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Rebalancing Isn’t Just About Stocks: Why Total Wealth Rebalancing Matters

Most people think of rebalancing as something you do with your investment portfolio—tweaking your mix of stocks and bonds to stay on target. That’s important, sure. But if you stop there, you’re missing the bigger picture. Your finances are more than your investment account. Rebalancing your total wealth means checking every part of your financial life to ensure it aligns with your goals. And that can make a much more significant difference than just shifting a few percentages in your portfolio.

Look Beyond the Portfolio

Rebalancing your wealth means reviewing all the areas that affect your financial health, not just your stocks and bonds. That includes things like:

  • Cash Reserves: Are you holding too much cash in low-interest accounts? Or not enough to cover short-term needs?
  • Debt: Is your debt structured in the most efficient way? Could you benefit from refinancing or consolidating?
  • Insurance: Do your insurance policies still match your life stage and responsibilities?
  • Tax Strategy: Have you reviewed tax planning opportunities based on current income, deductions, or investment decisions?
  • Business Interests or Real Estate: If you own a business or property, is its role in your overall plan still effective?

Each of these pieces can shift over time. Life changes, markets move, and your goals evolve. Total wealth rebalancing is about stepping back to assess everything and making thoughtful adjustments.

Why It Matters

When one area of your finances becomes out of sync, it can impact everything else. For example, if you’ve had a significant life change—a new job, a move, an inheritance—your plan needs to reflect that. Even without significant events, your wealth can drift away from your goals due to time or market performance.

Think of total wealth rebalancing as a regular tune-up. It helps you:

  • Stay aligned with your priorities by ensuring your plan reflects what matters most to you.
  • Reduce unnecessary risks by reviewing outdated decisions or overlooked exposures.
  • Maximize opportunities by taking advantage of changes in tax law, interest rates, or your financial position.

It’s not about perfection. It’s about intention. Total wealth rebalancing isn’t just a financial to-do list—it’s a way to keep your entire strategy working for you.

Keep the Big Picture in Focus

At Worth Advisors, real wealth management means looking at every piece of your financial life, not just your investments. Let’s chat if it’s been a while since you looked at the whole picture. We’ll help you step back, review, and rebalance so your strategy fits where you are today and where you want to go tomorrow.

Am I Going to Be Okay? Reassurance in Uncertain Markets

You’ve probably heard it a hundred times: markets are volatile. But when headlines keep hammering on inflation, tariffs, and market swings, it’s natural to pause and wonder—will I be okay? That question doesn’t mean panic. It means you care about your financial future. The good news is that there are clear steps you can take to stay grounded and feel confident, even when the market feels unpredictable.

What to Remember When Markets Get Choppy

Volatility isn’t new. It’s a normal part of investing. Market dips and global events like trade wars and tariff battles come and go. What matters most isn’t what the headlines say today—it’s the strategy you have in place and how you respond to the changes.

Tariffs can impact certain industries, and that can ripple into the stock market. But that doesn’t mean your entire portfolio is in jeopardy. Long-term investors who stay the course are historically the ones who come out ahead. If your investments are aligned with your goals and risk tolerance, short-term swings shouldn’t throw off your long-term vision.

The key is to stay focused on what you can control. That means reviewing your plan, assessing your current situation, and staying diversified. Worry comes from uncertainty, but clarity brings confidence.

Steps You Can Take Right Now

  1. Review Your Plan: Review your financial goals and the strategy supporting them. Is your portfolio built to weather different market cycles? Has anything changed in your life that should update your plan? If you’re unsure, now’s a great time to check-in.
  2. Stay Diversified: One of the best defenses against volatility is diversification. Ensure your investments aren’t tied too heavily to one sector or market. Spreading risk is a smart way to manage uncertainty.
  3. Don’t React Emotionally: It’s tempting to make sudden moves when the market drops. But reacting out of fear often leads to bad timing. Market declines are part of the process, and history shows they tend to recover.
  4. Refocus on Long-Term Goals: Think beyond this week or this month. Whether you’re investing for retirement, a house, or your kid’s college fund, stay focused on the bigger picture. Long-term planning wins over short-term guessing.
  5. Revisit Cash Flow and Spending: Volatility is a great reminder to consider your budget. Are you spending in line with your goals? Do you have a cushion set aside for unexpected changes? These habits keep you steady.

Let the Data, Not the Headlines, Drive Your Decisions

It’s easy to get swept up in the emotion of the news cycle. But the truth is, markets always respond to new information and often bounce back faster than people expect. If tariffs shift or policies change, markets will adjust. What matters is that your investment approach doesn’t swing with every headline.

A solid plan uses real data, historical trends, and proven principles. That’s what helps you stay calm when everyone else is nervous. Your financial goals are unique, and your plan should reflect that. That’s why personalization and regular review matter more than ever.

You’re Not Alone in This

At Worth Advisors, financial peace of mind comes from clarity, preparation, and partnership. If you’re asking, “Am I going to be okay?”—that’s not a sign of weakness. It’s a sign that you’re ready to take your financial future seriously. Let’s talk about where you are, where you want to go, and how to keep you on track through whatever the market brings.

No Pain, No Gain

It’s no secret that the exceptional market returns over the last two years have been driven primarily by a handful of the largest technology companies in the U.S. markets. Recent market volatility, which has been triggered by tariffs and breakthroughs in Artificial Intelligence (AI) by a Chinese technology company, is a reminder that even the strongest of bull markets can suffer corrections, especially when market-leading stocks are priced to perfection.

It’s often been said that “uncertainty breeds market volatility”. Since making new all-time highs earlier this year, the U.S. equity markets are providing a real-time example of this belief. While the current state of the markets is both elevated and unwelcome, volatility is a reality that equity investors must endure.

So, how did we get here? Short answer – Government spending has grown faster than the Gross Domestic Product (GDP). As of March, the current U.S. national debt is approximately $36.2 trillion. The current U.S. annual budget deficit is approximately $1.8 trillion. Government spending is now in the 20% to 25% range of GDP and the Federal Reserve balance sheet, along with the M2 money supply, has ballooned accordingly. 

The resulting inflation from all of the Government money in the system has had a positive effect on those who own assets (stocks, real estate, etc.), as asset prices have moved higher. However, inflation has a negative effect on consumers (basically a tax) as well as the overall economy. The days of ‘easy’ money are over, as are the days of the U.S. Government printing and spending at the onset of every new ‘crisis.’ 

Enter a new administration with an ambitious new agenda. Reminiscent of 1981 when Ronald Reagan (after defeating Jimmy Carter in the 1980 election) inherited an economy with double-digit inflation and interest rates hovering near 20%. Like Reagan’s economic plan, the Trump administration will attempt to encourage economic growth by enacting pro-growth policies, reducing government spending, and cutting tax rates. One difference is that when Reagan took office, facing a severe recession, the Price Earnings Multiple (PE Ratio) on the S&P 500 index was 8.5. Conversely, the Trump administration takes over an S&P 500 index, fueled by government spending and inflation, at all-time highs and a PE ratio of 27. 

The uncertainty surrounding the Trump administration’s tariff policies will invariably have some effect on inflation, supply chains, employment, economic growth, and corporate profits. President Trump’s announcement of the tariffs sent the markets reeling back into correction mode, sending the major indexes down approximately 4% – 6%. The sweeping tariffs-which include an across-the-board 10% tariff on imports and will top 50% for some countries, including China- far surpassed what most analysts anticipated. Volatility has spiked, and recession fears have been elevated. Some of these tariffs may be well intended, such as a necessity to combat other countries that have abused their trading status with the U.S. While any reconfiguration of the world economic order will come at a cost, the establishment of a new landscape will allow corporations to regain confidence and begin investing within the new framework. Any such transitions usually create new investor opportunities as companies adjust their operations. As a general rule, though policy and economic uncertainty are difficult for both CEOs and investors alike, we are usually better served to focus on actual data rather than get caught up in the multitude of theories as to what might happen in the wake of a change in policies.

As we digest the never-ending stream of breaking news, we must always try to discern between the short-term headlines and the longer-term structural trends. Market corrections occur regularly. Over the past 40 years, the S&P 500 index has seen a drop of at least 10% in 18 of those years. Since 2000, after the S&P 500 has experienced a correction of at least 10%, the average total return over the following 3-year period was 35%. And looking back to 1928, the S&P 500 index has been positive 73% of the time; an average of 3 years out of every 4. 

Many investors tend to overreact to volatility, decreasing their exposure to risk assets in the markets. Over the long term, this can be a mistake. This is especially true today as the U.S. and the rest of the world are on the verge of an AI-driven revolution, a theme that has just gotten considerably cheaper to access. Technology is changing the world faster than most anticipated.  Productivity and automation are soon to follow. These expectations could arguably be recognized and reinforced by economies across the globe.

Uncertainty about U.S. policy will remain high. We assume a slowdown in U.S. economic growth, and a negative impact on inflation. We can also assume a significant effect on countries outside the U.S. And let’s not overlook the existing geopolitical risks as the conflict in the Middle East continues, and a resolution to the Russia-Ukraine war remains uncertain.    

If anything, our economy is resilient, though we now see the economy slowing to 1% – 1.5% in 2025 as higher tariffs weigh on disposable income, consumer spending, and business investment. We expect core PCE inflation will remain sticky at approximately 3.5% – 3.75%, still above the Federal Reserve’s 2% objective. The market is currently pricing in 2 – 3 interest rate cuts by the Federal Reserve this year. So, we do see a softening economic environment, but not a recession at this point in time. We will, as will the entire industry, continue to monitor policy developments and their potential impact on economies and corporations across the globe.

Having Financial Goals and a Plan to Achieve Them Matter More Than You Think

Let’s be honest—money is one of the biggest factors shaping our daily lives. Whether you’re thinking about retirement, buying a home, or just making sure you can take that vacation next summer, how you handle your finances determines what’s possible. Yet so many people move through life without a clear financial direction. They make money, spend money, and hope it all works out. But hope isn’t a strategy. If you want financial security and the freedom to make choices that matter, you need two things: a goal and a plan to get there.

The Power of Financial Goals

Financial goals give you purpose. They help you take control of your money rather than letting your money control you. Here’s why they matter:

  • Direction: Without goals, your money lacks purpose. Clear objectives help you stay on track.
  • Motivation: Goals keep you focused, even when temptations arise to spend on things that don’t align with your priorities.
  • Measurability: When your goals are specific, you can track your progress and celebrate milestones.
  • Decision-Making: When faced with financial choices, having goals in place makes it easier to determine the right path.

Good financial goals follow the SMART framework—Specific, Measurable, Achievable, Relevant, and Time-bound. Instead of saying, “I want to save money,” set a SMART goal: “I will save $5,000 for an emergency fund within 12 months.” This gives you a clear target and a timeframe to make it happen.

The Role of Financial Planning

Once you have goals, you need a plan to reach them. Without a plan, even the best goals are just wishful thinking. Here’s what a strong financial plan does for you:

  • Roadmap: A plan outlines the steps you need to take to reach your financial goals.
  • Resource Allocation: It helps you determine how to allocate your income effectively.
  • Risk Management: A well-structured plan identifies potential risks and prepares you for unexpected challenges.
  • Flexibility: Life happens—your plan should be able to adapt along the way.

A solid financial plan includes budgeting, saving, investing, debt management, and insurance. It’s not something you set and forget. As your life changes, your plan should evolve too.

Goal-Setting and Planning in Action

Let’s say your goal is to buy a house in five years. Here’s how setting a SMART goal and creating a financial plan work together:

  1. Set the SMART Goal: “Save $50,000 for a house down payment within 5 years.”
  2. Break It Down: That means saving $10,000 annually or about $833 monthly.
  3. Create a Plan:
    • Review your budget and cut unnecessary expenses.
    • Set up automatic transfers to a high-yield savings account.
    • Explore ways to increase income, like a side hustle or negotiating a raise.
    • Invest a portion of the savings for potential higher returns.
  4. Monitor and Adjust: Regularly check progress and make adjustments as needed.

This structured approach ensures that a daunting goal becomes manageable and achievable.

Common Pitfalls and How to Avoid Them

Even with the best intentions, common mistakes can derail financial success. Here’s what to watch out for:

  • Setting Unrealistic Goals: Be ambitious, but make sure your goals are attainable to avoid frustration.
  • Not Sticking to Your Budget or Goals: As Sy Pugh puts it, “What is the purpose of setting a goal if you do not have plans to attain it in the first place?”
  • Neglecting to Review and Adjust: Financial plans should change as your life does.
  • Focusing Only on Long-Term Goals: Balancing short-term and long-term financial priorities keeps you healthy.
  • Being Too Prideful to Seek Help: There’s no shame in getting guidance when you need it.

Ready to Take Control of Your Financial Future?

Financial goals and a solid plan can mean the difference between drifting through life and achieving real financial security. If you’re ready to take charge of your finances, Worth Advisors is here to help. Let’s build a strategy that aligns with your goals so you can confidently move forward.

Effective Ways of Paying Off Debt

Debt doesn’t just weigh on your wallet; it can take up space in your mind. Late-night worries, second-guessing purchases, and feeling stuck are all too everyday. The good news? Paying off debt isn’t about having a secret formula—it’s about action, consistency, and smart choices. Debt doesn’t define financial success; how you handle it does. Building a plan tailored to your situation turns financial stress into financial freedom. No matter the amount owed, decisive action and commitment create a path forward.

Practical Strategies Anyone Can Use 

Prioritize high-interest debt. Credit cards and payday loans often have steep interest rates that quickly grow balances. Tackling these first reduces the amount you’ll pay over time. Start with the highest interest rate account and work your way down—this approach saves money and accelerates the payoff timeline. It’s like plugging the most significant leaks in a sinking ship; addressing them first keeps everything afloat. Consistently focusing on these costly debts shortens repayment periods and frees up cash for other goals.

For those who crave quick wins, the snowball method works wonders. It involves paying off the smallest debts first while making minimum payments on more significant balances. Each small victory builds confidence and momentum. Motivation grows as the number of debts shrinks. This psychological boost makes a difference when repayment feels overwhelming. The snowball method transforms what feels like a marathon into a series of achievable sprints, keeping morale high throughout the process.

Make more than the minimum payment. Minimum payments prolong debt and increase interest costs. By paying extra—even a small amount—you chip away at principal balances faster, slashing the total amount paid in the long run. Small sacrifices today lead to significant savings tomorrow. Think of it as speeding up the clock on financial freedom. Cutting down the repayment timeline by months or even years brings debt relief into the near future. 

Creating a budget sets the foundation for any debt repayment plan. Budgets don’t restrict freedom; they provide clarity. Identify how much you can allocate toward monthly debt by tracking income and expenses. 

Pair this with an emergency fund so unexpected expenses don’t force you to rely on credit cards, undoing your hard work. A well-constructed budget ensures debt repayment stays on track while leaving room for essential expenses. Incorporating an emergency fund acts as a financial buffer, preventing unexpected costs from derailing progress and offering peace of mind during repayment.

Approaches For Long-Term Debt Management 

Debt consolidation can streamline your payments and reduce interest rates. Consolidating debt into a single loan with a lower interest rate simplifies repayment and reduces overall costs. This approach reduces the mental load of juggling multiple due dates and payment amounts. 

However, it only works when paired with disciplined financial habits—consolidation without behavior change leads to repeated debt cycles. Borrowers should also compare consolidation loan terms to ensure they save money in the long run. With the right strategy, consolidation can be the bridge from debt management to wealth-building opportunities.

Equally important is resisting the temptation to take on new debt during repayment. It’s easy to undo progress by slipping back into old patterns. If spending habits aren’t adjusted, new debt can pile on top of existing balances, making repayment harder. Commitment to avoiding additional debt is critical for lasting results. This requires building better financial habits, such as

delayed gratification and mindful spending. Breaking the debt cycle means eliminating current balances and adopting sustainable financial behaviors for the future.

Sometimes, seeking professional help is the best move. Financial advisors and certified credit counselors offer guidance, accountability, and strategies tailored to specific situations. Experienced advice can distinguish between years of debt stress and a clear path forward. Experts can help analyze your debt situation, recommend suitable repayment plans, and negotiate with creditors if necessary. Partnering with professionals ensures that repayment strategies align with long-term financial goals, making the process more efficient and less daunting.

Building a Stronger Financial Future

Paying off debt isn’t just about numbers—it’s about regaining freedom. Practical strategies, such as prioritizing high-interest balances, embracing the snowball method, budgeting wisely, and considering consolidation, make the path to a debt-free life more apparent. Staying committed means avoiding new debt and seeking help when needed.

Sticking to a structured plan leads to more than just debt elimination—it lays the groundwork for wealth accumulation. A debt-free lifestyle allows for investments in savings, retirement accounts, and other financial growth opportunities. Every step toward eliminating debt builds the confidence and discipline needed to tackle larger economic goals.

Everyone deserves access to actionable financial advice. If you’re ready to move from debt management to wealth building, set up an appointment with Worth Advisors. Your future self will thank you.

The Importance of Financial Goals and a Plan

Whether you earn a modest income or manage multiple revenue streams, setting financial goals and crafting a thoughtful plan transforms how you approach your finances. It’s not about wealth but intentionality and creating a framework for success.

The Power of Financial Goals

Financial goals serve as a compass, giving your resources direction and purpose. Without them, you risk aimlessly spending without a clear sense of progress. Goals provide focus, helping you prioritize what matters most in your financial life.

Consider the motivational boost that comes from having a target. Saving for a rainy day is one thing, but saving $5,000 in 12 months for an emergency fund is an actionable goal with measurable steps. The difference lies in clarity—specific goals allow you to track progress, celebrate milestones, and adjust course when necessary.

Financial goals also guide decision-making. Deciding whether an impulse purchase aligns with your priorities is easier when you know what you’re working toward. Think of financial goals as a filter for spending habits, ensuring every dollar has a purpose.

SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound—are the gold standard. For example, instead of saying, “I want to save for a house,” set a goal like, “I will save $50,000 for a down payment within five years.” Breaking goals into actionable steps makes them achievable and keeps you motivated.

The Role of Financial Planning

If financial goals are the destination, financial planning is the roadmap. A well-crafted plan connects where you are now to where you want to be, offering a step-by-step guide for getting there. Planning helps you allocate resources efficiently, ensuring that your income supports your objectives without unnecessary waste. It also helps manage risk. From insurance to emergency funds, a financial plan identifies potential threats and ensures you have contingencies in place.

For example, budgeting is a key aspect of a financial plan. It allows you to meet your everyday expenses without sacrificing savings. A good plan also accounts for flexibility, allowing you to adjust to unexpected changes like job shifts or market fluctuations.

Imagine saving for retirement while also trying to pay off student loans. A thoughtful plan balances these competing priorities, ensuring progress on both fronts. Financial planning isn’t static; it evolves alongside your life circumstances, making it a dynamic tool for long-term stability.

Common Pitfalls and How to Avoid Them

Potential missteps can derail progress even with clear goals and a solid plan. Avoiding these pitfalls requires self-awareness and a willingness to adapt. One common mistake is setting unrealistic goals. Ambition is commendable, but it needs to be tempered with practicality. Saving half your income might sound good on paper, but you will likely abandon the effort if it leaves you stretched too thin.

Another issue is neglecting to review and adjust your plans. Life is rarely static, and your financial strategy should reflect changes like marriage, children, or career shifts. Periodic reviews ensure your plan remains relevant and practical.

Focusing solely on long-term goals is another trap. While retirement savings are crucial, neglecting short-term needs like building an emergency fund can leave you vulnerable to unexpected expenses. Balancing short-term and long-term priorities prepares you for immediate and future needs. Finally, don’t let pride prevent you from seeking help. Financial planning can be complex, and there’s no shame in consulting a professional.

Financial Planning Is For You; It’s For Everyone

Financial goals and planning aren’t just for those with significant assets—they’re for anyone who wants to control their financial future. Setting clear objectives and crafting a plan creates a framework for making informed decisions and reaching milestones. Avoiding common pitfalls ensures that your efforts lead to lasting success.

Worth Advisors can help guide you toward a financial future that aligns with your goals and values, whether you’re just starting or refining an existing strategy. Let’s create a plan that works for you because everyone deserves the confidence that comes with financial clarity. Set up a meeting with us so we can support you and your financial goals.

The Power of Compound Interest in Tax-Advantaged Accounts

Compound interest is a key factor in building wealth over time. Unlike the myth surrounding “timing the market,” compounding interest will work for everyone. It becomes an even more powerful financial tool when combined with tax-advantaged accounts. These accounts allow your money to grow without annual tax interruptions, helping you to maximize the benefits of compounding. Understanding how these two elements work together can help you make better decisions for your financial future.

The Magic of Compounding Interest

Compound interest is earning interest on both your initial investment and accumulated interest. Over time, this creates exponential growth. The longer your money remains invested, the more significant the compounding effect becomes.

For example, if you invest $100 in an account earning 5% annual interest, you’ll have $105 after the first year. In the second year, the 5% applies to $105 instead of just $100. 

This “interest on interest” creates a snowball effect. A portion of your growth is often lost to taxes every year in taxable accounts. This reduces the compounding effect because the taxed amount is no longer working for you. In contrast, tax-advantaged accounts like IRAs or 401(k)s let your investments grow tax-deferred or tax-free, allowing the total value to compound. This uninterrupted growth can lead to significantly higher returns over the long term.

How to Maximize Your Return Through Tax-Advantaged Accounts

Tax-advantaged accounts provide a framework for maximizing the impact of compound interest. These accounts generally fall into two categories: tax-deferred and tax-exempt.

Tax-Deferred Accounts

Traditional IRAs, 401(k)s, and 403(b)s are tax-deferred accounts. You won’t pay taxes on your earnings until you withdraw the funds. During your working years, you can contribute pre-tax dollars. This effectively allows you to reduce your taxable income for the year. This lowers your immediate tax liability and leaves more money in the account to grow.

The key advantage of tax-deferred accounts is that taxes are typically paid during retirement, when your income may be lower, potentially putting you in a lower tax bracket. This means you’re not only deferring taxes but also paying less in the future.

Tax-Exempt Accounts

Tax-exempt accounts, such as Roth IRAs, are funded with money after you have already been taxed. People are drawn to them because of the growth in the account, and all qualified withdrawals are tax-free. Remember, you may join a higher tax bracket when you get older. These accounts allow you to pay taxes when you deposit, even if you may be a lower one.

Your Roth IRA will grow tax-free for decades. Even if your investments generate substantial returns, you won’t owe taxes on those earnings when you withdraw the funds. This allows you to keep more of your compounded growth.

Maximizing Contributions and Starting Early

The benefits of compound interest grow exponentially with time, making it crucial to start as early as possible. You can take full advantage of compounding and tax benefits by consistently contributing the maximum allowable amount to tax-advantaged accounts each year.

For example, in 2024, the IRS allows up to $23,000 in contributions to a 401(k) for individuals under 50, with an additional $7,500 for those aged 50 and older. Similarly, IRAs have a $7,000 limit for individuals over 50. Maximizing these contributions yearly creates a larger principal base for compounding, translating into more significant growth over time.

Take Action to Secure Your Financial Future

Combining compound interest and tax-advantaged accounts is a proven way to grow wealth efficiently. By allowing your investments to grow uninterrupted by taxes, these accounts amplify the effects of compounding and provide a clear path to long-term financial success.

If you’re ready to learn how tax-advantaged accounts work, schedule a consultation with Worth Advisors today. We can help you create a strategy that maximizes your savings and puts you on track to achieve your goals.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, which, when sold, may be worth less or more than their original cost.

How to Combine an HSA with Other Retirement Accounts

A Health Savings Account (HSA) can be a valuable tool for managing healthcare costs and boosting retirement savings. It offers tax advantages that can complement other retirement accounts, like an IRA or a 401(k). Combining an HSA with these accounts can help you maximize your savings potential and reduce your overall tax burden. Here’s how to make the most of your HSA while planning for retirement.

What Is an HSA?

An HSA is a savings account for people with high-deductible health plans (HDHPs). Contributions to an HSA are tax-deductible, reducing your annual taxable income. Funds in the HSA can be used tax-free for qualified medical expenses, and unlike some other healthcare accounts, the money rolls over year after year.

HSAs also offer flexibility. You own the account, so the funds remain yours if you change jobs or retire. There’s no requirement to spend the money within a specific time frame. After you turn 65, you can withdraw money that can be used for non-medical expenses without facing a penalty.  (Those withdrawals will be taxed like ordinary income.)

How Does an HSA Work with Retirement Planning?

An HSA can be used alongside other retirement accounts, such as an IRA or a 401(k), to maximize savings. Here are a few strategies for combining them effectively.

Rolling Over IRA Funds into an HSA

The IRS authorizes you to do a one-time rollover from your IRA into your HSA. This increases your HSA’s balance without requiring additional out-of-pocket contributions. This is what is commonly referred to as a qualified HSA funding distribution. It’s important to note that the amount you roll over counts toward your HSA contribution limit for the year. In 2024, that limit is $4,150 for individuals and $8,300 for families.

To avoid penalties, you must stay enrolled in a high-deductible health plan (HDHP) for 12 months after making the rollover. If you lose eligibility before the 12-month period ends, you must pay income tax on the amount transferred, plus a 10% penalty. This process can be an excellent way to transfer funds from an IRA, especially if you anticipate high medical expenses in retirement and want to take advantage of tax-free withdrawals for qualified healthcare costs.

Maximizing Tax Benefits

An HSA is rare because it offers tax-free contributions, tax-free growth, and tax-free withdrawals for medical expenses. These benefits make it an effective complement to traditional retirement accounts like IRAs or 401(k)s, which are typically taxed when withdrawals are made. Contributing to an HSA and an IRA or 401(k) can lower your taxable income in the short term and save for healthcare and general retirement needs.

For example, if you have a 401(k) or IRA, the funds you withdraw in retirement are subject to taxes. However, withdrawals from your HSA for qualified medical expenses remain tax-free, even in retirement. This means you can cover healthcare costs without reducing your taxable retirement income.

Rolling Over 401(k) Funds

While you cannot directly roll over a 401(k) into an HSA, there is a workaround. You can roll over your 401(k) into a traditional IRA and then make the one-time IRA-to-HSA transfer. This can help you shift funds from a taxable account into a tax-advantaged HSA for future healthcare needs. (This will still count toward your annual HSA contribution limit.)

People may do this when they get closer to retirement and want to ensure they have enough saved for healthcare expenses, which can be a significant cost during retirement. Moving funds from a 401(k) or IRA into an HSA allows you to take advantage of the tax benefits that HSAs offer.

Other Important Considerations

Consider contribution limits and IRS rules when combining HSAs with other retirement accounts. For example, any IRA-to-HSA rollover counts toward your HSA contribution limit for that year, so it’s important to plan accordingly. You must also maintain eligibility for the HSA by staying enrolled in an HDHP for at least 12 months after the rollover to avoid penalties.

While HSAs offer many tax advantages, balancing your contributions between an HSA and other retirement accounts like an IRA or 401(k) is important. HSAs are best used for future healthcare costs, whereas IRAs and 401(k)s are more flexible for general retirement expenses. Having a mix of accounts can help you optimize your savings for healthcare and living expenses in retirement.

Let’s Build Your Wealth Together 

You can create a more comprehensive retirement strategy by combining an HSA with other retirement accounts. To explore the best options for your situation, schedule a consultation with Worth Advisors today.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, which, when sold, may be worth less or more than their original cost.

How To Travel For Free

If you have ever read our blog or interacted with us, you will have heard us warn you against making short-term financial decisions. Think about when you or someone else has had a bad day and opted to buy something. It may not have been as extravagant as a car or luxury watch, but it’s priced low enough to make you think you can get away with it. You know it’s more than you can afford, but you talk yourself into it. 

This same line of thought often applies to traveling. The upside of this post is that we’re not telling you not to travel or to give yourself a break, but we will explain how you can take advantage of specific benefits, travel for free, and not overextend yourself. 

Here’s the Logic Behind Traveling for Free

Some people only use their debit card rather than a credit card because it ensures they only spend what they have in the bank. This is a disciplined approach, but there are other ways to apply it. When your favorite store determines a price for the product, they usually include the credit card’s surcharge fee. The amount you pay incorporates this fee regardless of whether you pay cash, debit, or credit card. Why not get something back for this added charge?

Before we tell you to use a credit card, it is paramount that you understand that you can only spend what you have in the bank. You must apply the same rigid discipline as you would if using cash. Otherwise, this tip will not work. Use your credit card and pay it off in full each month. Doing this allows you to take advantage of the credit card’s reward system without being negatively impacted. You can use several different cards that will enable you to travel based on the rewards they offer. Before providing examples, we must insert that we are not advocating for these cards. We are simply showing some of the possibilities. You should research other cards before committing to any of them. 

Chase Sapphire Preferred® Card

  • Who It’s For: People who want to travel can also benefit from a flexible reward system.
  • What You’ll Get: 5x points on any travel you book with Chase Travel. 2x points on other travel purchases.
  • Added Benefits: Points are worth 25% more when redeemed through Chase Travel. Plus, an annual anniversary bonus of 10% on total purchases.
  • Is There an Annual Fee? Yes, and it’s $95.
  • Basic Overview: This card is for people who want to use it for traveling and dining. It has a modest fee compared to other credit cards. 

Capital One Venture X Rewards Credit Card

  • Who It’s For: Travelers who want a simple card but can take advantage of premium benefits.
  • What You’ll Get: 2x miles on all purchases.
  • Added Benefits: $300 annual travel credit through Capital One Travel and unlimited access to Priority Pass lounges and Capital One lounges. You’ll receive a 75,000 miles sign-up bonus if you spend $4,000 in the first three months.
  • Is There an Annual Fee? Yes, and it’s $395.
  • Basic Overview: This card is for people who fly regularly. It has straightforward rewards and premium perks like lounge access. 

Remember, credit cards are not a free pass, and using them requires planning. You can use these cards to your advantage with careful planning and budgeting. You only pay the interest (which is enormous) if you don’t pay off the card each month. Plan, be disciplined, and use the rewards to see and do what you want to. If you need tailored financial advice, contact our office and schedule a meeting with us. We’re here to serve and help you. 

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, which, when sold, may be worth less or more than their original cost.

Should I Worry About Market Fluctuations During An Election Year?

Because we are close to another election, we must address some common concerns people have about its impact on the market. People believe the market is at a crossroads during an election year for various reasons. Its final destination won’t be known until we know who will run the country. Given how much the media can fuel these concerns, it’s straightforward to get caught up in this narrative that there’s a potential collapse around the corner. As financial advisors, we see people make hasty decisions because of these emotions. 

We want you to understand how previous elections have impacted the market to give you peace of mind and clarity. We go through this every four years. Stop worrying about the future and rely on the past. Ask yourself whether history supports the notion that elections have significantly disrupted markets. 

Market Performance in Election Years

One of the most persistent myths is that the stock market performs poorly during election years. The assumption is that the uncertainty surrounding elections leads to weaker market returns. On the surface, it does make sense—which is why it is such an easy myth to get pulled into. However, historical data doesn’t back this. If you look at how the S&P 500 has performed since 1928, the average return during election years is 7.5%. 

The average return in non-election years is 8.0%. So, yes, there is a slight drop, but it does show that the dropoff isn’t as significant as people think. A closer look reveals that while volatility can be higher in election years, this volatility won’t necessarily lead to adverse outcomes if you invest over the long term.  

For example, while the average election year since 1980 has seen an intra-year drawdown of about 17%, markets have often recovered once election results are finalized. Additionally, economic fundamentals drive market returns, which remain stable or improve despite political uncertainty. This demonstrates that the stock market’s resilience often overrides the temporary fluctuations that might occur during an election year.

The Impact of Election Results on the Market

Another widespread belief is that markets will crash if a particular candidate wins. This idea is often fueled by the emotions and uncertainty that elections bring. However, historical trends show that the market’s response to election outcomes is unpredictable. Looking back at previous elections, market movements are more closely tied to the broader economic environment than to who wins the election. For example, during the 2008 election, the market was more influenced by the unfolding Global Financial Crisis than by the candidates’ policies.

Similarly, in 2020, the COVID-19 pandemic had a far more significant impact on the market than the election itself. The data does not support the belief that the Federal Reserve avoids changing monetary policy during election years. The Fed has historically adjusted interest rates based on economic needs, regardless of the political calendar. For instance, since the 1950s, only in 2012 did the Fed refrain from raising or lowering rates during an election year. This shows that economic conditions, not political considerations, guide monetary policy decisions. After election results are announced and uncertainty fades, markets often rally. This pattern has been observed in many election years, indicating that the fear of a market crash tied directly to election outcomes is largely unfounded.

Focus On the Long Term & Work With Us 

Worrying about market fluctuations in an election year is understandable, but history shows these concerns are often overblown. The market tends to remain stable, with performance more influenced by economic factors than the election. If you are concerned about how the upcoming election could impact your investments, schedule a meeting with our team at Worth Advisors. We can help you create a financial plan focusing on long-term goals rather than short-term election cycles.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, which, when sold, may be worth less or more than their original cost.