With President Donald Trump continuing to push steep new tariffs on a long list of countries, some economists fear the return of stagflation — a painful combination of inflation, high unemployment and low economic growth. Stagflation played a major role in President Jimmy Carter’s landslide defeat in 1980 and continued to haunt President Ronald Reagan during his first few years in the White House.
Fears that Trump’s tariffs will lead to an inflation while causing prices to soar are not going unnoticed by retirees or would-be retirees, many of whom are watching their 401k retirement plans plummet in value.
In an article published by Salon on April 16, financial journalist Cara Michelle Smith offers some tips on surviving “fiscal hell” during Trump’s second presidency.
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“To the millions of Americans who have recently retired, or who hope to retire soon, President Trump’s trade war and the ensuing global market panic has wrought a tremendous amount of anxiety over the future of their life’s savings,” Smith explains. “Since Trump announced his sweeping global tariffs on April 2, U.S. stock markets have nosedived, with the S&P down 4.2 percent and the Dow Jones down 3.2 percent.”
Smith continues, “More than 60 percent of America’s top CEOs think we’re headed into a recession in the next six months. And on Thursday, (April 10), the Yale Budget Lab predicted we’ll spend an extra $4700 this year on everyday goods and services because of the tariffs…. Thankfully, there are a few things that retirees, or those nearing retirement, can do to ensure they’re well-equipped to weather an economic downturn and to keep themselves mentally well-equipped to handle whatever fresh fiscal hell is next.”
Smith’s tips include: (1) “get a financial advisor,” (2) “avoid big changes to your investment strategy,” (3) “seek clarity” to “reduce anxiety,” (4) “consider an investment policy statement,” (5) “find small ways to claim control,” and (6) “take care of your mental health.”
“It’s hardly a harbinger of rosy times to come when a financial columnist starts recommending mindfulness strategies,” Smith observes. “But mental health experts stressed the importance of retirees protecting their mental well-being — a concept that might strike some older Americans as self-indulgent or woo-woo, having been raised by the stoic Silent Generation. But think about it like this: You want to be in the most clear-eyed, grounded headspace possible when taking any action around your finances, right? Just as you’d want your body to be in the best possible form before running a marathon, it’s simply in your money’s interest to invest in your mind’s health.”
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Cara Michelle Smith’s full article for Salon is available at this link.
