Americans Adjust Retirement Strategies amid Market Volatility

Stock market declines triggered by new U.S. tariffs have prompted Americans to reconsider their financial strategies, as advisors urge investors to remain steady.

Since President Donald Trump announced tariffs on most imports in early April, markets in the U.S. and abroad have experienced sharp declines. Alight Solutions, an information technology and consulting company, reported that 0.10% of 401(k) balances shifted after Trump's announcement — a rate about four times higher than normal monthly averages. Rob Austin, Alight’s research director, said that they "typically see this level in a month."

Man looking at his money | Source: Freepik

During the week ending April 4, 53% of outflows, totaling $140 million, came from large-cap U.S. equities, while 52%, or $138 million, moved into stable value funds. Overall, 401(k) balances fell by 7%, from $262 billion to $245 billion, resulting in significant paper losses for the 70 million Americans participating in such plans.

Financial advisors recommend three key strategies to navigate the volatility: adhering to an established investment plan, maintaining an appropriate cash reserve, and focusing on fundamental market data rather than headlines.

“I strongly believe in sticking to an investment policy statement that reflects my needs, and I tune out the rest of the noise,” said Carolyn McClanahan, founder of Life Planning Partners.

A man with money in his hands | Source: Freepik

For those nearing retirement, building a cash cushion is crucial. Lee Baker, founder of Claris Financial Advisors, recommends reducing risk and having enough cash to help sustain withdrawals for a year

Federal Reserve Chairman Jerome Powell emphasized patience amid uncertainty, stating, “We’re going to need to wait and see how this plays out” during a Society for the Advancement of Business Editing and Writing conference speech.