After the DOT-COM bubble burst in the early 2000s, Lars Staack decided to play safely and invest his retirement savings in the S&P 500 index fund.
It was a strategy that gave him more than 20 years of security – until President Trump was elected in November. Stack, 62, who retired two years ago, has become increasingly unsure about the savings he plans to use for the rest of his retirement.
These nerves about how Trump's economic policies will affect the stock market, as he began selling his index funds in January, transferring them to bonds and Treasury funds. Approximately a third of his savings are still in stock. Last week's daily swing made him consider transferring his assets to safer bonds, including the worst day on the market in a few months.
“I'm trying to find what's the best way to maintain retirement savings from a volatile economy and from future inflation,” Staack said.
Many financial advisors repeat the usual advice in moments of anxiety. Assuming your financial plan is diversified and aligned with your goals, do nothing and keep the course up. But the turbulent round of trading has rocked people like Staack who need his investments right away. The way he sees it, stock market index funds are no longer safe for those who intend to use their assets in the near future and don't have the luxury of waiting for the market to reverse course.
“It seems like nothing is safe anymore because what Trump and Musk have done is unprecedented,” Stack said. He lives in Poway, California, outside San Diego, and was a Republican voter until 2016 when he began voting for Democrats.
Over the past few weeks, Wall Street has become increasingly pessimistic about Whips' policy from Washington. By Thursday, the S&P 500 index had fallen 10.1% from its peak reached a month ago. It has fueled a sale driven by investors' fears that investors' trade wars and massive layoffs of federal employees would drive a slowdown. The S&P 500 correction highlighted how the two-year bull market was exhausting steam during the early days of the Trump administration.
Policy and politics have become a key driver of concern among clients, the financial advisor said. But not everyone is taking action. In fact, advisors from some of the biggest asset management companies said that their clients are mostly sticking to existing financial plans.
Most of the approximately 7 million investors on the Vanguard Brokerage platform “maintaining discipline” in line with past market slump behaviour, said James Martielli, Vanguard's head of investment and trade services. Martieri said when Wall Street experienced the sharpest decline this year, only 2.5% of Vanguard clients traded, with the majority of those transactions being bought shares.
“Most clients are a little sloppy right now, but they're still relatively comfortable where they are and where they're headed,” said Mars Mirsberger, chief executive of Dana Investment Advisors, which manages around $8.5 billion for institutions and individuals.
Rob Williams, managing director of financial planning and wealth management at Charles Schwab, said in conversations with his clients that he is the retired and retired, who are the closest attention to the stock market and express tension. The question he asked was how they respond.
For those close to retirement, it may make sense to “remove some risk from the table,” but when politics becomes a factor in more decisions, Williams said it encourages clients to stick to their plans and “not respond emotionally.”
Siegfriedrodwig has been retired for more than a decade, and recent volatility has not changed his mind about maintaining about half of his savings in the stock market managed by financial services companies. He said he believes the market will always bounce back.
Still, Rodwig, 80, said he plans to leave his property at Amherst University, where he received his scholarship years ago. He said he is concerned about how much left will be for schools if the market continues to fall in the short term.
Andy Smith, executive director of Financial Planning at Edelman Financial Engines, warns clients not to overreact to news headlines about unrest on Wall Street. He said that people with a diverse portfolio and sufficient cash for their short-term needs can be more easily calming their nerves.
“In the age of volatility, everyone is worried,” said Heather Knight, national securities coach at Fidelity Investments. “We're going to keep the course. This is the best way to get through some of these volatility.”
But for some Americans, especially those who are expected to need access to savings in the near future, the current economic unrest feels different from the market dips they have experienced in the past, and encourages them to rethink their investments.
Single McNamara, whose 16-year-old son is a senior in high school, has decided to pull out half of his 401(k) in February. Employed in healthcare sales, she still contributes to the Vanguard Index Fund. But the economic instability spurred by Trump's policies by mortgages and university tuition payments on the horizon was enough to make her feel like she needed cash in her hands.
As someone with no savings stockpile, McNamara of Newington, Connecticut, said the trade war and uncertainty about the outlook for the US job market have fueled her decision.
“This is definitely the first time I've felt unsafe when I was told it was the safest way to prepare for retirement,” said McNamara, 40, who voted for former Vice President Kamala Harris.
Volatility is rattle even among Americans who don't expect to use their savings in the near future.
Alison Greenlow, 43, is decades away from his retirement. She and her husband bought their home in Bloomfield, Connecticut a few years ago. (Greenlaw knows McNamara through community organizations.) Until three weeks ago, her 401(k) was Vanguard's Target Dating Retirement Fund, which had a premixed blend of stocks and other holdings based on the assumption that she would retire around 2045.
However, as economic concerns began to appear in the stock market in February, she decided to move all her 401(k) savings to the Vanguard Money Market Fund, which has low-risk investments like government-supported securities.
“I know I'm not going to make any money out there, but the 401(k) doesn't go crazy like everyone who loses money every day,” Greenlow said. “I'm pleased to have done what I did,” she added, pointing to tariff-induced fluctuations in the market last week.
Greenlow tried to make informed decisions by talking to people who work in finance and those she respects. Many of them advised her not to do anything. However, she said it was not comfortable taking the traditional waiting approach. She said she felt that the level of uncertainty in the US now was “existential.”
On Tuesday, Stephen Dinan, 55, was 5 and 7, moved 529 university savings accounts from the US Stock and Stock Index Fund to the Bonds and International Equity Index Fund. He also transferred the 401(k) to the bond along with his wife's.
Trump's unpredictable and aggressive approach to policies sparked Dinan's concerns about instability in the stock market. The Democratic voter said he hopes to bring savings back to stocks when the economic outlook is liquidated or when administration changes.
Financial experts “focus on what's moving in the game while playing,” he said. “But they don't plan whether the board game itself will be taken out of the under.”
