The stock market's reeling. What should nearly retired and early retirees do?
The stock market's reeling. What should nearly retired and early retirees do?
Show Caption
Hide Caption
How are tariffs and your 401(k) retirement savings intertwined?
Experts say a rise in tariffs can lead to several factors that impact your retirement savings.
Retiree Mary Johnson, 73, said she doesn't usually check her retirement accounts when the markets are in a freefall, but she couldn't 'remember a fall this deep.'
On Friday, when the blue-chip Dow dropped 2,231 points, or 5.5%, and the broad S&P 500 and the tech-heavy Nasdaq each shed almost 6%, 'I did grit my teeth and just checked it,' said Johnson, who retired last year.
What did she find?
The stock freefall on April 3rd, followed by another drubbing the next day due to shock and worry over President Donald Trump's aggressive tariff plan 'knocked me back about an estimated $6,000 in income for 2026,' she said. 'That's money that's needed to replace an aging roof on (my) house, among other things.'
On Wednesday, stocks rallied strongly when Trump put a 90-day hold on most of his most aggressive tariffs, but stocks remain down for the year and their outlook is murky. Stocks swooned again the next day because no one knows what will happen when the 90 days are up. Investors have learned well the past week, stocks can turn violently one way or another in an instant.
"The current situation is not only chaotic, it's crazy," said ING Economist Carsten Brzeski.
Americans about to retire, recently retired or deep into retirement may feel they're sunk after the latest stock market gyrations, but experts say don't panic.
'Don't make an emotional or knee-jerk reaction,' said Nick Bour, founder and chief executive of Inspire Wealth in Brighton, Michigan. 'During Covid, stocks went down really fast, but they also came back really fast. If you get out, you could miss the big bounce back.'
US stocks suffer worst quarter since 2022 amid tariffs fears
Two major US stock indexes ended their worst quarter in over two years, with the S&P 500 dropping 4.5% and the Nasdaq dipping 10.4%.The Dow Jones dropped 1.3%, marking its first consecutive monthly loss since October 2023, as the broader market faces uncertainty ahead of Trump's new tariffs.
unbranded - Newsworthy
What's happening in the stock market?
On Thursday, April 3, the Dow lost 1,679.39 points, the S&P 500 shed almost 5% and the Nasdaq dipped nearly 6% after Trump announced his long-awaited tariff plan late the day before. Tariffs included a sweeping 10% levy on all countries, effective April 5, and even higher reciprocal tariffs on a host of countries starting April 9.
Stocks continued to plunge as countries denounced Trump's tariffs and threatened retaliatory tariffs. China matched Trump's 34% tariff, to start April 10. Trump later escalated his China tariff to 125%. In total, the White House said on Thursday tariffs on China were 145%, including an earlier fentanyl-related 20% tariff.
The stock market saw its largest decline last week since the start of the COVID-19 pandemic in March 2020 amid worries for a potential all-out trade war. The Dow lost nearly 4,000 points over April 3 and 4, and stock indexes continued to drop the following Monday.
This week, stocks rebounded strongly on Wednesday after Trump paused most reciprocal tariffs, except the ones on China, but they're still down for the year and resumed their slide on Thursday. Worries about a trade war with China erased optimism stemming from the 90-day pause for other countries.
What should retirees or those near retirement do?
Stand still.
'Giving advice to not panic during severe market downturns is often customary and can frankly seem a bit boilerplate,' said Marc Zabicki, chief investment officer and director of research at LPL Financial. 'We get that. But it is perhaps the most important piece of advice financial consultants can give because it is during times of market turmoil when many investors get it wrong.'
Keep working.
'If you're not retired yet, probably hold for a minute, take a pause,' Bour said. 'If you're earning money, you don't have to tap retirement accounts yet.' Hanging on to your job for another three to six months buys you some time to see how things settle, he said.
People who sell in a market downturn during their late working years or early retirement to meet income needs may face 'sequence risk,' meaning they deplete retirement savings faster than anticipated, potentially leading to a shortfall in later years. Studies show the order and timing of poor investment returns can have a big impact on how long your retirement savings lasts.
If you need cash, consider your options.
Consider refinancing a mortgage if you have one.
'The question I've been working with for several months now is whether to refinance,' Johnson said. 'I currently pay a mortgage rate of less than 3%. But keeping a roof over one's head forces us to think the unthinkable. With the…market rout, mortgage rates are going down.'
Bour said he's already in the process of refinancing 'to free up some cash flow. We have some cash on hand, but that is mostly emergency fund money.'
Another option is a home equity line of credit, or HELOC. 'If you need $10,000 for three or four months, this could help people out because rates are low, but you have to pay it back,' Bour said. 'Some retirees don't want debt, but it's not a bad thing. It's better than selling low on investments.'
Have Americans heeded this advice so far?
Companies that track 401(k) and individual trading activity show many Americans have stayed invested and even poured more money into the downdraft.
On Thursday, April 3, when markets first swooned on Trump's tariffs, investing platform Wealthfront said deposits into its globally diversified index investment accounts jumped more than 330% from the previous day, and deposits into its individual stock investment accounts were up by nearly 500%. Nvidia, Amazon and Apple were the most popular stocks purchased, it said.
'This increase in investment deposits is likely due to investors 'buying the dip' and shows that clients are continuing to invest through volatility,' Wealthfront said. Investment deposits are still elevated, it added.
'Despite a sea of red, retail investors stood firm and not only bought the dip but did so at a historic pace,' wrote JPMorgan analysts led by Emma Wu last week. Thursday, April 3 saw $4.7 billion of net buying, the largest level over the past decade, they said.
Bank of America said on Tuesday its clients were also net buyers of $8.0 billion of U.S. equities last week. That was the fourth-largest weekly inflow in Bank of America's data history since 2008 and the 31st largest as a percentage of market cap, it said. Clients of all types bought both single stocks and exchange traded funds, it said.
Benefits record-keeper Alight Solutions said Monday saw the highest activity since March 12, 2020, the start of the COVID-19 pandemic. It was also almost 10 times the usual trading seen in 401(k) accounts. Savers pulled money from U.S. stocks and target-date funds and shifted into safer bond and money market funds, Alight said.
'I learned from the Great Recession that I waited far longer than I should have and missed some investing opportunities,' Johnson said. 'I tend to be a buy and hold investor. I buy large cap companies with top credit ratings, a good dividend and a good ten-year total return record. Investing in stocks paying a good dividend is important right now because in essence, the company is paying you to be patient and hold their stock.'
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
33 minutes ago
- Yahoo
How To Stop Living Paycheck to Paycheck When You Make Good Money
According to numerous reports, about half of all Americans say they live paycheck to paycheck. This isn't limited to low- or moderate-income households, either. Almost half of those earning six figures feel the same way. For You: Try This: If you're struggling to make ends meet and feel like you never have enough money to meet your financial goals — like saving for a down payment or paying off debt — you're not alone. But your situation isn't hopeless, either. GOBankingRates reached out to several financial experts about how to stop living paycheck to paycheck when you earn enough money not to. Here's what they said. Sean Fox, president of debt resolution at Achieve, suggested making a spending plan or a budget. 'Most people don't want to 'budget' because it sounds hard, tedious and complicated. It's not. It's just a way to understand your finances in simple terms, with an eye on goals you've set,' Fox said. 'That means taking time to consider what you really want in your life, both in the long run (e.g., retirement, vacations, buying a house) and short run (e.g., a new piece of furniture, clothing, time for your favorite hobby or pastime). Then you can build your spending plan around what it will take to reach those goals.' No matter how much money you earn, you should always keep track of your spending. It's all too easy to fall into the trap of lifestyle inflation, something that occurs when you start spending more because you start earning more. You could be earning $100,000 a year and still have very little to show for it at the end of the month…if you're not tracking your expenses. Knowing how much money you spend and on what can help you figure out where the problem areas are and fix them. 'Keep a record of every single expense (online and off) you and everyone in your household makes for a couple of weeks,' said Fox. 'Most people have some surprises, and are then in a better place to make some decisions on smart spending that's in line with the budget.' Find Out: The Federal Reserve found that 82% of American adults have a credit card, while over 40% regularly carry a balance. While not a guarantee, if you're living paycheck to paycheck while earning a decent income, chances are you have some credit card debt, too. If that's the case, Fox suggested paying off this debt first. 'With interest rates over 20%, this is a huge expense — both in terms of what you're paying to the credit card issuer and the fact that you're effectively paying much more than the purchase price of what you bought,' Fox said. 'Plus, if you are carrying debt and paying all that interest, you have no opportunity to do something positive with that money — like saving for retirement and other goals you've set.' If possible, increase your monthly payments to pay off your debt sooner. If that's not an option, see if you can get a balance transfer card or a low-interest debt consolidation loan instead. Depending on the new interest rate and term, you could end up paying less in interest and getting rid of your debt sooner. There are a lot of reasons why people who make plenty of money live paycheck to paycheck. One of the big ones is that they don't differentiate between wants and needs. 'Whether it's about 'keeping up with the Joneses' or just preferring to not do so, the lack of thinking about whether a given purchase will meet a 'want' or a 'need' fuels overspending and credit card debt,' said Fox. 'It is much easier to simply buy what you want than to develop the habit of stopping to consider each purchase, and whether you really need it in your life.' All of this leads to overspending and living beyond one's means. If you're living beyond your means, take the time to distinguish between your wants and needs. Once you've done that, see if you can take it one step further by living below your means. Living below your means 'provides some cushion, a way to save and insurance that you are not living paycheck to paycheck all the time,' said Fox. Similarly, find ways to limit your discretionary spending. 'Cutting back on nonessential purchases is a great way to stop living paycheck to paycheck,' said a Quicken spokesperson. 'It is important to consider how many nonessential purchases [you are] making each week that you could either go without or make more cheaply at home.' You don't have to do it all at once. You can use a budgeting app or expense tracker to see where your money is going. Or, once a month, you can look through your bank and credit card statements to find out what you spend money on — and start finding small ways to cut back. Having goals, whether they're short or long term, can help motivate you to get a hold of your finances. 'By prioritizing your financial goals and having a time frame in mind, you can maximize your savings, stay motivated and move closer to the finish line,' said the Quicken representative. But don't fall into the trap of trying to achieve those goals all at once. Having that time frame is key. With it, you can avoid taking too long for a certain goal while also keep yourself moving toward it. For example, say you want to save your first $1,000 in an emergency fund. If you don't have quite that much money at the end of the month, that's OK. Start with a smaller sum — like $100, $200 or whatever you're comfortable with. If you know you want to save that amount within three months, break down your monthly savings goals accordingly — $1,000 divided by three. Once you've achieved a few short-term goals, you can start thinking about those long-term goals — like retirement. Joe DiSanto, a financial expert, consultant and the founder of Play Louder, suggested making a 'financial independence roadmap.' 'This is a long-term plan to reach your retirement goal, which includes a savings plan and required levels of investment return,' he said. As you work on your spending and savings habits, it's important to be consistent. 'You need to be consistent and make it part of your life,' said DiSanto. 'You can't 'wing it' or 'go with your gut feelings.' It's like going to the gym or maintaining a healthy diet. I use those examples specifically because most people struggle with that, too.' You can go about this in many different ways. For example, you could get an 'accountabili-buddy,' someone who can help you stay on track financially. Or you can do things like automate your savings or use a budgeting app. Whatever works for you, do it and be as consistent as possible. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 7 Luxury SUVs That Will Become Affordable in 2025 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on How To Stop Living Paycheck to Paycheck When You Make Good Money
The Hill
an hour ago
- The Hill
Outdated apprenticeship laws are keeping Americans out of work
The U.S. is in the throes of a skilled-labor shortage. One answer to this problem is centuries old: apprenticeships. Apprenticeships can fill jobs and add a rung to the ladder of opportunity for people who cannot afford college. Yet many states lift that ladder out of reach by giving preferential treatment to existing apprenticeship programs over proposed new programs. That can change through legislation, federal executive action and litigation. Many trades train new workers through apprenticeship programs, where people learn on the job while earning a paycheck. But laws regulating apprenticeships have long stifled the creation of new programs that could train more needed workers. One example is the 'needs test.' In multiple states, proposed apprenticeship programs must show that there is a local 'need' for their program. This means that existing programs are protected against competition from new programs based on the theory that existing programs already meet industry needs. Some states even go so far as to allow established programs to file objections against proposed new programs. These 'competitors' vetoes' treat apprenticeship programs unequally, favoring established players (and their affiliated labor unions) over newcomers. Workers miss out on opportunities, consumers face increased costs and the labor shortage drags on. Beyond legislative reform, there are two ways to push back against these unfair laws: federal executive action and constitutional litigation. The National Apprenticeship Act, also known as the Fitzgerald Act, empowers the secretary of Labor to cooperate with states' labor agencies to promote standards for apprenticeships and increase apprenticeship opportunities. Department of Labor regulations create a system where state authorities can act on behalf of the department to register apprenticeship programs for federal purposes — that is, providing apprentice labor for projects operating under federal contracts or grants. The state's laws must meet certain requirements for the state to be eligible. This dynamic gives the Labor Department leverage over state laws that restrict access to apprenticeship opportunities. In 2007, for example, the Labor Department ended its partnership with California's apprenticeship agency due to the creation of a needs test. The department reasoned that the test 'limited, rather than promoted, apprenticeship opportunity.' Despite this, other states with similar needs tests remain federal partners. The first Trump administration sought to promote apprenticeship opportunities, and the second should follow this by pressuring states to drop needs tests in return for continued or renewed partnerships. There's also a constitutional path. Pacific Legal Foundation, where we work, brought a 2012 lawsuit challenging California's needs test, but the law was upheld in a Ninth Circuit decision in a different case the following year. Multiple courts have held that governments cannot shelter established businesses against competition from newcomers, but the Ninth Circuit upheld the needs test on the faulty premise that apprentices may need to have post-apprentice job opportunities protected. This justification holds no water in a climate with an insufficient supply of skilled workers. This reflects a sad trend in the law: Your right to earn a living for your family takes a backseat to lawmakers' favored interest groups. Your right to seek education so you can earn a living deserves just as much respect as many other rights we hold dear, like your right to speak freely. To paraphrase a Supreme Court decision, your need to feed your family 'may be as keen, if not keener by far, than [your] interest in the day's most urgent political debate.' This is especially true for those struggling to make ends meet. Too often, politicians believe that we need to adopt laws that shower marginalized groups with handouts and special favors. But what people really need is a fair shake — a chance to learn a trade and climb the ladder of opportunity. Yet the law often raises that ladder beyond reach. Leveling the playing field for apprenticeship programs will do far more than handouts to empower people to achieve the American Dream. Something is deeply wrong when we do not have enough workers at the same time families are struggling to put food on the table. We can address both problems by promoting apprenticeship programs. Much reform is needed of apprenticeship laws to maximize the potential these programs can provide. However, doing away with needs tests and giving equal treatment to existing and proposed apprenticeship programs is a good first step toward greater economic opportunity and lower costs for all. David J. Hoffa and Ethan W. Blevins are attorneys at Pacific Legal Foundation, a public interest law firm that defends Americans' liberty against government overreach and abuse.
Yahoo
an hour ago
- Yahoo
VinFast Delivers Over 11,000 EVs in Vietnam in May 2025
VinFast Auto Ltd. (NASDAQ:VFS) is one of the 8 Biggest EV Stocks to Watch in 2025. It reported that 11,496 electric vehicles had been delivered to Vietnam in May 2025, bringing its domestic year-to-date total to 56,187 units. A technician connecting an EV battery to the Grid Integrated Vehicle platform. Sales in May were led by the VF 5 (4,232 units) and followed by the VF 3 (3,950 units). In addition, there were 1,393 VF 6 and 773 VF 7 vehicles, while the larger SUVs VF 8 and VF 9 experienced growth. The overall volume was nevertheless supported by the business-oriented Herio Green and Nerio Green models. The VF 3 mini SUV was introduced in late 2024 and became VinFast Auto Ltd. (NASDAQ:VFS)'s best-selling vehicle in 2025 with 19,416 units delivered. Urban shoppers who are younger are particularly drawn to its youthful and compact style. The price and efficiency of the VF 5, an A-segment EV, make it a popular choice for people, young families, and ride-hailing services. VinFast Auto Ltd. (NASDAQ:VFS)'s competitive position in Vietnam's expanding electric vehicle market is shown by its product variety throughout the small, midsize, and business EV areas. While we acknowledge the potential of VFS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 High-Growth EV Stocks to Invest In and 13 Best Car Stocks to Buy in 2025. Disclosure. None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
