Feeling Uneasy About the Markets?

What history and other savers can tell you.

If you’re feeling anxious about your retirement investments lately, you are not alone.

Headlines about rising gas prices and war in the Middle East and Ukraine can make anyone want to do something with their retirement savings.

You have company
In a national survey taken last fall, 61% of Americans said they were concerned they won’t reach a financially secure retirement. Among the reasons they gave were inflation (73%) and market ups and downs (62%).¹

Early this year, a separate survey of workers found that 61% said they were confident they’d have enough money for retirement. That was down from 67% a year earlier, and the lowest level since 2017.²

What history shows
Wars and conflicts have rattled markets before. Researchers looked at how U.S. stocks (the S&P 500) performed after military conflicts dating back to World War II.³

• Three months later, stocks were up less than half the time (43%).
• One year later, they were up 73% of the time.
• Ten years later, they were up in every case.

That’s history, not a promise.
After the 1973 Arab oil embargo, for example, stocks were still well below where they started a year later. What happened decades ago may not be how things go today. That’s why you’ll often hear that past performance does not guarantee future results.

What other savers are doing
Most retirement savers have held steady. Vanguard reports that only 5% of participants who make their own choices traded at all last year, even during the spring’s market swings.⁴

Know your own comfort level
It’s okay to worry. But anxiety is a feeling, not a plan. The right mix of investments for you depends on how much time you have and how comfortable you are with ups and downs. Even “safer” choices carry risks, such as inflation slowly eating away at your savings.

How do I make a plan?
Talk it over with your retirement plan counselor or financial advisor. Share what you learn from the 13-question Risk Tolerance Assessment, your goals, and how much time you have to reach them.

Watch the Investment Choices Made Simple webinar.

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Watch the webinar here.

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See your email newsletter, or register here.

➤ Take the 13-question Risk Tolerance Assessment. It takes about five minutes.

Trump Accounts & College Savings Plans​

Reader Question: What is the difference between the new Trump Accounts and a 529 college savings plan?

Almost every child now has a new Trump Account. Children born from 2025 through 2028 can also get $1,000 from Uncle Sam.

So, our readers want to know what Trump Accounts are for and how they differ from a 529 college savings plan.

The short answer is, a Trump Account is set up like a retirement account. A 529 plan is set up for school costs.

Who qualifies for a Trump Account?
Almost every child. A child qualifies if they are under 18 and have a Social Security number. On October 1, the Treasury opened an account for each child who qualified and didn’t already have one. That was more than 60 million children.

There is a catch. A parent or guardian must claim the account before anyone can add money. You do this in the official Trump Accounts app or at TrumpAccounts.gov.

Scams are out there, so type the web address yourself.

$1,000 from Uncle Sam
Children born from 2025 through 2028 can get a one-time $1,000 deposit from the Treasury. The child must be a U.S. citizen with a Social Security number.

A parent or guardian must request it using IRS Form 4547. The Treasury says the account must also be claimed. Some charities and other donors have also promised extra money.

Who can add money?
Parents, family, friends, employers, charities and government organizations can contribute, subject to limits. Until the year the child turns 18, money added to the account generally must be invested in low-cost funds that track the U.S. stock market.

Can a Trump Account pay for school?
Not while your child is young. No money can come out until the year your child turns 18. So it cannot pay for kindergarten through 12th grade.
Starting the year your child turns 18, the account follows traditional Individual Retirement Account (IRA) rules.

A traditional IRA is a retirement account that is taxed when money comes out. Your child can then take money out for college, but may be taxed on at least some of it.

How does a 529 plan compare?

A 529 plan is a savings account built for school costs. The money grows, and it comes out tax-free when used for qualified school costs. These include up to $20,000 a year per child for K-12 school costs, college and trade school, many job-training and licensing programs, and registered apprenticeships.

The bottom line
A Trump Account is built mainly for long-term growth. Think retirement. While it can help pay for college, much of what comes out is taxed.

A 529 plan is built for school costs. When used for school, withdrawals are tax-free. The two are separate. Having one does not keep you from having the other.

State tax rules can differ from federal rules, so check your state’s rules too.

Watch the Saving for a Child’s Education webinar

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Watch the webinar here.

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