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What is a Health Savings Account- HSAs

What is a Health Savings Account?

A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your out-of-pocket health care costs. There is a 20% penalty if you withdraw the money for anything else other than medical expenses. You can also have the money invested while it sits in the account. However, only 9% of workers use this option. A health savings account (HSA) is designed to help people with high-deductible insurance plans pay their out-of-pocket medical costs, but it can be surprisingly effective as a retirement savings tool, too.

KEY TAKEAWAYS

Health savings accounts (HSAs) are available only to those who choose high-deductible health insurance plans (HDHPs). For some, a high-deductible plan works best because the monthly premiums are relatively low. The HSA can be used to cover costs that are not covered by the HDHP. The money paid into an HSA is tax-free. If you save some or all of your HSA money each year, you can pile up a significant and tax-exempt addition to your retirement savings.

The HSA account has triple tax advantages:

  • The money is not taxed before you pay it in.
  • The interest and earnings on the money is not taxed
  • Withdrawals are not taxed if used for allowable medical expenses.
  • It makes maxing out your HSA an ideal retirement savings strategy

Using one to save for retirement medical expenses is a great strategy rather than using a retirement account such as a 401k or an Individual Retirement account. Your contributions to an HSA can be made via payroll deductions, or from your own funds if you’re self-employed. They are tax-deductible, even if you don’t itemize your taxes. The money paid into an HSA is considered “pre-tax,” meaning that it reduces your federal and state income tax liability—and they’re not subject to FICA taxes, either.

Your account balance grows tax-free, and any interest, dividends, or capital gains you earn are non-taxable. Great advantages if you’re heading towards retirement as well.

If you would like to know more or set up an HSA call us at 1-866-745-2295.

Posted by Rick

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    Catch-Up Retirement Strategy No. 3

    Save extra cash and start a savings goal.

    Putting any extra money you receive toward retirement is one of the retirement savings tips to keep front and center. What can you consider extra money? Think: tax refunds, inheritances, salary increases, and bonuses, for example. If you do receive a windfall, move it directly to a savings or retirement account. This will allow it to start earning interest immediately, and it may help you avoid the temptation to dip into the funds for another purpose.

    Target a savings plan outside of your comfort zone. Having a specific goal in mind can motivate you to take the necessary steps to get there. It can also help you hold yourself accountable. The more specific the goal (how much you want to have in retirement savings, and by what age, for example), the more focused your efforts will be.

    Many banks and credit institutions offer in-account tools that allow you to set savings goals. Here are 7 banks and 7 credit unions that offer outstanding savings rates and account tools that can help you get started.

    BanksSavings RateCredit UnionsSavings Rate
    Citizens Bank4.50%Pentagon Federal Credit Union3.00%
    SoFI4.50%Alliant Credit Union3.10%
    Barclays4.35%Boeing Employees Credit Union6.17%
    CIT Bank5.05%Randolph Brooks Federal Credit Union0.25% – 4.05%, depending on the type of savings products you choose.
    Upgrade5.07%Delta Community Credit Union0.25% – 4.05%, depending on the type of savings products you choose.
    Ally Bank4.25%Navy Federal Credit Union0.25% – 4.05%, depending on the type of savings products you choose.
    Discover4.30%Suncoast Credit Union0.25% – 4.05%, depending on the type of savings products you choose.
    Saving accounts with great rates

    ***Bank and Credit Union rates are subject to change. This chart is not an endorsement of any of the banks or credit unions that are listed. Rates are posted for informational purposes only.

    To learn more on how and where to start a high-yield savings account, call us at 1-866-745-2295 or click here to request a callback.

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    Catch-up Retirement Strategy No. 2

    Younger man enjoying retirement

    Fully Fund your 401(k)

    An employee in this age category who is offered a 401(k) at work should consider funding it to the maximum amount. To provide you with a sense of how powerful maxing out a 401(k) can be, consider the following:
    An individual who is 40 years old and who contributes $17,500 annually to a401(k) could accumulate more than $1.3 million in savings by age 65. This assumes an 8% return and no employer contributions. Note the annual contribution limit for 401(k)s is $20,500 per year for 2022 and$22,500 for 2023. That’s a powerful savings tool, and it’s evidence that workers nearing retirement should seriously consider funding their 401(k)s as soon and as much as possible.

    The total allowed catch-up contribution for those 50 and older is $ 6,500 per year for 2022, for a total of $27,000. The catch-up contribution increases to $7,500 for 2023, for a total of $30,000. “Factoring in no growth at all, if you can sock away $24,000 a year from age 50 to age 60 (11 years), that’s $250,827 more saved for even the earliest unpenalized retiree. An extra $250,000-plus saved prior to retiring can make or break an income-producing portfolio lasting throughout retirement,” says Martin A. Federici, Jr., AAMS®, MF Advisers, Inc., Dallas, Pennsylvania.

    In addition, to earning the highest return on investment in your 401(k), check or view your 401(k) account periodically for performance. Oftentimes, workers have a tendency to set it and forget it. Unfortunately, that is a recipe for losing out on thousands in lost profits and gains.

    If you would like more information on catch-up retirement strategies or on what funds to choose to fully fund your current 401(k), call us for a free, private no cost-obligation consultation or call and ask for Rick at 1-866-745-2295.

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    Catch-up Retirement Strategies


    52 percent of American workers do not have enough saved in retirement or they are behind on their retirement savings goal, according to a bank rate survey.

    If you’re like the people surveyed, the question on your mind might be, “How do I catch up on my retirement savings?” No matter how close you are to retirement or how little you have saved up, it’s never too late to consider new tactics to get your nest egg growing. Social Security and Medicare may not be enough to cover your retirement expenses, so the best answers to the question “How to catch up on retirement savings?” will include smart retirement savings strategies and financial tactics. Here is a great tip that can help you save more

    Avoid early withdrawals
    One of the most important retirement tips is to avoid taking early withdrawal money out of your retirement plan. While an early withdrawal may not seem like a big deal at the moment, especially if you have another need for those funds, it can actually have a significant long-term impact on your retirement savings. You could face early withdrawal penalties or fees, for example, which will reduce your current savings and your total savings in the future.

    If you do have to make an early withdrawal, please consult with your tax advisor first to see how they can help you reduce or minimize your tax penalties for the upcoming tax year. There may also be exceptions to the rules to help you avoid the early withdrawal penalties. If you would like more information on retirement catch-up strategies call us at 1-866-745-2295 for a free, no-cost confidential consultation and ask for Rick.

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    Crypto Picks, Buys and Sells

    Virtual man in Decentraland

    There are over 24 categories of Crypto Assets and within those categories, there are 45 Sectors. It is very difficult to determine which crypto asset is the best one to buy. In addition, the industry itself has numerous current and previous unresolved risks that make investing in the industry uncertain and extremely risky. However, crypto-assets can still be a great place to invest in. With a little patience and guidance, investors can find and invest in some of the top crypto assets in the industry. We will post some of our best ideas in coins and tokens for serious and mildly curious investors going forward. Check out the page weekly for our highlight coins and tokens for the week.

    Our pick of the week is Decentraland- MANA. Decentraland is an NFT (non-fungible token) currently trading at a market spot price of $0.993831 as of the date this article was written. What is Decentraland? “Decentraland is a decentralized VR (virtual reality) world that is powered by the Ethereum blockchain. In this virtual world, you can purchase land, build it, monetize, and immerse into the applications and content that are built by other users. What distinguishes Decentraland from other VR projects is its decentralized nature. Land and in-game currency are powered by the Ethereum blockchain which gives users complete ownership and promotes transparency.” (Source: Coingecko.com)

    Decentraland is a virtual property and real estate blockchain platform and was one of the first movers in the virtual reality space that popularize the NFT movement. The stock has performed well over the last 24 months but like most crypto assets is down 75% – 83% to date. It’s ranked #40 as far as market capitalization with the industry suggesting that this virtual property and real estate blockchain platform is very liquid and highly capitalized.

    Industry analyst thinks it’s a buy at these prices and suggest accumulation in small amounts then using a dollar-cost averaging accumulation strategy. If you would like to know more about Decentaland such as price, trends, and industry direction post a comment below or email us for additional information.

    Purchase a twelve-month recurring subscription for Decentraland- MANA today!

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    Broadcom- AVGO is a Buy

    Broadcom has been a stellar performer over the last 7 years and it is expected that the company will continue to grow at a healthy clip over the next 5 years as it moves to more software rather than a pure chip company. The company’s stock price is currently trading in a range of $528 – $575 per share,

    Management has executed deftly during the pandemic and continues to make very good decisions that continue to add value to the company. The recent acquisition of VM Ware, a cloud virtualization company strengthens the company’s ecosystem of products and services and looks to deliver and add to free cash flow in the future. We believe that this stock can be purchased as a stand-alone investment or in a portfolio of balanced technology stocks.

    According to our calculations, a $1000 investment made in February 2012 would be worth $16,653.93, or a 1,565.39% gain, as of February 17, 2022. Investors should keep in mind that this return excludes dividends but includes price appreciation. Source: Zacks’s Equity Research

    If you believe that technology companies like Amazon, Microsft, and Google are great places to invest over the long term, check our web daily for our technology picks, and technology portfolios, and help in choosing the right technology companies to invest in. We offer a great way to invest for investors that may not have the experience of deciding where and how to invest. We offer a great AI platform for new investors and customized services for more experienced investors that are willing to take more risks. Call or email us at 1-866-801-3359 with your inquiries or questions.

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    Dropbox- The Box is Half Full

    Dropbox Inc., DBX reported earnings on Friday, February 20, 2020, not to be confused with BOX which reports earnings on February 26th, 2020, with revenues and stronger cash flows,   We started covering Dropbox Inc., in the 3rd quarter of 2019 because it’s in a space that we believe will see very good growth over the next five years. The stock is still slightly undervalued based on its intrinsic value by about ten percent with a fair value stock price of $24.71.

     The 4th quarter numbers were pretty good putting the company on track for stronger growth going forward. The company reported revenues of $443.5M but expected $446.00M a 0.60 percent increase. The company grew earnings to .16 per share versus expected earnings of .14 per share, up 13.19%. Based on my understanding of how the company was growing revenues and the context of the earnings call, this quarter was significant because of the quality of the earnings growth.

    The company is looking at Non-GAAP and GAAP forward guidance of 18% – 19% and 13% -14% respectively.  We believe the company’s earnings growth is sustainable based on the expectation of higher gross and operating margins and is not sacrificing growth by de-focusing on average user growth generated through subscription revenues.

    I think the company has a firmer grasp on its business plan, and we should see stronger, sustainable growth in the future. Is the stock a buy? We think so. However, be mindful. This stock is not a Wall Street darling like Facebook, Amazon, Netflix or Google so don’t expect huge volatility in the stock price or huge stock swings. It’s a slow burner. We own stock in Dropbox.

    Disclosure: I am/we are long Dropbox. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it . I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.