Retirement Planning For Young Professionals

"My CPA told me: You don't have to spend your HSA — just let it grow." Last week, I reviewed a client's tax return. They contributed $8,300 to their HSA... and panicked thinking they had to spend it all. They'd been saving receipts all year, planning a December shopping spree for eligible expenses. I stopped them cold: "That's FSA thinking. Your HSA never expires." That money? Still sitting there, tax-free, compounding. Completely untaxed growth — potentially for decades. Their face when they realized their HSA could become a stealth retirement account was priceless. The HSA is the ONLY triple-tax-free account in existence: - Tax-deductible going in (immediate savings) - Grows tax-free (no capital gains taxes ever) - Withdraw tax-free for qualified medical expenses — even decades later And if you don't use it for medical expenses? At age 65, it works like a traditional IRA — withdraw for anything, just pay income tax (no penalties). Here's how to actually win with an HSA: - Max out the contribution every year ($8,300 family limit for 2024, rising to $8,550 in 2025) - Do NOT spend it. Pay medical costs out-of-pocket if you can  - Invest the HSA balance — don't leave it in cash earning nothing - Keep every medical receipt digitally. You can reimburse yourself years later, tax-free - Treat your HSA as part of your retirement portfolio — not a short-term medical fund Remember: The average couple needs $315,000 for healthcare in retirement. Your future self will thank you for this tax-free medical nest egg. If your CPA hasn't explained this strategy to you, you're leaving one of the most powerful tax advantages on the table.

During annual reviews and meetings with new prospective families, I have been reviewing a plethora of 401k plans and documents. I wanted to share my 4 BIG takeaways and provide potential real-life next steps for you to consider. ☑ Don’t Save Too Fast In almost every other area of life, saving and investing more is encouraged. With an employer-sponsored retirement plan, that is not always the case. In many plans, you only get your employer match during the period you make contributions. In other words, if you max out your plan before the final paycheck of the calendar year, you could be forfeiting a portion of the employer match. You must understand your employer's plan. Fortunately, every plan must make a plan document available to you upon request. Your plan provider can provide a wealth of insight with a simple phone call. ☑ Beneficiary Designations While this one might seem obvious, mistakes happen way too often. Find the beneficiary tab of your employer plan online and confirm you have the correct beneficiaries. Common mistakes: parent instead of a spouse, ex-spouse, minor children ☑ Breaking Up with Your Target Date Fund For most employer-sponsored retirement plans, your investment contributions go to a target date fund by default. This is based on the year that you turn 65. For example, if you were born in 1980, your default investment option might be the ABC Target Date 2045 Fund. I do not think a person’s age should determine how their investments should be allocated. On average, I see that the average expense ratio in large employer plans is generally 0.40 to 0.45%. Inside the TDF, the fund allocates the funds to a combination of U.S. and International Stocks, Bonds, and cash. If you have a written financial plan, it should detail the investment asset allocation to help you optimally pursue funding your dreams. This could often be achieved by selecting 3-5 index funds without your 401k lineup. I see that passive index funds have an average expense ratio of 0.05%. ☑ Rebalance and Redirect When changing from target-date funds to your own mix of index funds, there are essentially 3 critical steps. First, you need to rebalance your existing holdings to the desired mix. Second, you need to re-direct future contributions to the desired mix. Finally, you need to select a date to do an annual rebalance. Hopefully, the plan provider will have an option for you to select to make this happen automatically. ★ Conclusion In a recent Vanguard study, Vanguard attempted to quantify the value of advice. They suggest that financial planners can add .45% of value by recommending low-cost index options and .35% for rebalancing. Hopefully, by reading this post, you improved your lifetime annual returns by 0.80% per year. Cheers, Nic #National401kDay

Is your retirement plan inflation-proof? Without the right strategy, even modest inflation rates can drain your financial future. Here's how you can shield your savings with these 5 strategies: 1. Maximize contributions to retirement accounts, including catch-up contributions closer to retirement. Consistently build assets to offset inflation. 2. Invest savings in assets with a history of outpacing inflation, like stocks. Smart asset allocation is key to growth. 3. Delay Social Security benefits as long as possible. This guarantees larger inflation-adjusted income later. 4. Work longer to keep building savings and delay withdrawals. More growth time helps compounding overcome inflation. 5. Build flexibility into your retirement budget to adjust withdrawals based on how conditions unfold. Remember, inflation doesn't rest, and neither should your planning. Leverage compound growth and adaptability now... And secure the freedom your future deserves. 

When we talk about the best perks of a 401(k), compound interest often takes center stage. But today, I want to shine a light on my personal favorite aspect of this retirement savings vehicle: The tax advantages. Contributions to a traditional 401(k) are made with pre-tax dollars, reducing your total taxable income. Here's how it works in practice: 🤑Imagine you earned $80,000 a year in 2023 as a single filer, putting you in the 22% federal tax bracket. Normally, you'd pay $9,861 in taxes. But what if you saved 15% of your income in your employer-sponsored 401(k)? Your tax bill would fall to $7,221 — resulting in $2,640 total tax savings all because of your 401(k) contributions. This approach has helped me see the full picture of my wealth and informed other investing strategies. 📊For example, I now save the equivalent of what I save in taxes in a Roth IRA, helping to diversify the amount of income I can rely on in retirement. Admittedly, this is something I discovered much later in my financial journey — lessons I'm sure other younger generations are also learning. About a third (32 percent) of Gen Z and millennials say they wish they knew more about investing as a way to build wealth, versus 22 percent of Gen X and baby boomers, according to a Bankrate survey from earlier this year. But I'm continually impressed with the inclination young Americans have for investing. Younger generations were more likely to say they contributed more, not less, into their retirement accounts in the 12 months since August 2022, a Bankrate survey published in September 2023 found. Those steps are bound to pay off: Americans are most likely to say not saving for retirement early enough is their top financial regret (22%), followed by not saving enough for emergencies (18%), among others, the latest Bankrate data shows. On this National 401(k) Day, what are the tips/strategies you've found most helpful when saving for the future? Let me know in the comments! #National401kDay https://lnkd.in/dyDJsAFv

Retirement isn’t just about saving it’s about strategizing. But too many professionals make mistakes that put their future at risk. Here are three critical mistakes to avoid: ❌ Not knowing how much you actually need. Most people underestimate what it will take to retire comfortably. Without a clear number, you could either outlive your savings or limit your lifestyle unnecessarily. ❌ Not accounting for inflation. If your retirement plan doesn’t factor in inflation, your purchasing power shrinks over time—meaning your savings won’t go as far as you think. ❌ Failing to adjust your portfolio as you near retirement. A downturn at the wrong time could erase years of hard work if you don’t transition your portfolio appropriately. Which of these mistakes are you at risk of making? Let’s review your plan and make sure you’re on track for the retirement you deserve. 📩 Shoot me a message, and let’s talk.

Young Salespeople, If you're making decent money for the first time in your life... 1. Don't spend your entire paycheck the week you get it. Setup auto deposits into investment accounts and don't touch that money. Let it earn for you. 2. Don't advance your lifestyle just because your paycheck is increasing. If you stay on that path you'll never accumulate real wealth. You'll enjoy a few steak dinners, fancy clothes, and a nice car along the way. None of which you'll remember in the end. 3. Start thinking long-term. Get life insurance, open a Trad IRA, Roth, and 401k. Invest more in your future than you do in your present. Impressing your friends or capturing that misleading Instagram photo will mean nothing 20-30 years from now. 4. Live a minimalist lifestyle in exchange for compounding interest. The longer you wait to save, the more potential interest you're throwing away. You won't get rich from your salary, you will through saving and investing. - save automatically - invest intentionally - spend only when necessary Plan for retirement. If you're smart about it, it can be an early one. Enjoy a little now, or a lot later. The people who never become wealthy are the people who act like they already are.

What accounts should you focus on building first to setup yourself up to be in a good spot financially? Here's a prioritized list to guide you: - Emergency Fund: Start by building an emergency fund that covers 3-6 months of living expenses. This is financial safety net, providing you with the liquidity needed to handle unexpected expenses such as medical emergencies, car repairs, or job loss without going into debt - Retirement Plan with Company Match: If your employer offers a retirement plan with a company match, prioritize contributing enough to get the full match. This is essentially free money that boosts your retirement savings. Take advantage of this benefit to maximize your long-term financial growth. - Health Savings Account (HSA): If you're eligible for an HSA, it's a powerful tool for tax-advantaged savings. Contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. - Roth IRA/Backdoor Roth IRA: After maximizing your employer match and contributing to your HSA, consider funding a Roth IRA. Contributions to a Roth IRA are made with after-tax dollars, but the account grows tax-free, and qualified withdrawals in retirement are also tax-free. This can provide you with tax diversification and flexibility in your retirement planning - Taxable Brokerage Account: Once you've taken advantage of tax-advantaged accounts, consider investing in a taxable brokerage account. This account offers flexibility with no contribution limits or early withdrawal penalties, making it a great option for additional savings and investment goals. You also can get long term capital gains rates - Go back to your 401(k) and max it out By prioritizing these accounts, you can really set yourself up well

The one skill every college student should master before graduating? Understanding compound interest. Not just the math. The mindset. Here's what I tell every young professional who walks into my office: Your first job offer might be $50,000. Maybe $70,000 if you're lucky. But the decisions you make in your first decade will determine whether you retire with $500,000 or $5 million. The difference? Time and knowledge. Consider this real example that still shocks my clients: 👉 Graduate A: Starts investing $100/month at 20 👉 Graduate B: Waits until 30, invests $300/month 👉 Both retire at 65 Graduate A ends up with $445,000. Graduate B? Only $406,000. One-third the monthly investment. More money at retirement. That's a 10-year head start worth $39,000, even though Graduate B invested $24,000 more of their own money. But here's what colleges don't teach: ✅ How to read a 401(k) statement (remember those hidden fees?) ✅ Why your first employer match is worth more than a signing bonus ✅ How lifestyle inflation kills wealth before it starts ✅ The real cost of student loan deferment 3 moves every graduate should make Day 1: 1️⃣ Contribute enough to get the full employer match (it's free money) 2️⃣ Automate 10% to savings before lifestyle creep kicks in 3️⃣ Learn one new financial concept monthly The best part? You don't need to be a finance major. You just need to start. Even $100 a month. Even $50. Because compound interest doesn't care about your GPA. It only cares about time. What financial lesson do you wish you'd learned in college? Share below. Follow me for daily insights that connect financial literacy to real-world wealth building. #LinkedInTopColleges #FinancialLiteracy #CollegeStudents #CompoundInterest #FinancialAdvisor

Compound interest is the 8th wonder of the world. I calculated exactly what it takes to reach $1 million by age 65 with a 7% annual return: Early Bird: - Invest $764/month from age 25-35 only - Then... do NOTHING for 30 years Total invested: $91,680 Late Starter: - Wait until age 35 to begin - Invest $855/month until age 65 Total invested: $307,836 Many young professionals tell me they'll start investing "when they're making real money." But often they’ll contribute >3× for the same outcome. Your Challenge: (1) If you're under 35, what can you automate into investments today, even if it seems small? (2) If you're over 35, how can you maximize your contributions now to make up for lost time? Time in the market > timing the market.

If you’re in your 30s and want 1 piece of advice to build wealth. Here's the one rule to remember: "𝗖𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 > 𝗠𝗼𝗿𝗲 𝗰𝗮𝘀𝗵." People are told they can’t touch their retirement accounts until 65. Most think they’re limited to the stock market. For some, that’s worked. But for those wanting more control over money and cash flow, here’s what you can do: 1) Request a rollover to a Self-Directed IRA (SDIRA). 2) Open an SDIRA with a suitable custodian. 3) Transfer funds and invest in real estate. You can transfer your current 401(k) or Roth IRA into an SDIRA. No taxes, no penalties. You’re not withdrawing funds. You're just moving them into a retirement account that gives you investment control. Now you’ve opened the door to: - Real estate. - Syndications. - A range of other investments. All while keeping your retirement benefits. You can earn: 1) Monthly cash flow from tenants. 2) Appreciation as property values rise. 3) Tax benefits like depreciation write-offs. And the best part? All profits from real estate investments in your SDIRA go straight back into the account and compound tax-free. You have options. You just have to know where to look. Have any questions? Feel free to drop them below and I will get them answered. ----- Disclaimer: Always check with your CPA or CFP. All guides and information provided are for informational purposes only. Any information is not a substitute for qualified, professional advice or information from CPAs or Financial professionals.