Taxes suck.
And yet most people don’t take advantage of the ONLY way to (legally) never, ever pay taxes on the
money you make.
Do I have your attention?
Ever heard of a Health Savings Account?
If you haven’t it’s because they’re relatively new. Dubya started them back in 2003.
Here’s the strategy for maximum tax avoidance:
Step 1: Contribute pre-tax money (just like your 401k)
Step 2: Invest and grow the money tax-free
Step 3: Withdraw the money tax-free (like a Roth IRA)Too good to be true, right? Well, yes and no.
Here’s the not-so-fine print:
1) Withdrawals are only tax-free if it’s used for qualified medical expenses
2) You can only contribute to an HSA if you are enrolled in a high-deductible health plan
Regarding #1, you will have to pay Medicare premiums when you turn 65.
Right now it’s a minimum of $148 per month, but can be up to $400/mo.
But thankfully those premiums count as a “qualified medical expense.”
So your HSA turns into free healthcare in retirement.
#2 is a little trickier because it will increase your health insurance costs today.
It’s also where most people go wrong.
So I’ll dive deeper on it tomorrow.
