5 New Year’s Resolutions for 2024

With a new year comes new opportunities, but also new challenges. For many people 2023 may have been better than 2022, with markets adjusting to the Federal Reserve’s interest rate hikes and shrugging off fears of recession.

While that may have been a welcome change from pessimistic expectations, there’s no guarantee that 2024 will bring the same kind of performance. So what might be in store for this year?

Predicting the future isn’t possible, but proper planning can help prepare you for any eventuality. Here are five New Year’s resolutions that might prove useful in the coming year.

1. Reassess Your Financial Goals

At the beginning of every year it can be helpful to reassess your financial goals and how you’re meeting them. If this is something you do every year, you may not need to do too much. But if you haven’t reassessed your goals in several years, maybe it’s time to take a fresh look at things.

If you’re nearing retirement, it might be worth taking a look at your retirement contributions, your portfolio allocation, and your investment performance to see whether you’ll hit your retirement goals. You may also want to familiarize yourself with RMD rules for IRA and 401(k) accounts and work with a tax advisor and financial advisor to maximize your retirement income and minimize your tax burden.

If you’re at mid-career, you may want to assess whether you’re putting enough money away for retirement or whether it’s worth putting more money aside. You might also be thinking about saving money for other purposes, such as health care spending or your children’s education.

And if you’re just starting out, you’re probably trying to figure out how to budget, how much to save for retirement, etc. But no matter where you are in life, the beginning of the year is a good time to reassess your situation, rethink your priorities, and make any changes that might be needed.

2. Take a Look at Diversification

Diversification can do numerous things for your portfolio. You can use diversification to adjust your risk profile, try to minimize losses, or just expose your portfolio to new asset types or classes, or different regions of the world.

There are numerous ways to try to diversify, whether it’s through mixing up the types of stocks and bonds you invest in, buying precious metals like silver and gold, or gaining exposure to commodities, real estate, or other alternative assets. But the beginning of a new year can be a good time to look at your portfolio and assess whether diversification might be helpful.

3. Stay on Top of Retirement Account Changes

In recent years there have been numerous changes to the rules surrounding retirement accounts, and not everyone has kept up to date. But some of these new rules could be important.

Of course, everyone should know that contribution limits have been increased for 2024. Annual contribution limits for 401(k) accounts are $23,000 for 2024, while limits for IRA accounts are $7,000. Catch-up contributions for those over age 50 remain at $7,500 and $1,000 respectively.

New rules for 2024 allow for tax-free rollovers of assets in some 529 accounts into a Roth IRA. And if you need to take an emergency withdrawal from your 401(k) or IRA account, you can now take $1,000 out without having to pay a 10% penalty.

Other rule changes include an end to required minimum distributions on Roth 401(k) accounts, bringing them in line with Roth IRA accounts in not requiring RMDs when you turn 73. And speaking of Roth 401(k) accounts, the Roth 401(k) catch-up rule that was supposed to go into effect in 2024 has been delayed until 2026, giving people additional time to place catch-up contributions into a standard 401(k) rather than a Roth 401(k).

The multiplicity of new rules that have come out in recent years could be confusing, which is why it can be helpful to work with a financial advisor or tax advisor before you make any big financial decisions with your retirement assets that could incur major tax consequences.

4. Assess the Risk of Inflation

While inflation may not be as high as it was in 2022, it hasn’t disappeared. Inflation remains problematic, and can eat away at your savings and investments.

Even worse, the threat of inflation remains elevated, particularly if the Federal Reserve starts to cut rates or returns to looser monetary policy this year. While most people think high inflation is done, it could get a shot in the arm if monetary tightening ends.

The 1970s stagflation saw inflation see-saw up and down as the Fed struggled to adopt consistent policies to prevent inflation. This decade could end up seeing something similar if the Fed can’t get its act together. And unless you assess the risk of inflation and protect yourself against that risk, inflation could take a big bite out of your purchasing power.

5. Prepare for the Unexpected

Many people expected a recession in 2023, but it never materialized, at least as far as we know today. As a result, the mainstream media is singing the praises of the Fed for threading the needle and saving us from recession.

But all this crowing about a missed recession will have to be remembered once the next recession hits. And that could come this year.

Debt levels are growing, the money supply is falling, and businesses and households are tightening their belts. The feeling that recession is growing closer is becoming more apparent to more and more people.

It’s precisely when everyone thinks that the threat of recession is past when the threat of recession could be most damaging. Remember early 2008, when Ben Bernanke and everyone else was trying to claim that the economy wasn’t going to face a recession, even though it was already in the midst of a recession?

Preparing now for the eventuality of recession could help you safeguard your wealth if the recession becomes severe. Whether that’s through buying gold and silver to help protect yourself against loss, moving into cash, or some other method, having a plan to guard against the negative impacts of unexpected or catastrophic events can be crucial to coming out ahead after all is said and done.

2024 could be an interesting year in many ways, and we all hope it’s a safe one. Hopefully these New Year’s resolutions get you thinking about the year ahead so that you’re prepared for whatever takes place.