If you have a 401(k) or are considering how to save for retirement, you’ve probably noticed that there’s been a lot of talk about these plans recently. Things have become dizzying since Donald Trump’s return to office on January 20, 2025.
There are strong economic policies, markets that fluctuate like a roller coaster, and many concerns about how this affects our savings.
A 401(k) is a special account that many companies in the United States provide for their employees to save money for retirement. It’s a very practical way to save: you choose how much of your salary to set aside each month, and that money is invested in things like stocks or bonds.
The great thing is that, in many cases, your boss contributes an amount equal to what you contribute as an extra gift for the future.
Millions of 401(k) accounts could be at risk?
Since taking office for his second term, Trump has played some powerful cards. For example, beginning February 1, 2025, it imposed 25% tariffs on products from Mexico and Canada, as well as an additional 10% on those from China.
At first, the markets appeared to be celebrating: in January, the S&P 500, which serves as the primary indicator of US stock prices, reached all-time high levels. But since the end of February, things have changed.
The markets became nervous, and the S&P 500 fell roughly 3%. Why? Tariffs, trade tensions with other countries, and persistent inflation all contribute to uncertainty.
Even Commerce Secretary Howard Lutnick has said things that investors may find confusing, such as the possibility of adjusting tariffs. All of this creates a slightly tense atmosphere.
In 2025, you can contribute up to $23,500 per year, with an additional $7,500 available to those over the age of 50. It’s not so bad, right? It’s like creating a financial cushion for when you want to take a break from work.
Is my 401(k) losing money?
You may have noticed some dips, but don’t panic just yet. If your 401(k) is heavily invested in stocks (up to 70%), you may have noticed that it fell by about 2.1% between the end of February and the beginning of March.
The S&P 500, for example, increased from 5,970 to 5,799 points during that time. I, too, have a 401(k), and believe me, I understand how it feels to see those numbers shake. But here’s the good news: markets have always gone up and down. This is not the end of the world, but rather a blip in the road.
From 2017 to 2021, his first administration saw a golden age for 401(k)s. The S&P 500 rose 64% as a result of tax cuts and fewer regulations for businesses. Many retirement savings skyrocketed during that time.
However, while Trump continues to promote similar ideas, the situation has become more complicated. There is higher inflation, commercial problems, and a weaker dollar. This makes the impact on 401(k)s less clear than before. Let’s say the game changed slightly.
What if I’m about to retire? Should I be worried?
It is normal for falls to make noise when you are nearing the end of your career. Nobody wants to see their money shrink right before they need it. However, experts advise: “Calm down, don’t make crazy movements.”
Historically, the market has always rebounded after such drops. If your 401(k) is well-diversified across stocks, bonds, and perhaps something international, the blow will be less severe. If you have all of your money invested in US stocks, you may feel the impact more strongly. It all depends on how you structured your strategy.
Consider that this article is only for informational purposes and should never be considered professional advice. Always consult and ask a retirement or stock expert.
