12-04-2025
Sacramento workers delay retirement, put off purchases amid economic uncertainty
Financial planner Lauren Williams woke up Tuesday to a panicked email from one of her clients, a retiree worried that her nest egg would evaporate amid ever-changing federal tariff policies and the wild swings in the securities markets that have ensued.
'The first line was, 'I think I need to go back to work,'' the Folsom-based adviser said of the message. The client added: 'I have a feeling I'm not going to have my money anymore.'
Another of Williams' Sacramento-area clients decided to put off a planned retirement. Her own parents, Williams said, have reduced the amount of money they are taking out of savings each month for living expenses, hoping to wait out the turmoil amid the opening days of President Donald Trump's second term.
The fluctuations in financial markets prompted by the Trump administration's imposition and pullback of tariffs over the past week, and retaliatory tariffs imposed by target countries, has left capital region parents worried about saving for college, consumers concerned about making purchases and retirees fretting about losing their savings.
'This is a time when people are feeling like it's wise to be more cautious with their big purchases, with their savings and investment decisions,' said Katheryn Russ, a professor of economics at UC Davis who focuses on international trade and the effects of macroeconomics. 'You may see people deciding to delay retirement or start evaluating their choices for their kids' college.'
In her own family, Russ said, she and her husband have decided to put off the purchase of a new car, choosing instead to rely on their beloved 7-year-old Subaru a little longer amid a continuing 25% tariff on vehicles built outside America. Tariffs extend to U.S. automakers, which source parts from foreign counties as well.
And the markets have been a see-saw since the across-the-board tariffs on trading partners were first announced by Trump on April 2 and scaled back on Wednesday.
The Dow Jones Industrial Average closed Friday just above 40,000 points, down from a Jan. 30 high of 44,882 but higher than its intraweek low near 37,000 points. The market selloff accelerated after Trump's self-described Liberation Day announcement of steep tariffs on trading partners followed by a steep rebound Thursday when the White House confirmed many of the tariffs would be put on hold for 90 days.
Broader market indices — like the S&P 500, which is down 8.6% since the start of the year — have flirted with bear market territory, lending to concerns of a recession in the year ahead. The volatility mid-week led economists at JPMorgan to raise the risk of a global downturn to 60%, up from 40% at the end of March, with its CEO, Jaime Dimon, suggesting Wednesday that a recession was a 'likely outcome.'
Financial planners say they've taken steps to reassure clients, reminding people that markets generally bounce back and that well-balanced investment portfolios aren't dropping as quickly as the markets. But that doesn't mean there aren't prudent actions that people can take, including trimming or delaying withdrawals from investment funds and carefully rebalancing some accounts.
Sanjay Varshney, a Sacramento State finance professor who is also an investment adviser, said his firm has been sending emails to clients for the past two months, educating people about market fluctuations, seeking to head off panic before it takes root.
The fundamental economic trends that underpin the U.S. economy remain strong, Varshney said, despite the market drops. Those trends give him confidence that markets will ultimately stabilize.
'I'm not saying it's not serious,' he said. 'I'm saying by worrying ourselves to death about what it's going to cost you tomorrow in the grocery store is not going to change anything.'
Worry over the value of the savings she will need to rely upon when she stops working led one Sacramento health care professional, who is 68, to nix her planned retirement this spring.
Dreams of taking classes and upping her cooking game will have to wait at least another year. She did not wish to be identified because she had not yet mentioned to her employer that retirement was in the offing — and she worries that she could lose a job she now desperately wants to keep.
'If I were to make the decision to retire in the midst of what's going on right now I don't think I could sleep at night,' she said. 'Intellectually I know the market will recover but the question is will it be six months? A year? Who knows?'
The majority of clients at Liz Daffner's boutique Roseville firm, Diligence Wealth Management, are staying the course, she said. But a few are panicking. Two were so worried that they sold all of their stocks, cashing out completely despite her advice not to do so, she said.
Those panicking the most tend to be left of center politically, she said.
'I am seeing a completely different reaction from conservative clients versus my more Democratic clients,' Daffner said. 'They don't trust Trump. They are scared, the news is not helping, and they are in panic mode. My Republican clients are just trusting the process.'
Down markets do offer some opportunities to investors, she said, including potentially reducing the tax hit from moving some investments from a traditional retirement account to a Roth IRA, a type of account for which income tax is paid on the money you put in, but not the money you take out in retirement.
Practical steps also include delaying or reducing withdrawals from accounts that are already battered by market fluctuations, said Williams. Among her clients, this has included delaying retirement or seeking a buyout from an employer rather than just quitting, she said.
Some parents with children close to college age may decide to wait before tapping the money they've saved in tax-protected 529 plans, making up the difference with out-of-pocket spending until the market recovers, she said.
It's too soon to know whether families will change plans for their children's education if the funds they have saved are worth less when tuition payments need to be made, said Judith Painter, a Sacramento-area college counselor. As of last weekend, she said, none of the families she works with had shifted their strategies.
But with acceptance letters going out this spring and decisions due in coming weeks, fall enrollment at area community colleges could indicate that some have opted for a less expensive plan, said Gabe Ross, a spokesperson for the Los Rios Community College District.
He noted that historically, community college enrollment has gone up in times of economic uncertainty.
Cassandra DiBenedetto, who runs the state's CalKids investment program for college savings urged parents to continue contributing to their children's' accounts, despite worries about markets and the economy.
'With the recent market volatility, I think it's really important that people keep in perspective their child's goals for the future,' she said. 'This is for the long haul.'
At the other end of the age spectrum, retirees worry not just about their monthly income, but about their legacy.
One of Warnel Simpson's clients, a 90-year-old woman, called this week to say that she needed to make sure that if something happened to her, there was money left over for a vulnerable heir, the Sacramento-based financial adviser said.
But Simpson said his firm focuses on diversified investments, with risk lessening as clients approach retirement or other horizons. He reassured the woman, one of a few clients who called with concerns about the market, that there was little or no risk to her money.
He cautioned against pulling funds out of the market during a drop, saying that would also lead investors to miss the dramatic increases that can occur on days when prices come surging back.
'If you miss just three or four or five of some of the best days over the course of the year, you might miss 50, 60 percent of the market,' he said. 'A lot of people understand that and they're going to wait it out.'
Despite the turmoil, he said, a young man in the last week came into his office and opened a new account, fully funding a Roth IRA for the first time in his life.
'The United States economy is like a train,' he said. 'It's going to keep going.'
