At 73, I’m Losing 10% of My 401k—How Do I Protect My Retirement Savings?

Trump tariffs have been rocking portfolios around the world. Even a defensive-minded portfolio light on high-multiple tech stocks and heavy on the bluest blue chips out there has been under growing pressure. For retirees, it’s a real test of one’s patience and tolerance for volatility. But, as we discovered Wednesday when Trump stepped back a bit on tariffs with his 90-day pause, volatility does, indeed, work in both directions.

After a historic Wednesday rally that saw the S&P 500 blast off close to 10%, the dangers of “getting out” and returning “after” the crash haven’t been this elevated in recent memory. For retirees, it’s not easy to have to deal with 5% down days on the daily. But it’s not the down days that should have retirees taking action. Rather, it’s the up days like Wednesday that could be perfect times to lighten up on risk and double down on safe haven assets (think gold, silver, T-Bills, CDs, annuities, and all the sort). 

Though there’s no telling when the Trump tariff turbulence will end, I do think that hitting the panic button is never a good idea. Further, it’s probably best not to pay too much attention to the headlines if your portfolio is already well diversified (think geographically and across sectors) and you don’t have plans on hiking your withdrawal rate by a drastic amount in response to any tariff-fuelled inflation. If you’re a hurting retiree who’s wanting to get out, do check in with a financial advisor to address your concerns and don’t panic sell because all it takes is missing one really good day in markets for you to be left hanging.

This retiree is tired of the volatility and has seen 10% wiped off the retirement accounts.

In a recent Reddit post, a 73-year-old retiree addressed his concerns about the recent surge in volatility. The post, which is now about a month old, took to Reddit on what they should do amid a 10% correction in their portfolio. Undoubtedly, the top commentators urged the retiree to stay the course. And I’m inclined to agree, especially since equities still make a lot of sense as part of a retiree’s long-term portfolio. If you go by the 4% rule, you’re going to need a bit of growth to keep up with the pace of withdrawals.

And while it’s tempting to get out with a 10% hit (it’s probably closer to a 15-18% hit at this point) with the expectation that stocks will crash 50% as Trump’s tariff battle with China takes things up a notch, I do think that there’s significant risk on both sides. Wednesday wiped out a considerable amount (almost all) of the post-Liberation Day pains. And with Donald Trump holding onto the belief that stocks will “boom,” it’s hard to tell when the next monster rally will be. Indeed, some sort of trade deal with China could probably take away most, if not all, of the pains that have dragged down stocks since the Trump tariffs kicked off earlier this year.

In any case, the retiree has a typical 60/40 exposure (stocks to bonds), which is about right for a retiree their age. As such, I’d tune out of the markets for a while and continue as planned. The equity portion of the stock portfolio is going to fluctuate. And there’s really no way around it. Either way, I’d argue that it’s too late to sell with all the upside that could be had if Trump simply says a few words. Given the upside risk here, it’d be prudent not to touch anything or even add to the stock position on the way down.

The bottom line

It’s a bloodbath out there, and retirees wanting to bail on stocks aren’t alone. If your allocation is already in the right spot (60/40), dumping stocks could prove a mistake, as you’d be timing the market, perhaps after a horrid spill. If you can’t handle the volatility, I’d suggest waiting for another Wednesday monster rally before rotating into more defensive assets. At the end of the day, you want to sell into the rallies, not the plunges. It’ll feel nice (at least initially) for the bleeding to stop. But odds are you’ll miss out on the green days and end up kicking yourself. If you’re comfortable with risking gains, speaking to an advisor could be a wise move.

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