What Could 2024 Bring for Retirement Investing?

Almost all prognosticators say 2024 will be a pivotal year for the global economy. As American investors keep their eyes on all the factors that can affect their holdings, they’re especially concerned about saving up for retirement.

What is the outlook for the economy in 2024, and how will these factors shape retirement investment strategies? 

Changes in Retirement Savings in 2024

Ty J. Young, CEO of Ty J. Young Wealth Management, has advised clients on building successful retirement savings portfolios in all market conditions. He sees a few economic headwinds on the horizon that may cause concern. In particular, Young foresees projected interest rate freezes or cuts, rising consumer debt, decreasing purchasing power, and continuing inflation. “All of the above squeeze the middle class,” Young says, “and all the above put our stock market in jeopardy.”

Despite the upcoming headwinds, the new year is set to usher in a few retirement savings and distribution changes. IRA contribution limits were raised to $8,000 for people 50 or older and to $7,000 for others, an increase of $500 for each group. More provisions of the SECURE 2.0 Act of 2022 kick in this year as well, including automatic 401(k) enrollment, a higher age limit for required minimum distributions, and more flexibility in hardship distributions.

Could We See a Recession in 2024?

Onlookers are divided about the economic outlook of what’s sure to be a pivotal geopolitical year in 2024. The robust job market of 2023 will likely cool down, and the inflation that plagued consumers has just started to even out.

The 2024 presidential election is a motivator for the Federal Reserve and the Executive Branch to forestall a recession as much as possible. “Printing money is the go-to response of the government during an election,” Young says.

“However, such money printing has already reached the tipping point – creating negative impacts on the bond market and creating rampant, massive inflation. That has the potential to generate stagflation and ultimately a recession due to the consumer being unable to keep up with rising costs.”

At least for 2024, Young believes the economy will avoid the two-quarter reduction of the Gross Domestic Product (GDP), which is one of the more reliable bellwethers of an oncoming recession. But after the election, Young predicts challenges for 2025.

“First quarter 2025,” Young says, “without a real budget through regular order and an Executive Branch committed to deficit reduction and industrial competition? It could get ugly.”

What Are Some Tips for Investment Success?

Saving for retirement involves some evaluation and strategic planning, but mostly, it’s a matter of awareness and discipline. In 2024, those qualities will be crucial for investors to maintain  — especially if darker turns are lurking at the beginning of 2025. Here are a few basic principles for investors to stick to:

Know Your Goals

Every plan for personal finance, including retirement savings, starts with setting a clear goal. How much do you need to retire comfortably? What is your target date to reach that goal?

This step is too important to overlook. Realistic goals act as motivators — they can establish a sense of discipline and provide a guardrail in case you need to change your plans. Risk management and asset allocation are easier to ascertain when you have a clear view of the ultimate goal line.

Know Your Strategy

Certain investment strategies are common to most. Experts always recommend diversification or spreading your allocation across different asset classes. Investors often rely on dollar-cost averaging, in which you make consistent, regular investments no matter what the market condition is like.

Whether you use a traditional or Roth IRA, mutual or exchange-traded funds, dividend reimbursement, or standard commodities like stocks and bonds, be clear on your strategy. Know the risks associated with your investment choices.

Stick to Your Strategy

In times of chaos, investors get nervous. They may feel the need to alter or redirect their investment strategies, resulting in panicked decisions and hasty transactions that could come back to haunt them.

The key to investment success is consistency. Sticking with the strategy you choose is important for your long-term focus. It eliminates the need for market timing and allows you to concentrate on fundamentals. You may need to make minor changes from time to time, but stay rock solid on the overall strategy.

Protect Your Portfolio

Sometimes, it becomes necessary to take a defensive stance with your investments. You want to preserve your capital and mitigate risk when markets are volatile. Protection strategies like stress testing, hedging, dividend-paying stocks, and fixed-income investments can preserve the core of your portfolio and maintain profitability.

A fixed-income annuity, for example, is an excellent portfolio stabilizer. It means that your lump-sum premium guarantees retirement income at a fixed income rate. As a result, your investment becomes more secure and independent of stock market factors.

Fixed-income annuities are considered an excellent option for investors because of their resilience to market downturns. With an uncertain future ahead, it is prudent to consider this type of investment.

Give Your Investments a Strong Foundation in 2024

Whether the economy is rocky or rock-solid in the coming year, it’s sure to be an eventful one with multiple challenges. Know that you don’t have to face them alone. Let a trusted, proven financial advisor steer you through 2024.