Retiring Into Trumponomics

Considerations for your investments and financial life

Photo by Towfiqu barbhuiya on Unsplash

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Note: Before getting into this piece, I just want to say a hearty “Thank You!” to readers who have stepped up to a paid subscription in the last few months. You add tremendous energy to the endeavor and I am very, very grateful to you. Thank you! —Anthony

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If you are retired or looking into retirement in the next few years, our new president’s economic policies are sure to affect your plans. Whether you favor them or not, they are a major departure from the kind of pro-stability policies pursued by presidents for at least fifty years and arguably much more. That leaning toward stability made long range planning much easier because one could set assumptions and stick with them. Events might change your trajectory, but the government favored and would put its efforts into preserving stability. One could count on it. But you can’t anymore.

Indeed, the topsy-turvy announcements about tariffs is roiling the markets. If you are thinking of retiring in the next few years, you should pay attention to Treasury Secretary Sott Bessent’s claim that people are not worried about our retirement accounts among the recent volatility. On the face of it, the statement seems out of touch, and it probably is. But if you listen closely, you can hear something else—he is telling us that they simply don’t care. The instability in investment portfolios does not matter to the leadership, and that means that they are not going to manage the economy toward stability—not in markets and not in the economy itself. This reality undercuts the assumptions of nearly all long term planning for retirement, and it is happening at the worst possible time.

AI and Digitalization Makes It Worse

The American and global economies are already on the precipice of enormous and radical change, even without policies that magnify instability. The emergence of generative AI comes on top of other forms of digitalization in the economy—robots, 3D printing, environmental sensors, and more. On one hand, these are just outstanding new technologies that will enhance economic efficiency, just as other innovations from the industrialized economy have done over the past few centuries. On the other hand, these technologies will not just replace workers; they will disrupt capitalism as we know it, which is to say that they will disrupt the economy to its core. Hence, we have a pre-existing force that undercuts all assumptions underlying long term financial planning—pre-existing, that is, to the president’s policies.

I outline the reasons for the collapse of capitalism in my book What Is Postcapitalism?, but in a nutshell, the digitalization of products, services, labor, manufacturing, and virtually everything in the economy reduces the costs so far that costs fall to zero and markets stop functioning. AI is simply the next step in this process and it is already displacing enormous parts of the service economy—especially writers, graphic designers, content creators, and so on. Robots are changing manufacturing. And digitalized products like ebooks and music require non-free market interventions by producers to maintain price levels. All of these forces are disruptive to capitalism, and we don’t know how they will unfold.

The point is that while this digitalization is already creating instability in the economy, the rapidly changing tariff policy is making it even worse. It is destabilizing the global trade system and upending small businesses, especially those who source their products from China and have no way of sourcing them at home. Now, we have both of them coming together. How in the world are we supposed to plan?

Some Possible Conditions to Plan For

Like most people, I planned for my retirement using spreadsheets, assumptions, and averages to define my likely needs, the growth of my investments, inflation, and other factors that would affect my circumstances. How much money would I have? Would it be enough? How long do I need to work? In most cases, those assumptions work because the deviations are not too large and when things go haywire, like in the 2008 financial crisis, we rely on and expect government to restore stability. As we look into the next ten, twenty, or thirty years, however, neither of those things holds true. The disruptions to the capitalist system from digitalization are going to create deviations much larger than any we have ever seen, and these will be magnified by the short term policies being pursued in an effort to change the global economy and trading system.

What I am planning for

In this environment, it seems prudent to consider what could happen and include that in our thinking about retirement. Here are some of the things I am considering.

Short term shortages of many things that primarily come from China

At the time of this writing, we are looking at 145% tariffs on imports from China. No one knows how long that will last, but such a tariff level amounts to nothing short of a trade embargo. Some industries are supplied primarily or even exclusively by companies in China, and wherever that is the case, we are going to have massive shortages until alternative production can be established. And alternative production will take a long time to create.

So, for me, this means I can plan on a lack of access to many products at any price. In other words, shortages. It may be best to buy now, while I can.

The demise of small businesses that rely on international trade

On April 14, 2025, a New York Times podcast, The Daily, interviewed a small business person from Minnesota who built a $15 million dollar business over about six years with products imported from China. She knows her market, and there is no way her customers are going to be able to absorb a price increase that would be necessary to cover her costs. Not even close. Without reprieve, she will have to fire employees and will lose this very successful business she has built.

What I take away from this is that there are likely many, perhaps millions, of small businesses in the same predicament. They can’t plan, they don’t know what to do, and they don’t know what the president will do. In short order, they will be laying people off and closing their businesses. In an environment of large scale layoffs, job will become hard to come by, and this affects back up plans for retirees. Many people I know say that if worse came to worse, they would get a part time job to close the gap. If this dynamic continues, that back up plan may be completely inaccessible—there may not be any jobs to get.

Price Inflation

Wherever businesses are able to stay afloat, we can be assured that there will be price increases due to the tariffs. Currently, they are 10% across the board added to some that already had 10% tariffs, thereby making them 20%. These added costs will largely pass through to consumers who will pay more for the same thing, the only difference being that government added tariffs. To us, it will be like a large sales tax that wasn’t there before, though all we will see are higher prices. Just today, I as shopping on Amazon for a new chipper shredder for my yard. I found one that looked good at $571. I looked at and read reviews of several other models, then returned to order the one I liked first. But by then, the price was $801. Gulp.

In addition, these tariff-driven price increases will run alongside the price increases that have been occurring due to decreases in agricultural production caused by changing climate conditions. Olive oil in Spain, rice in Thailand, and coffee in Brazil have all been affected by radical changes in production levels in recent years, as have many other crops and their resulting food products. Olive oil, for example, went up in price by 50% in 2022 and 2023 due to crop failures in Spain, which is the world leader in olive oil production. In 2024, production recovered substantially and prices should come back down. But now, it faces a 20% tariff, which will keep those prices high. Production related price changes like these are volatile, but the overall effect is the same on your grocery bill—you pay more, and it is a good idea to plan on it.

Major Entrenched Recession

Although many analysts and prognosticators are increasing the chances of recession to 50, 60, and 70 percent, there is a strong possibility for a major entrenched recession as the tariffs take hold. IF this happens, one would want to plan for it. Here’s the scenario.

As small businesses die off in the short run, the jobs they create will disappear. Because small businesses create most of the jobs in the country, massive unemployment will follow. The idea of tariffs is that American industry will “reshore” jobs, but it is far more likely that they will automate those jobs out of existence, if at all possible. AI, robots, and 3D printing, in particular, will lead this trend. Tariffs will not so much protect American jobs as it will generate a move to American robots. Without jobs and income, people can’t spend and you get a recession.

The problem for planning is that there isn’t a really clear path out of it. I’m sure there will be one eventually, but when and how it happens is anyone’s guess. If the economy goes to hell, your investment portfolio will suffer a loss of value, and likely the dividends you may rely on will fall, too. That will leave you with less income at a time when prices may be rising, as we have already seen, due to non-economic factors—i.e., tariffs and climate change.

I have not had to weather a long recession since the Regan recession of 1982. They say to hold your course with investments because it will all work out in the long run. It certainly did for people who held on in the early 1980s. But I have to consider: How long term do I have? My wife died over six years ago. We don’t know how long we have to live. What if I am dead in the long term? As an older person, this must be considered.

The Declining Value of the US Dollar

In the last week or so, we have seen that financial markets may be changing their assessment of American economic leadership. The dollar has fallen by several percentage points, going from $1.04 to buy a Euro a short time ago to as much as $1.13 recently. Likewise, the yield on US Treasuries has spiked up at a time of market turbulence when the normal behavior would be for yields to go down. This is widely understood as market participants selling Treasuries because they no longer look as safe as they once did.

A declining dollar is bad for retirement for two reasons: it makes imports that much more expensive (beyond tariffs and other inflation) and it makes travel or ex-patriot living more expensive. Imports will show up as higher prices, but the added expense of lodging and food when overseas is not reflected in our inflation reports. Those expenses, therefore, are not increased in things like social security COLA increases.

Increasing yields on US Treasuries are a two edged sword for retirees. On one hand, they can lead to higher interest payments both in purchasing the Treasuries directly oneself or through higher yields in money market funds or similar vehicles. On the other hand, that increase in yield is happening because prices are falling, and therefore you can get locked into holding those bonds to maturity because it is the only way to get your principal back. With things as volatile as they are right now, risk calculations must account for these things.

What Am I Doing Now?

The unprecedented changes in the world economy we are facing now cause a lot of instability. No one knows what the president will do or how the world will react. Everyone needs to manage their finances according to their own situations, and to me that means ensuring that you are able to sleep at night with confidence in your immediate future as well as the long term. I was talking with a friend about managing retirement finances the other day and he said: “Forget FOMO, embrace JOMO!” To which I said, “Huh?” FOMO refers to the fear of missing out. He was saying forget that; it is better to embrace JOMO—the joy of missing out.

I was lucky to have gotten uncomfortable enough with the direction of the economy and this administration before the tariff problem became obvious. I took my investments to 30% cash in February, and then as the meltdown started, I cashed out another 20%. Now, I am comfortable and can sleep at night with a more limited dividend income resulting from my remaining investments. Unless things get very protracted, I feel I can weather a recession and low stock prices for a couple of years.

I am tightening the budget as well. For the most part, this is reflected in the realization that I cannot make some of the large purchases I was hoping for—especially the construction of a garage on my property. Tariffs are driving prices up, and I‘d rather conserve cash.

Similarly, I am planning on staying put instead of traveling. This saves the costs and prevents any concerns about getting back into the country. Ex-pat living feels financially out of reach right now.

Finally, I also chose to pick up some work for cash, which was not something I wanted to do. I do not have a huge cushion in my retirement funds, so the extra cash will stretch what I have in a worst case scenario. I’m choosing to do it now because if we do go into recession, the job I would get might no longer be available. It might just become too late.

I must say that I hate the fact that both I and America finds itself in this place now. For financial planning, however, it is best to see things for what they are dispassionately, and act from there. You can see my reasoning. I hope this article helps to clarify yours.

Anthony Signorelli