| | | | | Are you still interested in this newsletter? Since you haven't read in a while, we'll pause sending it to you. Let us know if you still would like to keep receiving it. | | | | | | (Washington Post illustration; iStock) |  | | with Rivan Stinson | If you’ve looked at your 401(k) retirement portfolio, it’s likely you’re a bit seasick. “Now, I don’t know a lot of financial jargon,” quipped Stephen Colbert on Monday’s “Late Show,” just after the Dow Jones Industrial Average dropped 890 points. “But let’s just say your 401 is not k.” Nope, you are probably not feeling okay. On fears of higher prices from President Donald Trump’s turbulent tariff policy, and possibly even a recession, the markets had a day like the kid in the classic children’s book, “Alexander and the Terrible, Horrible, No Good, Very Bad Day.” Understandably, investors are panicking after a stretch of terrific returns. A Charles Schwab report pointed out that 2024 “was a very good year.” The S&P 500 was up more than 23 percent, marking the second consecutive year with gains of more than 20 percent — the first time since the late 1990s. If you’re an investor, experts caution that you should expect volatility in the stock market. That’s the risk you take for earning over time historically positive returns that you can live on in retirement or use to send your kid to college. But the markets don’t like extreme uncertainty. “Generally, the advice boils down to staying invested. But I firmly believe that just saying ‘stay invested’ doesn’t work on days when stocks are in free-fall and the world feels terrible,” said Callie Cox, chief market strategist for Ritholtz Wealth Management. “We’re not robots, we’re humans with emotions, and we need to honor that in times like these,” she added. If the stock market is making your stomach turn, you risk taking action that’s not in your best interest. Click the link below for advice on investing depending on your stage in life. | |  | | Communication is critical, especially when it comes to money. Here’s a question I received via Instagram. Should I purchase my leased vehicle before the tariffs take effect? I have never been an advocate for leasing a car. I recommend you purchase your car and keep it for at least a decade. If you took out a loan and pay it off, put the amount of that monthly payment in a savings account or low-risk investments so that by the time you are ready to trade in your older car, you can pay cash for the next one. If you’re in the market for a vehicle, read: Delayed tariffs won’t help car buyers. They just cause confusion. Okay, here’s a short answer to the question. If Trump’s on-again, off-again tariffs take hold, new and used cars will become more expensive. This means you will probably pay more to get into another lease or purchase another vehicle. So, if you like the car you’ve been leasing, you may find it less expensive to buy it. For more on car buying, read: More people than ever pay $1,000 a month for cars. You can avoid that. | | | | | Trump’s tariff volatility threatens to ignite a global trade war, is rattling Wall Street and may lead to a recession. The uncertainty is causing folks to ask whether they should claim Social Security early or pull out of the stock market. I offered some advice in a recent column. Here’s what readers had to say in the comments section (some responses have been edited for clarity). JackFalstaff wrote: “The decision about when to take Social Security is complicated. It's not always smart to wait to claim. For most people the break-even point is around age 79. That means that if you take smaller checks earlier or bigger checks later, you will collect about the same amount of money by age 79. You only come out ahead if you live longer. Meanwhile, if claiming earlier allows you to let other money grow untouched in a tax-deferred IRA or 401(k) for years, you will ultimately win. Your marital status and health are also important factors. Don't make this decision casually.” Dave Michigan wrote: “The suggestions for curbing spending and saving are universal in all times good or bad. As for the stock market, it has gone up significantly over [the] last five years. In fact, valuations of most stocks are on the rich side. Now with Trump, I have taken profits by trimming back on big gainers and sitting on the extra cash waiting to see how bad Trump will crash the economy.” darnay wrote: “This is starting to feel like a repeat of 2022 with poor stock market performance. But in 2022, we had a pandemic economy to blame, and now there’s a hurricane in the form of a president. He will most certainly put us in a recession. I am watching my investments fall with each tariff announcement. Even if there are no announcements, there’s the lingering uncertainty about the tariffs that’s causing volatility in the financial markets. I’ve lost [somewhere] in the five figures in just the last two weeks alone. I most certainly can blame the president, because he is the only one to cause these most stupid tariffs. I am watching my retirement savings dwindle away. Yet, I am determined to ‘stay calm and carry on.’ I won’t let a tyrant’s administration bring me down. I am sure he will get major backlash from corporate America when they start losing money too. But he seems to think he can fatten his wallet for himself and his oligarch friends while the rest of America suffers financially, and they won’t care a lick about us. If that isn’t the definition of evil, then I don’t know what is.” CAoptimist wrote: “I’ll bet nearly all consumers, and most businesses, have tightened their spending and hiring because of the delusional king's erratic behavior. And even if some of the federal employees eventually get their jobs back, why would they trust this administration again? All consumer sales will tank, including houses and cars. And if the tariffs really start in earnest, our economic decline will be amplified — which will lead to more layoffs.” | | | | | Melanie from Florida wrote in an email: “Michelle, I listen to you on NPR as often as I can. My question relates to when I should take Social Security in this time of uncertainty with Trump’s administration. I will be 62 later this month, and I’m concerned if I don’t take Social Security as soon as possible, it may not be available to me or be something I don’t recognize when I’m 65, 67 or 70. I don’t want to take it at 62 because I’d like to maximize the benefit as much as I can. I am also currently on the ACA for my health insurance. My current plan/hope is to wait until I’m 65 to take Social Security when I also am eligible for Medicare. I’d really like to wait until I’m 70 but am very scared right now to wait that long. Am I being overly pessimistic? Or am I right to be concerned about the future of Social Security under Trump?” Melanie, you are not being overly pessimistic. You are asking the right questions. The thing is I don’t know what might happen to Social Security. In the short term, you may see a disruption in services because of staff cuts spearheaded by Elon Musk’s U.S. DOGE Service. However, there may be some changes to the system because there is a coming shortfall. I would say for now, your plan of waiting to let your benefit grow is a sound one. But please pay attention to recommendations by the president and Congress to fix the funding issue with Social Security. If legislation comes that may impact your plans, you can revisit your decision on when to start your benefits. Send your comments and questions to colorofmoney@washpost.com, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated. | | | | | |
