You’ve heard of health savings accounts or HSAs. But who’s eligible? What expenses do they cover? What are their contribution limits? How are they different from FSAs? How can money in the account be invested, and what are the potential tax advantages? On this episode of Money Unscripted from Fidelity Investments, join host Ally Donnelly and Fidelity pro Amy Richardson as they explore ways an HSA could help you now and in retirement. 00:00 Welcome to Money Unscripted 00:58 What is an HSA? 01:23 What is a tr ...

It’s no coincidence that so many people wait until 65 to retire. That’s when Medicare kicks in. Having health coverage at that point can help keep your retirement savings intact — because paying for medical care on your own can drain your funds fast. There are a number of common healthcare expenses Medicare won’t cover. It’s important to know what they are so you can take steps to prepare; namely, by boosting contributions to your health savings account (HSA) or other savings so you have the funds to pay ...

Core Insights - Most Americans face challenges in making wise investments, but following six simple steps can significantly improve their financial future [1][2] Group 1: Investment Strategies - Maximize 401(k) Match: Employees should contribute enough to their 401(k) to receive the full employer match, which is essentially free money. For example, a $100,000 salary with a 100% match up to 5% means contributing $5,000 and receiving an additional $5,000 from the employer [3][4] - Eliminate High-Interest Debt: Prioritizing the payment of high-interest debts, such as credit card debt, can yield significant returns. For instance, paying off a card with a 26.99% APR provides an instant return on investment [4] - Open a Roth IRA: In addition to a 401(k), individuals should consider opening a Roth IRA to enhance their retirement savings. The contribution limit for 2025 is $7,000, with an additional $1,000 catch-up contribution for those aged 50 and over [5] Group 2: Additional Contributions and Accounts - Increase 401(k) Contributions: After maximizing the employer match and addressing high-interest debt, individuals should contribute more to their 401(k). The contribution limit for 2025 is $23,500 [6] - Utilize Health Savings Accounts (HSA): Contributing to an HSA is recommended due to its triple tax benefits, which include tax-deductible contributions, tax-free growth, and tax-free withdrawals, making it a powerful investment tool [7][8]

Many money experts are quick to differentiate between high-income earners and wealthy people. A six-figure salary does not necessarily mean that a person is rich, particularly if they do not know where to put their money. Often referred to as HENRYs (High Earners, Not Rich Yet), these individuals are in a top-tier income bracket but may be making money mistakes that keep them from becoming truly wealthy. Explore More: 5 Key Mindset Shifts To Financially Become the Top 1%, According to Humphrey Yang Check O ...

Core Insights - The article emphasizes the importance of planning for various expenses that can significantly impact retirement savings, highlighting the need for a comprehensive investment strategy as individuals approach retirement age [2] Group 1: Healthcare - Out-of-pocket healthcare expenses can be substantial even with Medicare, with many financial experts suggesting that individuals need at least $1 million saved for a comfortable retirement due to high medical costs [3] - It is recommended to have a health savings account (HSA) or similar fund for medical expenses, along with regular reviews of health insurance and consideration of supplemental insurance to mitigate costs [4] Group 2: Homeownership - Homeownership can lead to significant expenses in retirement, particularly as homes age and require costly repairs such as roof replacements or plumbing fixes [5] - Setting aside a home maintenance fund and conducting regular home inspections are advised to anticipate and manage these costs effectively [6] Group 3: Inflation - Inflation poses a risk to future savings, necessitating larger withdrawals to maintain living standards, especially if the investment portfolio relies heavily on fixed income strategies that do not keep pace with inflation [7] - To combat inflation, it is suggested to invest a portion of the portfolio in stocks that historically yield better returns than bonds and cash, while maintaining a diversified portfolio for long-term benefits [7]

Core Insights - Many middle-class Americans face financial challenges in retirement, often finding their savings insufficient to maintain their desired lifestyle [1][2] Investment Strategies - Maximize contributions to employer-sponsored retirement plans such as 401(k) or 403(b), especially taking advantage of any matching contributions offered by employers [4] - Consider Roth IRA conversions, which allow for tax-free withdrawals during retirement after paying taxes on the transferred amount, keeping in mind the five-year rule for withdrawals [5] - Maintain a balanced portfolio of stocks and bonds as retirement approaches, with a common recommendation of 60% stocks and 40% bonds, adjustable based on individual risk tolerance [6] - Utilize Health Savings Accounts (HSAs) if eligible, as they offer tax benefits for medical expenses, which are significant for retirees [7]

Group 1 - The article discusses the increasing use of AI tools, particularly ChatGPT, for financial advice, with approximately half of Americans utilizing AI for personal finance management [1] - ChatGPT provides legal strategies for Americans to minimize their tax liabilities, emphasizing the importance of retirement and healthcare savings [2] - The AI suggests maximizing contributions to retirement accounts, such as 401(k) plans and traditional IRAs, with the 2025 contribution limits being $23,500 for 401(k) and $8,000 for traditional IRAs [2] Group 2 - ChatGPT highlights the benefits of Health Savings Accounts (HSAs), noting their triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified health expenses are not taxed [3] - The AI emphasizes the importance of tax credits, which can significantly reduce tax bills, mentioning specific credits like the child tax credit, earned income tax credit (EITC), and the American Opportunity Credit for college expenses [4] - Tax-loss harvesting is presented as a strategy to reduce taxable gains, allowing investors to offset capital gains with losses, up to a maximum of $3,000 of ordinary income [5]

Core Insights - Earning a six-figure salary is not a prerequisite for retiring wealthy; commitment and planning are essential [1][2] Group 1: Saving Strategies - Prioritizing early savings is crucial, as time in the market allows for growth and risk tolerance [4] - It is recommended to save 15% to 20% of income, starting with what is feasible and increasing over time; utilizing employer-sponsored 401(k) plans can enhance savings through employer matches [5] - Tax-advantaged accounts like 401(k)s and IRAs are beneficial for those earning under $100,000, with Roth IRAs offering tax diversification advantages [6][7] Group 2: Investment Approaches - Focusing on low-cost exchange-traded funds (ETFs) can improve investment outcomes; health savings accounts (HSAs) are also valuable for managing healthcare costs in retirement [8] Group 3: Spending Control - Monitoring spending and avoiding unnecessary debt are vital for a comfortable retirement; living below means is a common trait among those who successfully build wealth on lower incomes [9]

Core Insights - Rising health insurance costs are projected to increase by 6.5% on average in 2026, marking the largest increase in 15 years [5][4][3] - The increase in health insurance costs is attributed to higher healthcare prices, increased utilization of services, and inflation [2][8] - Younger populations are experiencing health issues traditionally associated with older age groups, contributing to rising healthcare costs [1][6] Group 1: Cost Trends - Health benefit costs are rising due to two main factors: healthcare price increases and higher utilization rates [2] - A survey indicated that health benefits per employee could rise by 6.5% next year, with a potential 9% increase if employers do not implement cost-cutting measures [5][4] - The Business Group on Health reported a 7.6% increase in costs after cost-cutting, while Aon predicted a 9.5% increase [4] Group 2: Utilization and Health Issues - There is a noted increase in the utilization of obesity medications, which could rise by another 15% [7] - The prevalence of serious health conditions, such as cancer and heart issues, is increasing among younger individuals [1][6] - Virtual healthcare services are contributing to higher utilization rates by removing geographic barriers [2] Group 3: Financial Impact on Consumers - Nearly half of U.S. adults find it difficult to afford healthcare, with 36% postponing necessary treatments due to costs [9] - The anticipated increase in health insurance costs will likely lead to higher paycheck deductions for employees, estimated at 6% to 7% in 2026 [3][5] - Employers are responding to rising costs by increasing deductibles and cost-sharing provisions, resulting in higher out-of-pocket expenses for employees [3]

Financial Data and Key Metrics Changes - Revenue increased by 9% year over year, with net income up 67% and adjusted EBITDA up 18% to an all-time quarterly high [6][22][24] - Gross margin reached a record 71%, up from 68% in the same quarter last year, with adjusted EBITDA margin near record levels at 46% [6][22][24] - HSA assets grew by $3.7 billion year over year, with total accounts exceeding 17 million [6][7][22] Business Line Data and Key Metrics Changes - Service revenue increased by 1% to $117.9 million, while custodial revenue grew 15% to a record $159.9 million [22] - Interchange revenue grew by 8% to $48.1 million, indicating increased member contributions and distributions [22] - HSA accounts grew by 6%, and CDB accounts grew by 4%, driving total accounts up by 5% [6][22] Market Data and Key Metrics Changes - The labor market is underperforming relative to expectations, impacting hiring rates [7] - The budget bill passed in July expanded HSA eligibility, allowing more families access to HSAs, which is expected to drive future growth [15][17][19] Company Strategy and Development Direction - The company is focusing on enhancing consumer experiences through a mobile-first strategy and improved security measures [10][13] - Investments in AI technology are aimed at automating claims processing and enhancing member satisfaction [10][11] - The company is preparing for a busy growth season by leveraging improved data analytics and upselling opportunities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong early indicators for new enterprise wins and client retention [8][9] - The company is confident that the recent legislative changes will significantly expand the market for HSAs, potentially allowing 3 to 4 million more families access to HSAs [19][20] - Management acknowledged the challenges posed by the current macroeconomic environment but emphasized the strength of their value proposition in helping employers manage healthcare costs [86][88] Other Important Information - The company repurchased approximately $66 million of its outstanding shares during the quarter, with $352 million remaining on its repurchase authorization [25][30] - The introduction of passkey authentication is expected to enhance security and improve the member login experience [12][13] Q&A Session Summary Question: Any milestones regarding HSA fraud? - Management highlighted ongoing improvements in member security and the introduction of PassKey for better authentication, with no specific milestones identified [34][35] Question: Future legislative opportunities for HSA reform? - Management noted the recent HSA expansion as significant and expressed intent to pursue further opportunities in future legislation [37][40] Question: Impact of interest rate changes on custodial revenue? - Management refrained from specific modeling but acknowledged that placement rates will depend on market conditions at the time of asset placement [102][104] Question: Increase in service gross margin? - Management attributed the increase to efficient service delivery and investments in technology, with ongoing efforts to automate processes [98][100] Question: Implications of rising healthcare premiums on HSA enrollment? - Management indicated that rising healthcare costs strengthen the value proposition for HSAs, potentially leading to increased enrollment [86][88]