Investing for retirement is crucial to building a nest egg that can provide financial security in your later years. Unfortunately, many people who are investing are making a big mistake with the money they're saving for the future. In fact, recent research from Fidelity found around a quarter of all employees who are invested in workplace retirement accounts are taking on more risk than they should. 

Among the 24.2% of investors in 2021 who are over-exposed to risk, there's one generation that's especially likely to be invested in the wrong mix of assets. 

Two adults reviewing financial paperwork.

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Baby boomers are the most likely to be invested too aggressively

Fidelity's data showed that in 2021, close to one in four employees had more stock than was recommended. Allocating too much money to equities is dangerous because stocks present a higher risk of loss. Now, they also offer higher potential returns than other, safer investments. It's important for every investor to balance risk versus return and to put an appropriate percentage of their investments into equities given their investing timeline. 

Unfortunately, baby boomers are more likely than their younger counterparts to have a portfolio in which stocks are over-represented. And one reason for this may be that older Americans aren't rebalancing their portfolios often enough.

See, as you age, you should have less exposure to equities because you have less time to wait out market downturns. You may need your money before an inevitable recovery happens. Having to pull out cash during a market crash can lock in losses that you'd likely be able to recover from if you had a long investing timeline. The other issue is that, the closer you get to retirement, the less time you have to build your account back up if you do suffer losses. 

Since baby boomers are mostly already in retirement or close to it, they'll need to rely on their invested funds sooner rather than later, so they need a lower portion of their money invested in stocks. This is why every investor -- but especially older ones -- should review their asset allocation each year and make sure their current investment mix matches the risk tolerance appropriate for their age. 

If boomers fail to do that and leave most of their money in the stock market, they'll end up invested too aggressively -- which Fidelity data suggests is exactly what occurred.

How can baby boomers fix the problem and reduce their risk? 

The good news is, boomers have an opportunity to correct this investment mistake before it causes permanent damage to their retirement security. 

The key is to take a close look at what your money is invested in and make sure you have the right mix of assets right now -- which could include stocks, bonds, CDs, and even cash. Ideally, baby boomers should subtract their age from 110 and invest that percentage of their portfolio into equities while keeping the rest in other, safer investments such as bonds.

Those who are already retired or who will be retiring in the next few years may also want to have enough money in a high-yield savings account to cover a few years of living expenses in case the worst happens, the market crashes, and they need money to live on until things turn around.

By recognizing the problem and taking steps to fix it ASAP, boomers may be able to save their retirement -- and they'll have a lot more peace of mind knowing their aggressive investment mix isn't putting them at risk.