If you have a 401(k) or are thinking about how to save for retirement, you’ve probably noticed that there’s a lot of noise around these plans lately. With Donald Trump back in office as of January 20, 2025, things have gotten dizzying. There are strong economic policies, markets that go up and down like a roller coaster, and many questions about how this affects our savings.
A 401(k) is a special account that many companies in the United States offer for their employees to save money for when they retire. It’s a super practical way to save: you decide how much of your salary you want to set aside each month, and that money is invested in things like stocks or bonds.
The great thing is that, many times, your boss puts in a portion equal to what you contribute, as an extra gift for your future.
Millions of 401(k) accounts could be at risk?
Since Trump took office for his second term, he has pulled some strong cards. For example, as of February 1, 2025, it placed 25% tariffs on products from Mexico and Canada, and an extra 10% on those from China. At first, the markets seemed to be celebrating: in January, the S&P 500, which is like the main indicator of stocks in the US, hit all-time highs. But since the end of February, things changed.
The markets became nervous, and the S&P 500 fell about 3%. Why? Well, there is uncertainty due to tariffs, trade tensions with other countries and even inflation that does not let up. Even Commerce Secretary Howard Lutnick has said things that are a little confusing to investors, like that they could adjust those tariffs. All of this makes the atmosphere a little tense.
In 2025, you can add up to $23,500 a year, and if you’re over 50, you can add $7,500 more. It’s not bad, right? It’s like building a financial cushion for when you want to take a break from working.
Is my 401(k) losing money?
You may have seen some dips, but don’t go into panic mode just yet. If your 401(k) has a good chunk invested in stocks (some up to 70%), you may have noticed that it fell something like 2.1% between the end of February and the beginning of March.
For example, the S&P 500 went from 5,970 to 5,799 points in that time. I have a 401(k) too, and believe me, I know what it feels like to see those numbers shake. But here’s the good thing: markets have always had ups and downs. This is not the end of the world, but rather a bump in the road.
During his first administration, from 2017 to 2021, 401(k)s experienced a golden age. The S&P 500 rose 64%, thanks to tax cuts and fewer rules for companies. Many retirement savings skyrocketed in that time. But now, although Trump continues with similar ideas, the outlook is more complicated. There is more inflation, commercial problems and a dollar that is not as strong. That makes the impact on 401(k)s not as clear as before. Let’s say the game changed a little.
What if I’m about to retire? Should I be worried?
If you are close to hanging up your shoes and enjoying retirement, it is normal that these falls make noise. Nobody wants to see their money shrink just when they’re going to need it. But experts say: “Calm down, don’t make crazy movements.”
Historically, the market always rises after these drops. If your 401(k) is well distributed between stocks, bonds and perhaps something international, the blow will not have been as hard. Now, if all your money is in US stocks, you might be feeling the impact more. It all depends on how you have put together your strategy.
Consider that this article is just for information purposes, and will never must be considered professional advice. Always consult and ask your retirement or stocks expert.