Dave Ramsey: 5 Factors That Impact Your Retirement Savings in 2024

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Saving for retirement is a common goal, but exactly how much should you save? That number depends a lot on your personal financial situation and what makes the most sense for you. Since the year just started, it’s ideal to evaluate how much you can put aside specifically for retirement.

Entering 2024, there have been some adjustments to help Americans increase their retirement savings. According to finance expert Dave Ramsey’s website Ramsey Solutions, the 401(k) contribution limit was $22,500 in 2023 but now, it’s $23,000. That’s an extra $500 you can take advantage of this year, and even more if you’re 50 or older and can utilize additional catch-up contributions which are limited to $7,500.

However, certain factors can affect how much you’re able to save, so it’s not just about your income. Per Ramsey Solutions, these factors include:

• The stock market
• Housing market 
• Interest rates and inflation rate
• Unemployment rates
• Consumer confidence
• Gross Domestic Product (GDP)

Here’s a look at how these factors may impact your retirement savings in 2024.

Stock Market

The stock market is looking up, but even expert investors can’t predict exactly what it will do in 2024. Don’t be tempted to shift too many of your retirement assets into risky equities, for fear of missing out on big returns, and likewise don’t move too many assets out of the market and into a liquid savings account just because you can sell high now.

“No matter what the stock market is doing, stay focused on the long term, avoid making decisions out of fear and keep saving for retirement (as long as you’re out of debt and have an emergency fund in place),” the Ramsey Solutions article advised.

Housing Market

Rising interest rates and low inventory in the real estate market can affect your budget for saving. If you’re looking to sell, expect for it to take longer than usual, as many would-be buyers are put off by today’s interest rates. On the other hand, “If you have to take out a mortgage, a 15-year mortgage is the only way to go. That’s because it’ll save you tens of thousands of dollars in interest over the course of repaying your loan,” the Ramsey Solutions article said.

Housing is a need people have to fulfill but the rising prices can take a chunk of retirement sayings. However, keeping up with what’s happening with the market and speaking to a real estate professional should help you make the best decision with your money, whether you’re buying or selling.

Interest and Inflation Rates

As much as inflation has gone down since the 2022 average of 8%, it’s still a struggle that Americans are forced to contend with, whether they’re looking at increased rent, grocery or gas prices. And the Fed’s increase of interest rates, while it has lowered inflation, has also adversely impacted Americans’ finances in the form of higher loan rates.

“No matter how high or how low interest rates are, borrowing money for a car loan or home equity is always a bad idea as the interests are not worth it,” the article on Ramsey Solutions said.

That means the smartest way to go about these purchases would be to save up enough money to make them outright, without needing a loan. Or, if that’s not possible, potentially waiting until interest rates go down to seek a loan. Any money that’s not going toward lenders’ high interest rates can be going into your retirement fund instead.

Unemployment Rates

While unemployment is expected to rise in 2024, it’s still relatively low. Rising unemployment is bad for a country and its people as it weakens the economy. However, if the current projection which is about 4.2% holds for the year, there will not be a big impact on the economy — and hopefully even less of an impact on your retirement savings.

According to Ramsey Solutions, “As job growth slows down, that means less growth for companies… which could hurt your investments in the short term. But don’t panic — this kind of thing happens from time to time. Work with your financial advisor to see if you need to make any adjustments to your portfolio or if you should just ride it out for the long haul.”

Consumer Confidence

Consumer confidence in 2023 was low and is expected to even get lower this year, as many people anticipate a recession.

“With more Americans going back into debt and savings rates slipping to their lowest level in nearly two decades, millions of families could be in trouble down the road. That’s why it’s more important than ever to get on a budget, stay away from debt and keep saving and investing for the future to outpace inflation,” advised the Ramsey Solutions article.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is an indicator of a country’s financial health as it tells the value of goods and services produced in the country at a specific time. If the GDP is negative, it increases the risk of recession but also typically lowers inflation.

GDP grew by 3.3% in the fourth quarter of 2023, which was down from previous quarters, but it’s still expected to remain stable this year. This means there’ll likely be some room to expand your savings.

As the Ramsey Solutions article put it, “The Federal Reserve of St. Louis predicts GDP growth will slow in 2024 but stay positive and end the year at 1.3%. If that’s the case, the Fed will have achieved its so-called ‘soft landing’ — lowering inflation without pushing the economy into a recession.”

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