'Retirement Panic': Trump's New Tariffs Spark Fresh Fears for Americans Nearing the Finish Line

US President Donald Trump is set to announce a slate of new tariffs on imported products today, which he dubbed the 'Liberation Day.' Market experts and participants are increasingly worried about the impacts of these new taxes on the volatile stock markets, AI funding and investments, and supply chain constrictions due to potential retaliatory actions from other countries, especially China.

Economists believe higher tariffs will ultimately increase costs for US consumers, who are already battling higher living costs due to sticky inflation. The US trade war, led by Trump, has introduced volatility in the stock market as people continue to face significant investment losses.

A soon-to-be retiree reached out to MarketWatch, seeking insights into the impact of impending tariffs in April and how to manage investments after witnessing losses in recent months.

'Should I sell some of my stocks to slow the losses recently taken? I'm in my 60s and plan to retire in 3 years. It may take longer to recover my losses. I cannot afford to lose more,' the person told MarketWatch.

Selling Right Now Could Be A Mistake

No clarity on near-term or mid-term market outlook could become tricky for people looking to retire soon. There is currently no clarity on whether the US economy is entering a recession or if it's only a matter of time before world leaders chalk out a plan to navigate trade tariffs and the market rebounds.

Note that offloading stocks based on recent US stock market movements might be unwise. Economists, business leaders, investors, and politicians are likely still processing the sweeping policy changes as markets gradually price in their impacts. The recent dips in the Dow Jones Industrial Average, S&P 500, and Nasdaq indexes come after a decade of healthy US stock market growth, excluding 2018 and 2022.

Moreover, the recent slump in corporate investments amid the trade war and the combination of dynamic estimates and political machination have played a role in triggering the recent Wall Street selloff. While tariffs could be balanced to work as a negotiating tactic, they could also be detrimental to the overall economy. However, after Trump's tariff updates today, investors and world leaders can better understand the economic landscape and plan ahead.

Goldman Sachs' 2025 S&P 500 Forecast

Goldman Sachs said the S&P 500 index has entered correct territory, signifying a 10% drop from recent highs. It forecasts another 5% decline for the benchmark in the next three months and doesn't expect it to trade at its recent levels of 6,000 for the remainder of 2025. The investment bank predicted the index to hover between 5,300 and 5,900.

However, several economists believe some positives could stabilise the economy. 'Tariff uncertainty, persistent inflation, waning consumer confidence and moderating earnings growth expectations are weighing on investor sentiment as the first quarter draws to a close,' per US Bank Wealth Management. 'Despite tariff-related headwinds, there remains much to like about equities.'

The bank pointed to several factors like market valuations that, although high, remain short of extreme elevations, relatively stable interest rates, and somewhat steady 2025 earnings estimates despite corporate leaders slashing their outlooks. The strategists said that these factors reflect robust' year-over-year growth.

The Conference Board's Consumer Confidence Index and the Michigan Consumer Sentiment Index hit their lowest levels since 2021-2022. However, the US Bank added, 'investor sentiment is transformed for now.'

Meanwhile, Yardeni Research increased the odds of stagflation to 45% from 35% earlier, considering Trump's tariffs, such as a 25% levy on imported automobiles and auto parts. Stagflation is a scenario of high inflation combined with an economic slump and elevated unemployment rates. Yardeni believes a 'shallow recession' in H2 2025 is possible, following a buy-in-advance shopping spree in April and May.

However, it expects that 'the roaring 2020s scenario will prevail over the remainder of the decade, as it has so far, but after 6 to 12 months of heightened stagflationary risks for now,' according to Ed Yardeni, president of Yardeni Research. 'So we are lowering our outlook for S&P 500 earnings per share and our S&P 500 stock-price targets for 2025 and 2026. We are still targeting 10,000 for the S&P 500 by the end of the decade.'

Soon-to-be Retirees Must Maintain a Diverse Investment Portfolio

As Americans planning to retire are increasingly worried about the continuity of Social Security payments and navigating the complex markets, it is advisable to maintain an investment portfolio comprising between 30% and 50% equities and the remainder in low-risk instruments like bonds and cash for emergencies.

T. Rowe Price recommends investing 60% in US large caps, 10% in US small caps, and 25% in developed non-US stocks. The remaining 5% can be invested in emerging markets.

'Retirement can last up to three decades or more, meaning your portfolio will still need to grow in order to support you,' T. Rowe Price stated. 'Exposure to stocks should remain an important part of your allocation target, even in retirement. However, a possible need to access these assets for income in the near term means you are more susceptible to short-term risks. That's why it's important to position your portfolio to add more exposure to bonds and cash.'

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.