real estate pessimism priced in, REITs now trade below levels seen in both 2007 and 2015-2019.

REITs serve as an effective hedge against inflation, as rising rents and property values help preserve purchasing power over time. They also allow baby boomers to access large-scale real estate investments without requiring significant capital. Historically, REITs have delivered strong total returns, combining steady dividends with long-term appreciation.

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