In April 2020, the United States and global stock markets faced turbulence following President **Donald Trump’s announcement of sweeping tariffs**. Dubbed “Liberation Day,” this date marked the introduction of **blanket 10% tariffs on all imported goods** and additional taxes on imports from **60 other countries**.
This news triggered a significant market reaction, resulting in the **worst week for U.S. stocks** since the pandemic crash of 2020. The **Dow Jones fell by 2,000 points**, the S&P 500 plummeted by **6%**, and the **Nasdaq** experienced a comparable drop. It’s safe to say, ***financial markets are on edge!*** Read more.
The **volatility** of the market has surged, leaving **investors and businesses alike** anxious about their portfolios. Many individuals have started expressing concerns regarding their **401(k)** accounts as they notice worrisome decreases in their investments. What does this mean for your retirement savings?
How Are Your 401(k) Investments Impacted by Tariffs?
A **401(k)** is an employer-sponsored retirement plan allowing employees to contribute a portion of their paycheck, sometimes with company matching. **But here’s the catch**: the value of your 401(k) is closely linked to **stock market performance**. When market fluctuations occur, your 401(k) can reflect significant changes. In this case, with such **extreme stock market dips**, many Americans are witnessing severe hits to their **retirement savings**.
**Teresa Fort**, an associate professor at Dartmouth, has voiced concerns about this unprecedented economic shift, stating, “The U.S. market has outperformed globally for decades, but the entire world economic order has been shifted. People need to rethink their optimal allocations.”
In response to rising worries about market conditions, Trump was asked onboard Air Force One whether he had checked his 401(k) since announcing the tariffs. **“I haven’t checked my 401(k),”** he stated confidently, expressing his belief that the tariffs would ultimately benefit the economy. “I think our markets are going to boom; we’ve got to give it a little chance,” he assured.
The President reiterated his positive outlook through a post on **Truth Social**, proclaiming, **“This is an economic revolution; we will win. Hang tough; it won’t be easy, but the end result will be historic. We will Make America Great Again!”** Read the full post here.
But what does this mean for you, the everyday investor? Will the tariffs spell doom for your retirement savings? Here’s what the experts say.
Expert Insights: What Should You Do About Your 401(k)?
**Brad Clark**, founder and CEO of Solomon Financial, advises against panic. “It’s scary,” he admits, “but now is *not the time* to take money out of savings.” He suggests that especially for younger investors preparing for future retirement, it’s important to **stay the course**.
“When you’re in turbulence, all you think about is getting off that plane!” says Clark. “But remember, that plane was built to handle this. Your portfolio is similar.”
For those nearing retirement—within **two to three years**—Clark advises that such portfolios should already be less risky. But if you’re still **10 years or more** from retirement, **this downturn could present an opportunity!** “What a great buying opportunity,” he says. “Warren Buffett makes money by being greedy when others are fearful.”
Clark encourages long-term investors to continue investing as they always have, confident that it will pay off down the line. On a similar note, **Michelle Singletary**, personal finance columnist for the Washington Post, reassures younger investors: “Don’t let what’s happening now scare you away from the stock market. Keep investing.” Read more here.
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**Laurence Kotlikoff**, a respected economist at Boston University, takes a more cautious stance for people of all ages—advising against risky investments at this time. He suggests beginning from a safe investment position and gradually re-entering the riskier market space later. “There’s no reason to believe that the market will reverse itself,” he warns. “Leave only in the market what you can afford to lose.”
He also recommends building a **TIPS ladder**—a portfolio of Treasury Inflation-Protected Securities—to safeguard against volatility. “It’s a combination of spending and investing behavior,” Kotlikoff says. “This strategy eliminates downside risks while allowing for proactive financial management.”
**Teresa Fort** echoes Kotlikoff’s cautious approach, emphasizing that we’re in unprecedented times. For her mother, who relies on her 401(k), she’s advised minimizing market exposure as much as possible. “This is a fundamental shift in the world order,” Fort cautions. If you’re close to retirement, seek the safest assets available.
Ultimately, the expert consensus varies depending on individual circumstances, age and proximity to retirement. Nevertheless, a unified message remains: **don’t panic**. Avoid rushed financial decisions. Remember, this turbulent time calls for careful navigation—**being informed and strategic can lead you through financial storms.**
