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You hear about data breaches almost every week. Big companies, small businesses, even government agencies have all been hacked. Your personal information is likely floating around in places you don’t even know about. That’s a reality we all live with. The question is: what are you doing to protect yourself? Ignoring it isn’t an option. If your identity is compromised, the impact can be expensive, time-consuming, and stressful, especially when your financial accounts are involved.

At Worth Advisors, we know that wealth protection isn’t just about investments. It’s also about making sure your accounts, personal data, and financial records are secure. Building wealth is only part of the equation. Keeping it safe is just as important.

How Identity Theft Happens

Identity theft happens when someone gains access to your personal information like your Social Security number, bank details, or online account credentials, and uses it to commit fraud. This can happen in several ways:

• Phishing Scams: Emails, texts, or calls that trick you into giving up sensitive information.
• Data Breaches: Hackers infiltrate company databases and steal personal data.
• Public Wi-Fi: Using unsecured Wi-Fi networks can expose your data to hackers.
• Lost or Stolen Devices: Phones, laptops, and tablets that aren’t secured can be a goldmine for thieves.
• Malware and Spyware: Downloading files from unknown sources or clicking suspicious links can install malicious software on your devices, giving hackers access to your information.

Once someone has your data, they can open credit accounts, access bank accounts, transfer funds, and even attempt to impersonate you to financial institutions. The last thing any investor or family wants is to see their hard-earned wealth drained due to preventable security gaps.

Steps to Protect Your Wealth and Personal Information

Protecting your information doesn’t require tech skills, just some awareness and good habits.

1. Use Strong, Unique Passwords: Don’t use the same password for multiple accounts. Use a password manager to create and securely store complex passwords.
2. Enable Two-Factor Authentication: This adds a second layer of protection, like a text code or authentication app, to your logins. This is especially important for financial accounts.
3. Monitor Your Credit: Regularly check your credit reports. You can access a free report from each of the three major credit bureaus once a year at AnnualCreditReport.com.
4. Monitor Financial Accounts: Set up account alerts on your bank, investment, and credit card accounts to catch suspicious activity early.
5. Be Skeptical of Unsolicited Contacts: If someone asks for personal information by phone, email, or text, even if they claim to be from your bank, verify their identity first.
6. Secure Your Devices: Use screen locks, keep software up to date, and install antivirus protection on your devices.
7. Limit Public Wi-Fi Use: Avoid accessing sensitive accounts or making transactions on public Wi-Fi. If you must use it, connect through a virtual private network (VPN).
8. Shred Sensitive Documents: Physical security matters too. Shred documents that contain personal information before disposing of them.
9. Use Secure Websites: When shopping or banking online, ensure the website uses HTTPS. This encrypts your data and helps protect your information from interception.
10. Be Careful on Social Media: Avoid sharing personal details like your birthday, address, or answers to common security questions. This information can help scammers piece together enough data to impersonate you.

Protect Your Wealth Beyond the Market

No system is foolproof, but the more barriers you put in place, the harder it becomes for thieves to get what they want. At Worth Advisors, protecting your wealth goes beyond market strategy. It includes helping you safeguard your financial information and identity. If you’re serious about locking down your financial life, let’s talk about a strategy that protects not just your investments, but everything connected to them.

 

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Disclaimer: The information contained in this article is intended for discussion purposes only. The information included herein is highly confidential, intended for review by the recipient only, and should not be disseminated or made available for public use or to any other source. It is not an offer or a solicitation for the sale of a security, nor shall there be any sale of a security in any jurisdiction where such offer, solicitation, or sale would be unlawful. An investment with Worth Advisors (whether through a commingled fund or on a separate account basis) involves a degree of risk and may only be made pursuant to the respective offering documents and organizational materials governing such investment. Past performance of the clients of Worth Advisors, or any of its employees or principals, may not be indicative of future results, and there is no guarantee that targeted performance will be achieved. The entirety of investors’ capital is at risk.

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.

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.

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.

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.

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.

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.