Stock Market Sees Worst Drop Since COVID After Trump's 'Liberation Day.' What It Means for Your Retirement

The effects of Donald Trump‘s “Liberation Day” tariffs are drawing concern among the millions of United States citizens who have retirement plans tied up in the stock market.

Trump’s announcement of mass tariffs on nearly all U.S. imports on April 2 immediately caused the stock market to free fall, according to a report from NBC News. On Thursday, the Nasdaq dove nearly 6%, leading to its largest-ever single-day point drop. Meanwhile the S&P 500 fell almost 5% and the Dow Jones Industrial Average saw a 4% drop — each exhibiting their largest single-day decrease since the COVID-19 pandemic tanked the economy in 2020.

On Friday, the stock market indexes continued to plummet, extending the historic slide into a second straight day, CBS News reports.

Retail, energy and small businesses were some groups hit the hardest by the implementation of new tariffs, NBC noted. Though the days since April 2 — dubbed “Liberation Day” by Trump — have seen great losses, the stock market has been unsteady for some time, due to Trump’s past tariffs in February and March.

The New York Times reports that in the wake of new tariffs, the direness of Americans’ retirement situation depends on how much longer they intend to work.

The stock market is the one of the only methods to keep up, in the long term, with increasing prices and inflation. But as trust in the market thins, there are a few options to spread out investments, so that people can stay secure in both the long and short term.

Generally, when the stock market appears to be in decline, experts advise shareholders not to be alarmed by a bad day and instead keep the bigger picture in mind. However, for recent and soon-to-be retirees — the “retirement danger zone” — there’s less time for stocks to recover and consequently yield stable results.

While stocks are volatile, experts advise relying on stable cash investments, which will be able to mitigate the years after retirement when people may need to dip into savings. To do this, one can slowly transition — in small, consistent amounts — some assets from stocks to cash investments across several months.

Another option is shifting assets into bonds, which tend to be impacted less by financial downturns than the stock market in the long term, Retirement Advice founder Mark Whitaker told the Times. Like cash investments, this method means a stable but smaller return — meaning the majority of assets should still remain in the stock market.

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For younger investors — those with many years before retirement — a steady plan is to gradually invest small amounts, regardless of the market’s rise or fall, senior wealth advisor Jon DeMoss told CBS.

Some measures to ensure a good quality of life in retirement involve day-to-day actions rather than managing funds.

Though it may seem small, being more mindful of spending habits can contribute to short-term security — and ease the immediate anxiety of the stock market’s daily movements. For those who are able to wait on big purchases, like a car or a vacation, do it; and for those who are in a place to pick up extra hours working, go for it.

Furthermore, the Times recommends having backup plans in place, especially as the financial future grows unpredictable, or employing multiple cost-saving measures in the event one is compromised.