Retirement plan trading activity was high in the first quarter of 2025 —even before Trump announced his new tariff policy—and has fluctuated significantly on a day-to-day basis since. As a result, March 2025 was the most active month for retirement plan trading since 2020. However, the S&P 500 Index recently lost $2.4 trillion in one day.
Not surprisingly, Americans are panicking as they see their retirement savings quickly dwindle. Nonetheless, Treasury Secretary Scott Bessent reminded Americans that retirement plans are long-term investments, and most 401(k) plans have a “60/40 account,” which better weathers the current day-to-day unsteadiness of the stock market. While stock market investments are risky in the short term, they tend to pay off in the long term, which makes them good investments.
Alight Solutions, which tracks some of its 401(k) plans, reported that 401(k) plan balances fell by about six or seven percent during the recent stock market decline. However, those losses are less than actual stock market losses since 401(k) plans typically contain a mix of bonds and stocks. As a result, investment advisors almost uniformly advise investors to stay the course and continue to invest regularly, regardless of market performance. For many investors, retirement is still years away, which will give their 401(k) plans time to recover.
Advisors also caution that investors should not panic and take money from their retirement accounts. Although market drops can be frightening, daily monitoring your 401(k) balance is counterproductive. Instead, investors should view their 401(k) plan investments as a long-term strategy that will overcome market variations to support a distant retirement.
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