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Is 2024 a Volatile Year for Retirement Investing?

As the U.S. economy continues to grow, so do the challenges for anyone planning to retire in 2024. As the largest group of Americans ever in one year turn the traditional retirement age of 65, financial uncertainty abounds with continued inflation, the weakening dollar, and rising consumer debt.

All these elements are squeezing the American middle class and could impact the stock market. In turn, you could see an effect on your retirement accounts as well.

How volatile will 2024 be if you want to retire? You’ll have to wait and see. So far, the American economy continues to show resilience, adding more jobs than observers expected. Congress has also vowed to focus on finding ways to help more Americans save for retirement.

But indicators point to retirement in 2024 pushing against headwinds that could create a bumpy ride for people planning to fly out of the workplace and into retirement this year. According to the Alliance for Lifetime Income, 2024 is Peak 65®, the year that 4.1 million Americans born near the end of the baby boom will turn 65. That’s 11,200 people per day who have the potential to leave the workforce — the most ever in a given year.

The organization’s data show that millions of these Americans reaching retirement age lack the sufficient protected income to retire; as such, they face financial insecurity. The Alliance for Lifetime Income also says the data shows that half the potential retirees are at risk of having insufficient retirement savings to maintain their standard of living.

So is 2024 a volatile year for retirement? Clearly, some people who plan to retire will face challenges; however, if you have saved and invested for your retirement, the outlook appears better, though uncertainty is expected to linger throughout the year. 

Could We See a Recession in 2024?

In this presidential election year, most prognosticators say the U.S. economy will continue to chug through the remainder of 2024. Ty Young, CEO of Ty J. Young Wealth Management, said the U.S. executive branch and the Federal Reserve could help prevent an outright recession during an election year.

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

Young expects the U.S. economy to shrug off any reduction in the gross domestic product (GDP) in the second quarter and through the November presidential election. That effectively takes you through the end of 2024. However, if you plan to retire in 2024, you might want to keep an eye out for what may come in the first quarter of 2025.

Congress could fail to pass a real national budget through the regular order process and get no commitment to reducing the deficit and returning industrial competition to the U.S. economy. If this comes to pass, “it could get ugly,” Young said.

The Headwinds to Our Economy

The U.S. Chamber of Commerce says the nation’s economy has not fully absorbed the higher interest rates that were necessary to slow the runaway inflation of recent years. The chamber believes those high interest rates will continue to be a drag on the U.S. economy in 2024.

Plenty of jobs are available, and wage growth has been strong. But several other economic indicators have converged to create a compounding effect that shouldn’t be ignored:

  • People spending their savings
  • Consumers using more credit cards to buy
  • High interest rates
  • Lingering inflation

Young, of Ty J. Young Wealth Management, adds to that list the devaluation of purchase power for consumers. He also cites concerns that the Federal Reserve might actually go the other direction in 2024 and overstimulate the economy with rate cuts.

How You Can Protect Your Retirement   

Whether the economy takes a turn for the worse, flattens out, or keeps strengthening and moving forward, your income from retirement still could be eroded by the typical volatility of the stock market. Investors have options that can help them protect their nest eggs, Young said.

You can play a bit of defense and offense with your investments at the same time by investing in a Fixed Index Annuity. The annuity can help you avoid losses from the stock market while growing your money, Young explained.

Keep an Eye on Your Retirement

While it’s always good advice to stick to your financial plan for retirement, the uncertainty of what might happen in the financial markets this year is a good reason to review your plan regularly. And if you consider Young’s view on adding a Fixed Index Annuity to help protect your retirement income, you can keep an eye on your plans and guess less about any volatility in 2024.

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