Soft money tenured profs in schools of medicine I am a PhD student focusing in psychiatric genetics, hoping to become a professor someday. It is my understanding that a lot of the PhDs in my field end up working in schools of medicine in positions that are 80-100% soft money (even though they are tenure-track).

That sounds... terrifying. You're not a clinician so you can't make up salary with patient care, you're in a school of medicine so there isn't much opportunity to cover part of your salary with teaching... it sounds like you would have to spend your entire career living in fear of a grant dry spell, even once you had tenure (no grants = no salary).

Am I misunderstanding how this works, or is it really that bad? How do people survive in that situation?
For soft money position, especially NIH funded one, there are a number of things working in your favor. You might be PI on 2 or 3 grants and CI on another 1 or 2 which means that no grant has more than 30 percent of your salary. Since NIH grants are generally 5 years long, it means you write a new grant every year.

The amount of time between getting an NIH grant and starting it can be 12 months. This means you have lead time before you run out of money. The NIH also allows you to get a no cost extension, which allows you to stretch what money you have.

Universities also will often allow you to either front pay or back pay your salary while you wait for a grant that has been awarded to start. This again allows you to cover gaps.