Trump’s tariffs and the subsequent retaliation from other nations have been a source of mayhem for US stocks in recent weeks – and apparently the burden is falling on American savers, especially ones near retirement.
Americans are seeing their 401(k) retirement accounts lose thousands of dollars as the Trump administration continues to invoke a global trade war.
Their plans of relying on retirement accounts through their senior years are increasingly at risk amidst the ongoing sell-off.
In fact, some of the US retirees have already started questioning whether they’d be able to remain retired if the market rout continues.
“It’s stressful. If that continues, I can’t stay retired,” said Victor Fettes, a 54-year-old retiree from Georgia in an NBC interview last week.
Why does the market sell-off matter for US retirees?
Earlier this week, the benchmark S&P 500 index was seen down roughly 20% versus its year-to-date high.
That’s significant for American retirees as 401(k) savings accounts often have significant exposure to the stock market through mutual or exchange-traded funds.
This sufficiently explains why the tariffs-driven sell-off that has wiped more than $11 trillion from US markets since Trump’s inauguration on January 20th is making savers more nervous in 2025.
As tariffs continue to stun the global economy, US retirees are also delaying big-ticket purchases and home renovations. Some are even concerned that 401(k) losses could significantly hurt their quality of life as well.
What Trump’s 90-day tariff pause means
US stocks are inching up at writing after US President Donald Trump announced a 90-day pause on all reciprocal tariffs on non-retaliating countries.
However, whether that upside will be sustained remains uncertain, given it’s not an indication that he’d roll back those tariffs.
So, it does rather little to alleviate the expected negative impact of new levies on US businesses, which suggests the stock prices could falter again moving forward – potentially resulting in more losses for US retirees.
That said, the benchmark S&P 500 index is currently up nearly 7.0% versus its previous close.
Experts have been lowering year-end targets on SPX
Tariffs-driven uncertainty has made investment firms turn more dovish on SPX this year as well.
Earlier this week, the head of US equities at the Zurich headquartered UBS, David Lefkowtiz, lowered his year-end target on the benchmark index to 5,800.
Lefkowitz bailed on his previous call for 6,400 as Trump’s trade policies have made “our economic team downgrade their growth expectations to reflect anemic GDP growth this year.”
In his research note, the strategist lowered his estimate for SPX per-share earnings for this year as well by nearly 6.0% to $250.
Nonetheless, his year-end target on the benchmark index continues to suggest a potential upside of about 8.0% from here.
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