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By In Do the Math, Health Financial Accounts, Health Savings Accounts (HSAs), Retirement Income, Retirement Investment Accounts, Savings

Doing the Math on Why You Should Max Out Your HSA Contribution

Here are The Benefits of FI, we talk about HSAs as a savings vehicle for retirement in the same vein as a 401(k) or IRA. That’s because it has the same basic features of enabling pre-tax savings to be invested and thereby grow at a significantly higher rate than post-tax dollars in a standard checking or savings account.

What some of you, especially those who have just started you FI journey and have neither started a family of your own nor seen your own parents get to standard retirement age, may be thinking is that since you’re saving the money for retirement, it’s retirement income that you’ll get to spend on fun stuff. Hopefully that will be true (although you’ll get taxed on it), but odds are that you’ll use it for medical expenses, which are never as fun but almost always a factor.

Research by Fidelity Investments, reported by Money, shows that the average couple currently reaching retirement age will incur $280,000 in medical-related expenses in retirement. As homer Simpson would say:

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By In Budgeting, Do the Math, General Benefits Knowledge, Money-Saving Tips, Savings, Savings and Budgets, Student Loan Debt, Taxes

How to Identify Your Scarcities and Use Them to Your FI Advantage

Recently, at a PTA meeting for my daughter’s school, the school’s two parent-volunteer yoga instructors gave a short presentation (with student participation) on the easy yoga and meditation techniques they practiced with our kids. It was fun, funny and heartwarming to see the kids really get into their practice. It was also illuminating for us as parents to try it ourselves. When it got to the mindful meditation part, one of the instructors mentioned how focusing on your breath opened a path to the amygdala, which “will get you off of the treadmill of worry and into relaxing mindfulness.” I used to find these types of descriptions a little silly, but the more I’ve tried to be more mindful in my own daily life, the more I can buy into this idea of needing a real shift in mindset to get from worry to deeper conscience.

It reminded me of a book I read last year called Scarcity: The New Science of Having Less and How It Defines Our Lives. It’s a wonderful book that can impact the way you approach both personal and professional challenges. It’s more of a research-oriented book than self-help, so don’t go into it expecting to get a blueprint for finding mindfulness. It’s more about the research the authors did on how scarcity impacts how we think and make decisions — and it really does.

As you seek financial independence, chances are you are making plans that are deeply impactful to the two most common forms of scarcity: money and time. You’ll want and need to ensure that you’re making the most of both to reach your FIRE goals. But you’ll also want to make sure that you understand when you’re making decisions based on a scarcity of one or the other, or both, and what you can do to work against making bad decisions.

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