Tariffs—essentially taxes on imported goods—are a powerful economic tool, but they come with ripple effects that can influence everything from the stock market to your retirement portfolio. For investors and retirees, understanding how tariffs impact the economy is essential to protecting long-term financial goals.
Market Volatility and Investment Risk
Tariffs can lead to uncertainty in financial markets. When trade tensions rise, global companies may face increased costs, supply chain disruptions, and shrinking profit margins. This uncertainty often results in market volatility, which directly affects retirement accounts like IRAs and 401(k)s, especially those heavily invested in equities.
For retirees relying on consistent portfolio income, short-term market swings can be unsettling. While long-term investors may have time to recover, those drawing income now could be forced to sell investments at a loss during downturns.
Inflation and Purchasing Power
Tariffs typically raise the cost of imported goods, contributing to inflation. For retirees living on fixed incomes, higher prices on everyday items—from groceries to medical supplies—can stretch budgets thinner and reduce purchasing power.
Strategic Planning is Key
Navigating tariff-driven uncertainty requires thoughtful diversification, risk management, and a clear income strategy. Working with a financial advisor to periodically review and rebalance your portfolio can help protect your nest egg from policy-driven disruptions.
In a world of shifting trade policies, proactive planning is the best defense.
Sharon L. Herman AAMS, ADPA is the CEO and financial advisor at Silver Key Wealth Management, and affiliated with LPL Financial. www.silverkeywealth.com
The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Silver Key Wealth Management, an independent investment advisor. Silver Key Wealth Management is a separate entity from LPL financial.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, NJ, IN, NM, VA, NC, SC, OR, CA, TX, CO, NH, NY. www.finra.org www.sipc.org