The Trump Administration Keeps Tariff Promises, While the Stock Market Rout Continues. Here's My Advice to Retirees During Volatile Markets

President Donald Trump had been touting the announcement of tariffs, which he said will restore America's manufacturing base and improve the country's economic security and standing over time. However, the stock market was still caught flat-footed by just how aggressive and expansive the tariffs Trump proposed on April 2 were.

Since then, stocks have suffered their sharpest sell-off since early in the COVID-19 pandemic, five years ago. As the market extends its weeks-long decline, many retirees are struggling as they watch their retirement accounts suffer rapid losses. Meanwhile, they may also be wondering how the now new tariff policies will impact their cost of living.

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Here's my advice to retirees looking for stability in this volatile market.

Move slowly to avoid making decisions you might regret

I can't emphasize enough how fluid the tariff situation is.

The Trump administration says that tariffs and tax cuts will generate hundreds of billions of dollars in annual revenue while stimulating the economy for working-class Americans. That sounds good, in theory, but a dramatic pivot from established policy comes with near-term risks, such as higher prices, reduced consumer spending, and business headwinds.

Therefore, many aspects of this situation could change at any time. Countries could negotiate lower tariffs (or none), or Trump could pivot. Even if the new tariffs largely remain in place as announced, nobody knows for how long or precisely what impact they will have on the economy. While I don't want to oversimplify this, it's like an experiment with wide-ranging potential outcomes. With so much uncertainty, the market is spooked, which explains the S&P 500's 10.5% sell-off on April 3 and 4.

Those market sessions were ugly, but it's also just two days. The worst mistake would be taking drastic action only for the situation to de-escalate. In this situation, it's probably wise to move slowly.

Check up on your finances and your investment strategy

At the same time, you shouldn't ignore the situation. So instead of rushing to action, take this opportunity to evaluate your finances and your nest egg.

Prolonged tariffs could increase prices for goods and services, so you may want to look at how that would impact your living expenses. Consider how tariffs might affect your purchasing decisions. If you're in the market for a new vehicle, for example, you can look into which companies the tariffs will impact the most.

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Additionally, conduct a checkup on your investment portfolio. Review what you own and decide whether you're taking more risk than you're comfortable with. Diversifying your portfolio is about more than just owning lots of stocks. A retiree's portfolio might include a mix of exchange-traded funds (ETFs), stocks, bonds, real estate investment trusts, international mutual funds, and hard assets like gold.

Again, you don't want to act rashly, but reevaluating your portfolio with a focus on risk management can help you prepare for whatever happens. Your goal in retirement is to protect and preserve your wealth, not necessarily to maximize your investment returns. That goes double in such a volatile market. If you're feeling stuck, don't hesitate to consult a professional financial advisor to help formulate a personalized plan.

Steady the ship, then look for opportunities

I'll repeat: Your top priority is getting your financial house in order.

Once you feel you have a handle on your financial situation, you may want to seek out opportunities. Could the markets continue to decline from here? Absolutely. However, I wouldn't try to predict how long or how much. History has shown stock market downturns happen, but the market has always recovered and seen brighter days.

This time, it's fears over tariffs and a trade war. But as a retiree, you can probably remember how scary the various recessions, wars, and other crises throughout your lifetime felt in the moment. Yet in hindsight, they ended up being excellent buying opportunities. This will likely prove to be a similar situation, and you can act on it according to your risk tolerance and budget.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.