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Is Your 401(k) OK?

I don’t know about you, but since “Liberation Day,” thousands of dollars in my 401(k) have been “liberated” as the stock market nosedived. Unfortunately, I’m not one of the select billionaires who was in on Trump’s not-so-secret signal to buy stocks that he posted just hours before announcing the tariff pause that led to a sudden meteoric rise in the market. Of course, after that event, the market resumed its downward trend.

But I’m not alone. Gallup reports that 65 percent of people in its middle-income category — making $40,000 to $100,000 — own stocks, either directly or through their retirement plans. Nevertheless, investment strategists told USA TODAY that the recent dip is no reason for Americans with retirement accounts such as 401(k)s to panic, no matter what stage they’re at in life:

“The people who would be hurt by (the stock market dip) are the emotional ones who are likely to do something irrational,” said Sam Stovall, chief investment strategist at investment research and analytics firm CFRA Research. “That could be somebody at any age.”

Stovall also said younger Americans should stay the course with their investments and make sure to take advantage of the “free money” their company may be offering through a 401(k) match. If able, now may be the time to look into boosting their monthly contribution. At minimum, Stovall said they should aim to invest enough to receive the maximum match from their company.

For Americans nearing retirement, Stovall said there is likely still plenty of time to make up for lost ground from the most recent dip, especially since the stock market tends to bounce back quickly.

A historical analysis from CFRA shows that so long as the stock market doesn’t fall 20% or more and enter bear market territory, it takes on average four months to recover from a correction.

“Don’t let your emotions become your portfolio’s worst enemy,” Stovall said. “The only way to lose money is by selling what is down.”

Ryan Detrick, chief market strategist at financial services firm Carson Group, added that older Americans should, ideally, have a more diversified portfolio that’s able to weather selloffs.

“For someone closer to retirement, diversification is your friend,” Detrick said. “To have some gold, to have some bonds, to have some cash, to have some stocks … that should be what they’re thinking about right now.”

For me personally, I am already retired so the best I can do is to keep my 401(k) diversified. I still watch the market with great concern since I do have some stock funds in my portfolio. Also, the market is one indicator of the overall economic health of the country. As I write this on April 17, the Dow Jones average is down again over 500 points.

Trump, Musk and their cronies don’t have to care about losing thousands or even tens of thousands in market fluctuations but to those of us on more limited incomes, losses like that can be disastrous.

Hold On To Your Wallets

It’s difficult to predict the impacts of the latest raises in tariffs since economic projections are often little more than guesses. And there are those who, for political reasons, will simply make up numbers and throw them around as if they were facts. But there are legitimate organizations that use scientific approaches to make projections such as the Yale University Budget Lab.

This organization recently published a document entitled “Where We Stand: The Fiscal, Economic, and Distributional Effects of All U.S. Tariffs Enacted in 2025 Through April 2” (https://budgetlab.yale.edu/research/where-we-stand-fiscal-economic-and-distributional-effects-all-us-tariffs-enacted-2025-through-april). The document explains the results and methodologies they used. It presents the effects of the April 2 tariff announcement separately from any earlier tariffs imposed in 2025 and then combines them.

Some of the key findings are as follows:

  1. 1. Tariffs are a regressive tax, especially in the short-run. This means that tariffs burden households at the bottom of the income ladder more than those at the top as a share of income.
  1. 2. The April 2nd action is the equivalent of a rise in the effective US tariff rate of 11 ½ percentage points. The average effective US tariff rate after incorporating all 2025 tariffs is now 22 ½%, the highest since 1909.
  1. 3. The price level from all 2025 tariffs rises by 2.3% in the short-run, the equivalent of an average per household consumer loss of $3,800 in 2024 dollars. Annual losses for households at the bottom of the income distribution are $1,700.
  1. 4. The price level from the April 2nd announcement alone rises by 1.3% in the short run, the equivalent of an average per household consumer loss of $2,100 in 2024 dollars. Annual losses for households at the bottom of the income distribution are $980 under the April 2nd policy alone.
  1. 5. Both the April 2nd tariffs themselves and all 2025 actions to date have disproportionately affected clothing and textiles. Apparel prices rise 8% from the April 2nd action alone and 17% from all US tariffs.
  1. 6. Food prices are also disproportionately affected, rising 1.6% from the April 2nd policy and 2.8% from all 2025 tariff actions. Fresh produce rises 2.2% and 4.0%, respectively.
  1. 7. Motor vehicle prices are largely untouched by the April 2nd announcement but rise by 8.4% under all tariff action to date, the equivalent of an additional $4,000 to the price of an average 2024 new car.

Another legitimate source, the Tax Foundation, has reported that a 10 percent tariff would increase taxes on US households by $1,253 on average, and a 20 percent tariff would increase taxes on US households by $2,045 on average (https://taxfoundation.org/blog/trump-tariffs-revenue-estimates/).

Our Representative, Steven Horsford, also made similar points in a recent press release. He said,

“A tariff is a tax – Donald Trump owns these taxes; he owns the harm they’re inflicting; he owns the financial instability he’s sowing for Nevadans and people across the country. Trump campaigned on lowering costs for Nevadans and people across the country – instead, he’s intentionally making everyday goods more expensive. That’s wrong.”

He then went on to say, “No president in American history has taxed the American people this much, this fast, and this recklessly.”