Eric Brotman, Contributor
July 21, 2020
As a financial advisor, nothing is more disheartening than giving someone the advice that could change their life and watching them ignore it. In over two decades of advising clients, here are my suggestions that most often went ignored—but you can listen to.
Save and invest in an HSA
A Health Savings Account is arguably the best and most underutilized retirement savings vehicle available for Americans. Money goes into this account pre-tax, and, if used for a qualified health expense, can be withdrawn without being subjected to taxes. It is the only type of account in which your money will NEVER be subjected to taxes.
While HSAs are used by many to cover health care expenses, few people take full advantage of the tax and retirement planning aspects of these accounts.
The money you put into an HSA doesn’t have to just sit there like a savings account. The funds are investable. If you’re able to afford your day-to-day health care expenses without touching this account, you can continue to add funds while letting it grow exponentially throughout your lifetime.
Health care costs are generally higher during retirement, so having access to a pile of tax-free money once you retire will take a massive weight off your shoulders.
Have a plan for long-term care expenses
Nobody likes thinking about getting old, but once you get there, you’ll be thanking your younger self for being prepared. Having a plan for long-term care should you need it will be a gamechanger when the time comes.
Medicare does not cover most of the expenses related to long-term care. Look into long-term care insurance or at least follow my first piece of advice and start investing in an HSA early so you have available funds when needed.
Update your estate plan and beneficiary designations regularly
There is one thing everyone should have once they turn 18: a power of attorney. But who you entrust with this role at 18 may not be the same person you’d want in charge of your decisions at 28, 48 or 68.
The same goes for your beneficiary designations. Maybe you named your spouse to inherit your retirement accounts and subsequently got divorced. Perhaps you named your first child but have had two more since that time.
Reviewing who has legal power over your finances and healthcare decisions and your estate when you die—and who gets your property—is something that should be done every few years to ensure the correct people are named.
Shop your property and casualty insurance regularly
The company you insure your car, house and other property with now does not have to be the one you stay with forever. Research difference options to make sure you’re getting ample coverage for a fair rate. You don’t have to do this at every annual renewal, but shopping insurance companies can pay off if you do it periodically.
Cancel unused subscriptions
Small, automated subscription charges are very easy to forget about—even after you’ve stopped using the services. The gym membership you swore you’d use and the ten-dollar music streaming service you needed when your car radio was broken last year are going to add up.
Make sure you know where your money is going each month and cancel subscriptions that you don’t regularly use. You may also want to turn off the auto-renewal option so that each year you can decide if you’re getting your money’s worth. Since you’re used to these recurring expenses anyway, you can start putting the amounts towards debt or into personal savings each month instead and watch your debt shrink and your savings balance grow.
Think seriously about a prenup
A prenuptial agreement is not a negative thing, and it’s something that should be considered by anyone entering a marriage . Most importantly, those who are getting married for a second time or already have children from a prior relationship should definitely consider a prenup.
Plus, if you’ve inherited money from family, consider keeping it separate from joint funds. In the case that you die before your partner, you’ll probably want your inheritance going to your children and not your widow or widower’s next spouse.
Financial advice is only valuable if you actually take it. Try to learn from the mistakes of others and at least consider one or more pieces of advice on this list.
By Eric Brotman, Contributor
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