***Lively has started charging $24 or forces you to hold a minimum of $3,000 in their HSA. Due to this change, I do NOT recommend them any longer. Please do not use this company. A Fidelity HSA is currently free at this time***
An HSA (Health Savings Account) is one of the best investments you could ever make. This is especially true for anyone pursuing Financial Independence Retire Early. The HSA gives you the chance to invest your money tax-free, let your money grow tax-free, and you can even withdraw your money tax-free.
In this video, I’ll show you how to turn your HSA (Health Savings Account) into one of the best retirement accounts you’ve ever had.
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Disclaimer: This video is for entertainment purposes only. Everyone’s situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.
#HealthSavingsAccount #FinancialIndependence…(read more)
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HSA Is The Best Investment For Financial Independence Retire Early – The FIRE Movement
The Financial Independence Retire Early (FIRE) movement has gained significant traction in recent years, with individuals seeking to escape the daily grind of employment and achieve financial freedom sooner rather than later. While FIRE strategies often revolve around maximizing savings and investing in traditional retirement accounts such as 401(k)s and IRAs, one investment vehicle that has been gaining attention is the Health Savings Account (HSA).
An HSA is a tax-advantaged savings account that individuals and families can utilize to save for qualified medical expenses. It is only available to individuals who have high-deductible health insurance plans, making it an attractive option for those who prioritize low premiums over comprehensive coverage. While the primary purpose of an HSA is to cover medical costs, it can also be an incredibly powerful tool for building wealth and achieving financial independence.
There are several reasons why HSA contributions can be advantageous for those pursuing FIRE. Firstly, HSAs offer a triple tax advantage. Contributions to an HSA are tax-deductible, meaning they reduce your taxable income. The money in the account grows tax-free, and withdrawals for qualified medical expenses are also tax-free. In comparison, 401(k)s and IRAs are subject to taxes upon withdrawal in retirement.
Secondly, HSA funds can be invested in various financial instruments such as mutual funds and stocks, allowing them to potentially grow at a higher rate than traditional savings accounts. This means that individuals can harness the power of compound interest and grow their HSA funds over time.
Furthermore, HSAs are portable and have no “use it or lose it” provision. Unlike Flexible Spending Accounts (FSAs), which require individuals to spend their funds within a specific time frame, HSAs allow for continuous contributions and the ability to carry over unused funds from year to year. This flexibility makes HSAs an excellent long-term savings vehicle, particularly for those aiming for early retirement.
One feature of HSAs that sets them apart from other retirement accounts is that they can be used as a retirement savings vehicle in addition to covering medical expenses. After age 65, individuals can withdraw funds from their HSA for any reason without penalty, although income taxes may apply if the withdrawals are not used for qualified medical expenses. This makes HSAs an attractive option for individuals seeking an efficient way to save for both healthcare costs and retirement.
Moreover, HSAs can act as a hedge against unforeseen medical expenses. Many individuals, especially as they near retirement, worry about the rising costs of healthcare and its potential to derail their financial plans. With an HSA, individuals are better equipped to handle unexpected medical bills, reducing the risk of a financial setback that could jeopardize their FIRE aspirations.
In conclusion, while traditional retirement accounts play a crucial role in achieving financial independence, it is essential to explore alternative investment vehicles like Health Savings Accounts. HSAs provide unique tax advantages, the ability to invest in growth-oriented assets, and flexibility in spending. By leveraging the benefits of HSAs, individuals can maximize their savings, secure their healthcare needs, and ultimately accelerate their FIRE journey towards financial independence and early retirement.
I'm almost 58 and just started a new job and plan to work at least until I'm 65. Should I do HD plan with HSA or the PPO?
yeah, but I'm not going to have $143k worth of receipts to claim…i still dont get it
Jarrad, good video, like it. I have been doing this for about 10 years, have never taken any money out, have $85K in my HSA at this time.
One thing I believe you didn't cover is that you can save your un HSA reimbursed health care receipts for all the years you are doing this, then withdraw that total amount at any time, tax and penalty free. I believe I have spent over $50K over the 10 years I have been saving. That $50K is available to me at any time, tax and penalty free. In other words, there is no time limit on submitting receipts. So that is another advantage of this savings method over others like Roth, the money is more accessible in case of an emergency.
My health insurance says I am not qualified. I don't have high deductible healthcare. I have $10000 out of packet expenses.
that's nuts that you just started paying into an HSA this year and know this much and I've been having an account and doing nothing but paying for braces lol. Very informative video. Thank you.
Are foreign receipts from medical expenses incurred overseas accepted?
: )
Hi Jarred, question as i am still learning about this. I have PPO and if my employer (im still checking) do not sponsor HSA you said i have to create my own and have to get HDHP. Is HDHP a plan like PPO too? isn’t it a redundant to have 2 plans? or did i understand it incorrectly?
Giraffe bite?
Jarrad, if your HSA custodian charges a fee to invest your money like HealthEquity you can get around this by opening another HSA with a no-fee custodian like Fidelity or Lively and then transferring all your contributions to that new account.
The only drawback to this is that you have to remember to do this every time there's a contribution and most HSA custodians require a paper form to be faxed or mailed to transfer from HSA to HSA.
I'm trying to figure out the benefit of keeping the receipts for 30 years and using your post tax money now versus just investing your own money in an investment account and using HSA for the medical bill? Genuinely curious I do have an HSA and I'm very fond of any dollar I can keep from having to pay to the government legally.
Good lord I need an HSA
Great info on the hsa
If you don't have access to an HSA pay attention to building your Roth accounts and developing buckets that allow you to control your MAGI. You can then use the ACA and low deductibles as long as it is in existence.
Hello. Thanks for this info. Do you must max the hdhp acct. Each year??
Where can some find a high deductible health insurance plane that’s HSA qualified?
Love the sweet & simple “Time in the market is more important than timing the market” advice
I've been researching this and found your video helpful, my question would be can I start this HSA at a young age but when I have kids switch to a PPO until the children are 3-4 then switch back to HSA? Or do I lose my ability to have the HSA? Thank you