US President Donald Trump speaks during a tariff announcement at the White House in on Wednesday, April 2, 2025. Trump plans to roll out tariffs on global trading partners, the centerpiece of his effort to bring back manufacturing to the US and reshape a world trade system he has long decried as unfair. Photographer: Kent Nishimura/Bloomberg
Even before President Trump announced his new tariff policy, designed to implement reciprocal tariffs on global trading partners, last Wednesday, volatility on Wall Street made for high trading activity in retirement plans in the first quarter of 2025, according to the Alight Solutions 401(k) Index. In addition, March was the most active month for retirement plan trading since 2020, but now roughly $2.4 trillion was erased from the S&P 500 Index on Thursday’s selloff on Wall Street, according to Reuters.
As Americans are watching their retirement savings plummet, how specifically is it affecting 401(k)s and what, if anything, should employers and employees do differently with their retirement plans? Treasury Secretary Scott Bessent talked about the current economic landscape on NBC’s Meet the Press on Sunday.
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“Most Americans in a 401(k) have what's called a '60/40 account,' said Bessent, “60/40 accounts are down 5 or 6% on the year. People have a long-term view. They have a program that the reason the stock market is considered a good investment is because it's a long-term investment. If you look day-to-day, week-to-week, it's very risky. Over the long term, it's a good investment.”
Brad Clark, founder and CEO of Solomon Financial, echoed Bessent’s sentiments. This is not the time to panic and take your money out of savings, he said. “When you're flying somewhere and you're in the worst turbulence you've ever been in, all you can think is, ‘I've just got to get off this plane,’” Clark told Time Magazine. “But the plane was built to handle this. That's kind of like your portfolio.”
“Go ahead and panic …,” said Washington Post columnist Michelle Singletary on Thursday, but added, “don’t look at your portfolio” and keep investing. “Please feel what you need to feel but don’t act on those fears, particularly if you have a long time before you need that money that is invested,” Singletary said.
According to Alight Solutions, which tracks a subset of the 401(k) plans it administers, balances fell by about 7% over Thursday and Friday. That's less than the stock market decline because retirement accounts also contain bonds, which rallied, and cash, aside from stocks.
Many Americans follow a “dollar-cost averaging” investment strategy, where they commit a fixed amount of money to their retirement accounts at regular intervals, regardless of how the market is performing.
Continuing monthly investments toward a 401(k) “is the right thing to do,” Sarah Behr, a registered investment advisor and founder of Simplify Financial Planning in San Francisco, told USA Today. “If I'm 30 years old, I’m not retiring for 30 or 35 years. I’m not going to touch that money. There is plenty of time for that money to recover."
Related: 2025 retirement industry trends: What a Trump return means for 401(k) savings
The wrong move, Mark Williams, a risk-management practitioner and lecturer at Boston University, told USA Today, is panicking and taking money out of those retirement accounts. “Market drops test investor resolve,” he said. “It is counterproductive to look at your retirement account daily. Instead, view your investments as part of a long-term strategy that will overcome market corrections, grow and support retirement.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
