NASHVILLE, Tenn. (WTVF) — Recent tariff announcements by President Trump sent shockwaves through the financial markets, leading to sharp declines that left many Americans worried—especially those watching their retirement savings shrink.
Julio Rivas, a professor of finance and economics at Lipscomb University, says the market’s reaction is a textbook example of how information influences investor behavior.
“One thing I teach new students is how the stock market reacts to news,” Rivas explained.
In this case, it was news about tariffs that caused the market to see a lot of red.
The new tariffs have sparked widespread concerns as their potential ripple effects could hit nearly every corner of the economy.
“Every single company in the market could potentially be affected,” Rivas said. “Some companies will be more affected than others, but everyone is going to see some sort of struggle if this materializes.”
As the market dipped, many Americans saw the impact directly in their 401(k) accounts, which are typically tied to the performance of stocks and bonds.
“All of us are nervous about our retirement, right?” said Rivas. “We would like to, first of all, retire—and second of all, afford to retire.”
With retirement savings so closely tied to the market, volatility can feel personal. When stocks fall, account balances drop. For those nearing retirement, the timing couldn't be worse.
“A lot of times, investors panic because prices drop,” Rivas said. “Truth be told, it’s scary. And if you're a year away from retirement, it can be even more scary.”
But despite the fear, Rivas advises against rash decisions like pulling money out of the market. Instead, he encourages a diversified investment approach, especially as retirement nears.
He recommends reducing your risk exposure. “Invest less in stocks, and put more into bonds, money markets, and other lower-risk options,” says Rivas.
While these safer investments may not offer the same high returns, they can protect savings from steep losses. “You're not going to have a lot of upside potential, but you're not going to have a lot of downside potential either,” Rivas added.
There is hope for recovery. If global trade tensions ease and diplomatic solutions are found, the markets could stabilize.
Economists point out that younger investors, and even those in their early 50s, still have time for their accounts to rebound. But for those already in or approaching retirement, careful planning and conservative investing are more important than ever.
Do you have more information about this story? You can email me at kelsey.gibbs@newschannel5.com
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