The Year Of The Rabbit

Happy New Year — 2023 is here. The year of the rabbit. In many cultures, rabbits are known to symbolize good luck and prosperity. I wouldn’t consider myself to be much of a superstitious person, but I like the idea and mindset that these things can bring. Other than hoping that good luck will be sent our way, there are a few things we can do to help guide ourselves toward a prosperous life.

When it comes to finances, make sure you are contributing the maximum amount in your retirement accounts like your Roths and IRAs. If you are under 50 years of age, the maximum amount to contribute per year is $6,000. If you are older than 50, you can contribute $7,000 per year.

It is also important to check to see if you are maxing out your 401(k) contributions for the year. The IRS states that the maximum 401(k) contributions for 2023 is $22,500. If you are 50 or older, and depending on the 401(k) plan, you may be able to make what’s called a “catch-up” contribution as well. The catch-up contribution for 2023 is $7,500. You don’t need to be behind on contributions as these are based on cost-of-living adjustments. As a result, the total possible 401(k) contribution for 2023 is $30,000.

I also recommend looking into your options for opening a Roth 401(k) instead of your traditional 401(k). Many employers are adding the Roth option, and this differs from the Roth IRA in that it doesn’t have income restrictions. People making over $138,000 individually or $218,000 jointly are unable to contribute to the Roth IRA, but these earners are eligible for the Roth 401(k). Post-tax dollars are going into the account, but that money is growing and will be withdrawn tax-free. Controlling your tax liability in the future is as important as ever in today’s environment.

It can be hard sometimes to try to think positively about our finances in today’s economy. I will say that historically, we’ve been here before. We need to do what we can to keep on a positive path for ourselves. The average bear market is 289 days. Using that as our guide, we can estimate how long the bear market will last (of course, no one has a crystal ball and knows for sure). Either way, it is a new year. A new chapter. The year of the rabbit will have a lot in store for us. Though our rabbit may not be able to outrun the bear, we can try to stay hopeful for what is to come.

The views depicted in this material are for informational purposes only and are not necessarily those of Cetera Advisor Networks LLC. They should not be considered specific advice or recommendations for any individual.

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and if taken prior to reaching age 59 and a half, may be subject to an additional 10% IRS tax penalty.

Jason LaBarge, financial advisor and president of LaBarge Financial

7 Riggs Avenue, Severna Park, MD 21146 · 443-647-4321. www.labargefinancial.com - Retire with more than just money.