If you have a 401(k) or are considering how to save for retirement, you’ve certainly noticed that there’s been a lot of talk about these plans recently. Things have become hectic with Donald Trump’s return to office on January 20, 2025. There are powerful economic policies, markets that fluctuate like a roller coaster, and numerous concerns about how this affects our finances.
A 401(k) is a special account that many companies in the United States provide for its employees to save money for retirement. It’s a really practical approach 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 excellent part is that, in many cases, your boss contributes an amount equivalent to what you contribute as an added present 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 index of US stock prices, reached all-time high levels. But since the end of February, things have altered.
The markets got jittery, and the S&P 500 plummeted almost 3%. Why? Tariffs, trade conflicts with other countries, and persistent inflation all contribute to anxiety. Even Commerce Secretary Howard Lutnick has suggested things that investors may find puzzling, such as the possibility of adjusting tariffs. All of this creates a little anxious environment.
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 horrible, right? It’s like creating a financial buffer 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 equities (up to 70%), you may have noticed that it declined 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 jiggle. 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 path.
From 2017 to 2021, his first administration saw a golden period for 401(k)s. The S&P 500 rose 64% as a result of tax cuts and less regulations for businesses. Many retirement savings skyrocketed during that period. However, while Trump continues to promote similar ideals, the situation has become more complicated. There is higher inflation, commercial concerns, and a weaker dollar. This makes the impact on 401(k)s less evident than before. Let’s imagine the game modified somewhat.
What if I’m about to retire? Should I be worried?
It is natural for falls to create noise when you are nearing the end of your career. Nobody wants to watch their money dwindle right before they need it. However, specialists advise: “Calm down, don’t make crazy movements.”
Historically, the market has always rebounded following such losses. If your 401(k) is well-diversified over equities, bonds, and perhaps something abroad, the damage will be less severe. If you have all of your money invested in US stocks, you may feel the impact more strongly. It all relies on how you structured your strategy.
Consider that this text is only for informational reasons and should never be considered professional advice. Always contact and ask a retirement or stock specialist.