Decision Time – Part 2

October 22, 2021 /

Advice on 2022 Employee Benefits

In last week’s newsletter “Decision Time Part 1“, I discussed the first of two decisions employees are currently making regarding 2022 employer provided benefits. The article stressed the importance of making 2022 the year to start building wealth in the Roth 401(k). 

The second decision is to choose a high deductible Health Savings Account (HSA) health insurance policy and to invest the HSA for retirement.

HSAs became available in 2004. A married couple, age 50, who fully funded and fully invested (S&P500) their account each year would actually have accumulated $362,000!

Hindsight is 20/20. Make 2022 the year you identify which of your clients owns an HSA. Educate them on:

  • the potential for higher federal, state, and Medicare taxes in years ahead
  • the importance of accumulating sources of tax-free wealth for retirement
  • the significance of retirement health care costs 

HSA contributions are pre-tax, earnings grow tax-free and distributions for qualified health care expenditures are tax-free. Stop spending the HSA by using your emergency fund for current uncovered health expenditures and get the HSA invested. Qualified medical expenses create life long tax-free withdrawal opportunities from the HSA.

When the time arrives to take income from one’s retirement portfolio, having HSA and Roth 401(k)income that will not drive you into higher federal, state and Medicare taxation can lead to an overall  higher post-tax retirement income.

For more on this HSA strategy see my “Health Savings Account” WealthWatch video.

As you provide resources to clients regarding Medicare and retirement health care planning please check out my new Facebook page. As always, I welcome the opportunity to provide an objective, educational Medicare overview with you and your clients.To schedule a phone consultation send me an email: pfstahl@bedrockresults.com

Peter Stahl CFP® 

The information in this presentation is provided as a general overview. It is derived from the Internal Revenue Code, Medicare.gov and other government publications, all subject matter sources reasonably believed to be reliable.  Tax law and the laws governing Medicare/Medicaid are complex and subject to change.  Clients should consult with their attorney and/or qualified tax advisor when making decisions regarding these matters.