WEBVTT NOTE This file was generated by Descript 00:00:45.249 --> 00:00:47.969 Linda Ostovitz: hello everyone and welcome to Real Talk Real Growth. 00:00:48.829 --> 00:00:53.349 Today I am pleased to have my friend Shaun Eddy join us. 00:00:54.059 --> 00:01:00.219 Shaun is a CEO and partner at Oxford Planning Group with a whole bunch of cool 00:01:00.219 --> 00:01:06.489 stuff associated with his name, such as a certified financial planner a master's 00:01:06.489 --> 00:01:12.579 degree in financial analysis, and he's an accredited investment fiduciary, 00:01:12.689 --> 00:01:15.289 all of which is so impressive, Shaun. 00:01:15.569 --> 00:01:18.509 What does all that mean, and what do you do at Oxford Planning Group? 00:01:18.939 --> 00:01:19.569 Shaun Eddy: Thanks, Linda. 00:01:19.869 --> 00:01:23.659 Well, certified financial planner, it sort of speaks for itself, but it's a 00:01:23.679 --> 00:01:28.199 person that has gone through several years of accreditation and courses to 00:01:28.479 --> 00:01:30.239 become a certified financial planner. 00:01:30.419 --> 00:01:35.269 And then they've passed a national certification exam about a 50 percent 00:01:35.279 --> 00:01:37.539 pass rate on those exams, 50 to 60%. 00:01:37.559 --> 00:01:38.849 So pretty cool. 00:01:38.889 --> 00:01:40.989 And I've been doing this for about 25 years. 00:01:41.269 --> 00:01:46.079 The accredited investment fiduciary is really just an additional fiduciary focus 00:01:46.079 --> 00:01:48.029 that we chose to do in our business. 00:01:48.029 --> 00:01:52.129 And, we're already a fiduciary for all of our clients, but we just feel it's so 00:01:52.129 --> 00:01:56.329 important to have an extra emphasis on that and make sure our clients understand 00:01:56.329 --> 00:02:00.499 the importance of being a fiduciary and that we represent ourselves that way, and 00:02:00.499 --> 00:02:05.649 then the master's in financial analysis ties in with the CFA designation, which 00:02:05.649 --> 00:02:09.569 I do not hold, but I really just love that background and it ties so much in 00:02:09.569 --> 00:02:13.429 with all the wealth management topics that we do for our clients, and I wanted 00:02:13.429 --> 00:02:16.999 to make sure that we continue to have a rounded out expertise in that area. 00:02:17.999 --> 00:02:20.879 Linda Ostovitz: So while we talk about you being a planning group 00:02:21.379 --> 00:02:27.009 that covers things like investments, retirement, tax issues, et cetera. 00:02:27.009 --> 00:02:27.869 Would that be correct? 00:02:27.974 --> 00:02:28.694 Shaun Eddy: Yeah, that's correct. 00:02:29.401 --> 00:02:33.729 Linda Ostovitz: So since it's January and we're recovering from a snowfall 00:02:33.729 --> 00:02:38.459 here in Maryland that was significant and people should be spending time 00:02:38.459 --> 00:02:42.039 thinking about what they're going to do for the year rather than waiting 00:02:42.069 --> 00:02:43.829 till tax time to say, Oh my goodness. 00:02:44.924 --> 00:02:49.864 I would really love it if you would educate us, Shaun, on HSA plans. 00:02:50.114 --> 00:02:51.444 We hear about them a lot. 00:02:51.494 --> 00:02:56.644 I have my own perception that they're a medical thing, that we can 00:02:56.644 --> 00:02:59.144 use them to save taxes, et cetera. 00:02:59.464 --> 00:03:00.504 But you're the expert. 00:03:00.614 --> 00:03:03.194 What is an HSA and why should we have one? 00:03:03.864 --> 00:03:08.674 Shaun Eddy: so an HSA is a health savings account, and at its simplest level, it 00:03:08.674 --> 00:03:10.924 simply is money that you can put away. 00:03:10.954 --> 00:03:13.894 I'll get into the amounts in a little while, but it's money that an 00:03:13.894 --> 00:03:16.464 individual can put away from their pay. 00:03:16.934 --> 00:03:21.544 And it grows tax deferred and it can be used to reimburse medical expenses. 00:03:21.644 --> 00:03:23.224 That's what a lot of people see it for. 00:03:23.624 --> 00:03:28.264 I really take it a step further and see it as an opportunity to build up 00:03:28.634 --> 00:03:31.024 a sizable savings account long term. 00:03:31.474 --> 00:03:35.404 And it's money that can be used to reimburse health costs in retirement. 00:03:35.694 --> 00:03:39.074 And after age 65, it can be used much like a retirement account. 00:03:39.324 --> 00:03:43.664 If there's any money left over that hasn't been used for healthcare reimbursement. 00:03:43.734 --> 00:03:47.641 So it's a pretty cool account that has a lot of opportunities. 00:03:48.143 --> 00:03:51.633 Linda Ostovitz: Is it money that you can roll over from year to year if I 00:03:51.903 --> 00:03:57.156 create an account and fund an account in 2025 but don't use it, can it stay there 00:03:57.156 --> 00:03:59.566 or roll over, if you will, till 2026? 00:03:59.621 --> 00:04:00.711 Shaun Eddy: That's a really great question. 00:04:00.941 --> 00:04:04.171 Some of the plans out there, some of the flexible savings accounts and 00:04:04.171 --> 00:04:07.581 some of the other types of accounts that employers have are monies that 00:04:07.581 --> 00:04:11.291 you mostly have to use that year or you actually lose the money. 00:04:11.431 --> 00:04:15.098 There may be in some cases with those accounts a very small amount that 00:04:15.098 --> 00:04:16.648 can be rolled over for the next year. 00:04:16.968 --> 00:04:21.578 With a health savings account you can put in up to $4,300 as an individual. 00:04:22.138 --> 00:04:27.993 $8,550 as a family per year, and if you're over 55 you can put an 00:04:27.993 --> 00:04:29.763 additional $1,000 on top of that. 00:04:30.193 --> 00:04:32.893 And that money continues to be added to the account, does 00:04:32.903 --> 00:04:34.303 not have to be used at all. 00:04:34.533 --> 00:04:38.733 So if I put that full amount in and didn't reclaim any medical expenses 00:04:38.733 --> 00:04:41.993 this year, the full amount rolls over and can continue to roll up. 00:04:42.273 --> 00:04:45.683 We have clients that have several hundred thousand that they've grown in those 00:04:45.683 --> 00:04:49.959 accounts To some people that may sound like a lot of money, but one of the things 00:04:49.959 --> 00:04:55.439 we always tell people is an individual in the market at retirement could use 00:04:55.609 --> 00:05:01.269 over $260,000 of their own monies during retirement, so you could certainly see 00:05:01.269 --> 00:05:06.079 it being used, and then a couple could easily be in the $400,000 range for 00:05:06.269 --> 00:05:08.109 health care expenses during retirement. 00:05:08.534 --> 00:05:08.924 Linda Ostovitz: Wow. 00:05:09.210 --> 00:05:14.690 So you mentioned initially that the money that's in an HSA can be used to 00:05:14.690 --> 00:05:17.330 reimburse qualified medical expenses. 00:05:17.350 --> 00:05:19.070 What makes an expense qualified? 00:05:19.760 --> 00:05:19.940 Shaun Eddy: Yeah. 00:05:19.940 --> 00:05:24.730 So some things like there, are people that belong to concierge medical groups where 00:05:24.730 --> 00:05:26.620 they pay a monthly premium for the doctor. 00:05:26.930 --> 00:05:30.700 That type of cost is not deducted, but most of your medical costs, your 00:05:30.700 --> 00:05:35.130 regular physicals, your doctor's visits, specialty care, things like that. 00:05:35.140 --> 00:05:38.430 Most of your medications, most of those things are all reimbursable. 00:05:38.570 --> 00:05:40.200 It's really the outliers. 00:05:40.410 --> 00:05:44.535 You have to be careful with certain medical devices and certain non medical 00:05:44.545 --> 00:05:47.515 things where you're being billed by your doctor just in a concierge 00:05:47.555 --> 00:05:51.325 practice, etc Make sure that those things are checked with your health 00:05:51.325 --> 00:05:53.025 care provider to make sure they qualify. 00:05:54.025 --> 00:05:59.715 Linda Ostovitz: Are there circumstances where an employer contributes to an HSA or 00:05:59.715 --> 00:06:05.605 is this solely a, Shaun is putting money into an HSA account as you've indicated? 00:06:05.745 --> 00:06:07.795 Do employers get involved in the process? 00:06:07.800 --> 00:06:09.830 Shaun Eddy: Yeah, so employers, they can do that. 00:06:09.850 --> 00:06:13.927 And then, of course, an employer that does it has to do similar types 00:06:13.927 --> 00:06:15.487 of things for all their employees. 00:06:15.497 --> 00:06:19.674 So if they're very generous and are providing some level of benefit to 00:06:19.674 --> 00:06:21.884 their employees, they can put money in. 00:06:22.024 --> 00:06:24.744 And they can put money in up to those limits that I described 00:06:24.744 --> 00:06:28.364 earlier, that 4,300 or that 8,550. 00:06:28.594 --> 00:06:33.224 However, if they were to put that amount in, then the employee would not be 00:06:33.224 --> 00:06:34.744 able to put any further funds in there. 00:06:34.904 --> 00:06:38.374 So both the employer and the employee are subject to a combined 00:06:38.394 --> 00:06:42.204 limit of that 4,300 or 8,550. 00:06:43.154 --> 00:06:43.514 Linda Ostovitz: Okay. 00:06:43.514 --> 00:06:46.034 So it's not a matching type of a situation. 00:06:46.164 --> 00:06:49.369 Shaun Eddy: It can be matching, which means Yeah, it's not going to get you over 00:06:49.369 --> 00:06:53.129 those limits, but if the employer puts in money, that just means you can get up 00:06:53.129 --> 00:06:57.169 to the limit by putting less money out of your own pocket if you're an employee. 00:06:57.169 --> 00:06:58.599 So, that can be nice. 00:06:59.599 --> 00:07:02.669 Linda Ostovitz: We talked about qualified medical expenses, but if 00:07:02.669 --> 00:07:08.859 someone uses HSA money for a non qualified expense, and I guess they can 00:07:08.859 --> 00:07:10.189 use it for anything they want, right? 00:07:10.189 --> 00:07:14.389 It's an account in their name to which they have complete access. 00:07:15.009 --> 00:07:19.769 If they use it for a non qualified pourpose or purchase. 00:07:20.234 --> 00:07:21.654 What is the consequence of that? 00:07:22.164 --> 00:07:24.984 Shaun Eddy: Well, first and foremost, usually there's an administrator on the 00:07:24.984 --> 00:07:27.964 plan that the bills get turned into. 00:07:27.964 --> 00:07:32.434 So typically they reject things that aren't qualified, but if something 00:07:32.434 --> 00:07:37.504 was to slip through the cracks or you charge something yourself and it didn't 00:07:37.514 --> 00:07:42.774 get caught by the administrator, the cost on those types of things is one, 00:07:43.114 --> 00:07:47.274 the amount is taxable to you, and there's also a 20 percent penalty. 00:07:47.274 --> 00:07:50.604 So if you, for instance, you pulled money out of the account prior to age 00:07:50.614 --> 00:07:55.704 65, unlike a retirement account which has a 10 percent penalty, the health 00:07:55.704 --> 00:07:58.074 savings accounts have a penalty of 20%. 00:07:59.074 --> 00:08:02.104 And after age 65 though, that 20 percent penalty goes away. 00:08:02.656 --> 00:08:04.906 Linda Ostovitz: So you talk about an administrator. 00:08:05.178 --> 00:08:09.968 If I had an HSA, this would not be an account in my name to 00:08:09.968 --> 00:08:11.798 which I have unfettered access. 00:08:12.208 --> 00:08:15.348 I'm dealing with an administrator of an HSA? 00:08:15.803 --> 00:08:16.433 Shaun Eddy: Yeah, a little bit. 00:08:16.453 --> 00:08:17.683 They're complicated accounts. 00:08:17.683 --> 00:08:21.723 They are set up typically through the employer, although the employee, 00:08:21.773 --> 00:08:25.133 if the employer does not have an account can set them up as well. 00:08:25.353 --> 00:08:30.153 And you can only set them up if you are part of a high deductible healthcare plan. 00:08:30.463 --> 00:08:31.713 That part is very important. 00:08:32.173 --> 00:08:35.493 The rules change every year, so it's always important when they're 00:08:35.793 --> 00:08:39.823 issuing the new plans or your plan changes that you talk to your 00:08:40.053 --> 00:08:45.083 healthcare provider to confirm that this is a qualifying high deductible 00:08:45.083 --> 00:08:47.263 plan that allows an HSA account. 00:08:47.263 --> 00:08:51.338 We've seen several situations where Healthcare providers changed their plans. 00:08:51.558 --> 00:08:54.088 The deductibles changed a little bit to the employee. 00:08:54.088 --> 00:08:56.978 They didn't look any different, but they found out suddenly that 00:08:57.198 --> 00:08:59.268 they were no longer HSA eligible. 00:08:59.508 --> 00:09:04.708 So at the administrator level, again, there's someone that takes the money in, 00:09:04.878 --> 00:09:06.878 make sure it's accounted for properly. 00:09:07.048 --> 00:09:10.128 There are some service fees on these accounts, but as the account grows, 00:09:10.563 --> 00:09:13.913 their service fees are pretty low, so the bigger the account gets, the 00:09:13.913 --> 00:09:18.333 smaller the percentage of the account that those administrative costs are. 00:09:18.573 --> 00:09:22.083 So they become more and more reasonable the more the person saves in the account. 00:09:22.483 --> 00:09:26.403 And again, that administrator is making sure that the right things 00:09:26.403 --> 00:09:27.583 go in and out of the account. 00:09:27.913 --> 00:09:32.013 Not all, but most health savings accounts have investment options. 00:09:32.193 --> 00:09:36.703 So if there are no investment options, it may not make it as 00:09:36.990 --> 00:09:38.890 attractive to save long term. 00:09:39.060 --> 00:09:42.560 It may make it more in that case, more attractive just to use the money for 00:09:42.840 --> 00:09:44.390 healthcare costs from year to year. 00:09:45.080 --> 00:09:49.200 If there are investment options, which we prefer to see the certain 00:09:49.200 --> 00:09:53.020 amount of it stays in cash, ready to reimburse medical expenses back and 00:09:53.020 --> 00:09:56.850 forth, and then a certain amount can be put over into investment options. 00:09:57.060 --> 00:09:59.490 And again, that's where the administrator's involved to make sure 00:09:59.490 --> 00:10:03.710 that all those things are being tracked properly and that the employee is getting 00:10:03.710 --> 00:10:06.570 the proper monthly statements that they're supposed to get for those accounts. 00:10:07.570 --> 00:10:10.810 Linda Ostovitz: And that's where somebody like you really comes into play, right? 00:10:10.810 --> 00:10:11.370 Shaun Eddy: Absolutely. 00:10:11.370 --> 00:10:16.720 Linda Ostovitz: To share with individuals that this is an investment vehicle. 00:10:17.445 --> 00:10:21.565 Or can be an investment vehicle as well as something that really is just dollar 00:10:21.565 --> 00:10:23.065 for dollar to cover health expenses. 00:10:23.420 --> 00:10:23.620 Shaun Eddy: Yeah. 00:10:23.620 --> 00:10:26.790 We really try to work with individuals to make sure that they can get the 00:10:26.790 --> 00:10:28.320 maximum benefit out of these plans. 00:10:28.320 --> 00:10:32.595 So if they don't have an investment option, In their plan we want to make 00:10:32.595 --> 00:10:38.125 sure that they look into the option to see if they can in fact get a plan 00:10:38.405 --> 00:10:41.475 outside that would have investments in it and some employers allow 00:10:41.475 --> 00:10:44.505 that they just say oh yeah you can subscribe to a different plan will make 00:10:44.695 --> 00:10:46.595 deposits into that account or you can. 00:10:47.010 --> 00:10:48.350 And it still qualifies. 00:10:48.360 --> 00:10:51.510 So we want to make sure they have an account that does have investments. 00:10:51.760 --> 00:10:54.960 And then we can then in turn, help our clients with what the proper 00:10:54.960 --> 00:10:59.190 allocation for those investments is based on their risk tolerance 00:10:59.190 --> 00:11:02.150 and how long they think it'll be before they need some of those funds 00:11:02.765 --> 00:11:03.305 Linda Ostovitz: Okay. 00:11:03.316 --> 00:11:09.135 And you said that at age 65, if I understood you correctly, those 00:11:09.175 --> 00:11:14.085 funds can be used for medical or any other reason without penalty. 00:11:14.085 --> 00:11:14.665 Is that right? 00:11:15.165 --> 00:11:15.985 Shaun Eddy: Without penalty. 00:11:16.000 --> 00:11:18.240 The difference would be though, they're still more attractive for 00:11:18.240 --> 00:11:23.925 healthcare costs, because if you turn in a healthcare bill, then you can 00:11:23.925 --> 00:11:25.845 be 100 percent reimbursed tax free. 00:11:26.645 --> 00:11:32.795 But, if you take money out just for random expenses after age 65, that money 00:11:32.795 --> 00:11:37.045 would be taxable to you just like an IRA account or a retirement account would be. 00:11:37.969 --> 00:11:38.369 Linda Ostovitz: Okay. 00:11:38.369 --> 00:11:44.854 So let's talk about the tax benefit of an HSA since we've moved to a tax discussion. 00:11:45.024 --> 00:11:50.294 The money that goes into an HSA, is there a tax benefit to putting it in an HSA? 00:11:50.439 --> 00:11:55.359 Shaun Eddy: Yeah, so this is where, at the employee level, there is no 00:11:55.359 --> 00:11:57.949 state or federal tax, but you're still paying Social Security 00:11:57.949 --> 00:11:59.899 tax before the money goes in. 00:12:00.339 --> 00:12:03.679 At the employer level, so if you have a generous employer that's putting 00:12:03.679 --> 00:12:07.689 money in, that money never had social security tax come out of it. 00:12:07.699 --> 00:12:10.969 So there can be a little extra perk when the employer puts money 00:12:10.969 --> 00:12:12.989 in that the employee doesn't have. 00:12:13.029 --> 00:12:18.619 But once all that's done in the future the money grows tax deferred, healthcare costs 00:12:18.619 --> 00:12:23.419 can come out tax free, so you never pay for any taxes at all for healthcare costs. 00:12:23.739 --> 00:12:26.799 And then if you do pull money out later for other reasons, then it's 00:12:26.799 --> 00:12:28.349 just the state and federal tax. 00:12:28.754 --> 00:12:30.784 That you would normally pay for retirement accounts. 00:12:31.784 --> 00:12:34.624 Linda Ostovitz: Okay, so who should have HSA accounts, Shaun? 00:12:34.904 --> 00:12:37.874 Shaun Eddy: I honestly think everyone should the challenge is that not everyone 00:12:37.884 --> 00:12:42.154 has a high deductible plan and honestly when you first set up high deductible 00:12:42.154 --> 00:12:46.274 plans and if people aren't used to them, we often see clients with a lot of 00:12:46.274 --> 00:12:50.164 complaints because they're not used to paying those higher deductibles and it 00:12:50.164 --> 00:12:51.804 can get a little expensive for families. 00:12:51.854 --> 00:12:54.354 If they have a lot of health care costs in one year. 00:12:55.354 --> 00:12:58.794 It also helps the employer make the premiums for the health care less 00:12:58.794 --> 00:13:02.694 expensive by utilizing that high deductible plan, so it's a win for the 00:13:02.694 --> 00:13:07.577 employer and then by utilizing that health savings account, there's money set aside 00:13:07.577 --> 00:13:11.347 so if the employee does have unexpected bills that they can't defer to the future, 00:13:11.477 --> 00:13:13.087 they've got that money available to them. 00:13:13.367 --> 00:13:18.207 So we recommend everyone get those as early as possible and keep those intact. 00:13:18.437 --> 00:13:22.277 Certainly if you're having a really low budget year and can't afford to defer 00:13:22.297 --> 00:13:26.057 those healthcare costs, then you can take the money out as needed in that year. 00:13:26.367 --> 00:13:29.647 But we also like to see a significant amount of money grow over the years 00:13:30.007 --> 00:13:32.947 and use it as an account that can be used in retirement, both 00:13:32.947 --> 00:13:34.317 for healthcare and other needs. 00:13:35.157 --> 00:13:37.657 Linda Ostovitz: you've used the term high deductible health plan. 00:13:37.657 --> 00:13:39.620 What is a high deductible? 00:13:39.630 --> 00:13:42.470 What qualifies as a high deductible health plan? 00:13:42.470 --> 00:13:48.635 Shaun Eddy: It changes every year, but the $3,200 individual is a typical number. 00:13:48.935 --> 00:13:51.005 And then, aggregate amounts for the family. 00:13:51.005 --> 00:13:54.115 So they cap that I don't have the aggregate amount right in front of me, 00:13:54.115 --> 00:13:58.875 but It is a lot more money than people are used to and so if someone's used 00:13:58.875 --> 00:14:02.155 to having a few hundred dollars every year and then after that the plan covers 00:14:02.155 --> 00:14:05.665 the whole thing, this can be a bit of a shocker when they first get into 00:14:05.665 --> 00:14:08.205 it and they realize they could be out of pockets several thousand dollars. 00:14:08.950 --> 00:14:09.410 Linda Ostovitz: Right. 00:14:09.738 --> 00:14:14.210 Well, thank you for that education on an HSA plan. 00:14:14.290 --> 00:14:17.800 Let's move on to a little bit of a broader discussion, maybe. 00:14:18.720 --> 00:14:22.380 Again, I started by saying, this is January, and this is the 00:14:22.390 --> 00:14:27.930 time when people need to start planning for tax returns for 2026. 00:14:29.485 --> 00:14:33.705 Not at the end of the year and not in April, obviously. 00:14:34.705 --> 00:14:38.775 So do you have any thoughts you can share with us about, this is January. 00:14:38.775 --> 00:14:41.765 People have 12 months to put a plan into action. 00:14:42.575 --> 00:14:45.375 What are some things that you would recommend that individuals 00:14:45.375 --> 00:14:50.675 do to start planning for managing the tax situation that they're 00:14:50.685 --> 00:14:53.345 going to face in April of 2026? 00:14:53.915 --> 00:14:55.705 Shaun Eddy: Yeah, this is a great time of year to do that. 00:14:55.745 --> 00:14:58.525 Obviously, a lot of people are collecting information to get 00:14:58.525 --> 00:14:59.975 together their tax returns. 00:15:00.255 --> 00:15:03.320 So they're, Probably a little bit more familiar with what they've been doing. 00:15:03.320 --> 00:15:06.590 And soon, of course, then we'll be getting into March and April where people 00:15:06.590 --> 00:15:10.110 actually are filing returns and they'll have a really good idea of where they 00:15:10.110 --> 00:15:12.410 are, but we want people to plan early. 00:15:12.410 --> 00:15:15.510 We want them to start looking at what possible free cashflow they 00:15:15.510 --> 00:15:16.930 have that they can set aside. 00:15:17.190 --> 00:15:19.970 I'm sure everyone realizes that if you don't set money aside, 00:15:20.050 --> 00:15:21.570 somehow it manages to get spent. 00:15:21.990 --> 00:15:26.210 So, we prefer that you plan ahead, have money that can be set aside, and 00:15:26.210 --> 00:15:30.420 then we want to start looking for ways to do everything that you're doing in 00:15:30.420 --> 00:15:32.190 the most tax efficient way possible. 00:15:32.500 --> 00:15:37.150 So, looking at maximizing retirement accounts, if that's the best way to go. 00:15:37.300 --> 00:15:42.930 For people with higher incomes, and people that think that potentially they may have 00:15:42.930 --> 00:15:46.290 lower incomes in retirement than they do now, and their taxes might be lower. 00:15:46.700 --> 00:15:50.780 The more tax deferred products that they use now could be more beneficial for 00:15:50.780 --> 00:15:52.260 some of the people in their twenties. 00:15:52.540 --> 00:15:56.660 It may actually benefit to pay a little extra taxes right now and put 00:15:56.660 --> 00:15:58.580 monies away in a Roth IRA account. 00:15:59.250 --> 00:16:03.070 Other areas that we look at are charitable deductions, and there's 00:16:03.070 --> 00:16:06.140 just so many different ways that those can be done tax efficiently. 00:16:06.500 --> 00:16:09.360 Gifts of appreciated stock or investments. 00:16:09.710 --> 00:16:12.500 Direct gifts that can be deducted on your tax return. 00:16:12.740 --> 00:16:16.060 If you have enough that you can do a schedule a, that's getting a little 00:16:16.060 --> 00:16:18.940 bit more difficult with the higher limits on the schedule a these days. 00:16:19.330 --> 00:16:22.930 But if you have enough deductions that you can get higher than the standard 00:16:22.940 --> 00:16:25.250 deduction, those gifts may make sense. 00:16:25.770 --> 00:16:28.360 Qualified charitable deductions from your IRA account. 00:16:28.880 --> 00:16:33.120 If you're over 70 and a half those are gifts that can be made tax free, and 00:16:33.120 --> 00:16:34.520 were never taxed in the first place. 00:16:34.530 --> 00:16:36.720 So the gift can be made right out of your IRA account. 00:16:36.980 --> 00:16:37.930 We'd love to see that. 00:16:38.330 --> 00:16:40.700 And then also gifts to donor advised funds. 00:16:41.320 --> 00:16:44.440 There's other ways as well, but those are just some of the highlights. 00:16:44.690 --> 00:16:48.920 And so certainly if you're charitably inclined or doing it already, why not 00:16:48.920 --> 00:16:53.000 make sure that what you're doing is done in the most tax sensible way so 00:16:53.000 --> 00:16:56.560 that you're, at the end of the year, leaving as much in your pocket, but 00:16:56.560 --> 00:16:59.250 at the same time still benefiting the people that you want to benefit. 00:17:00.034 --> 00:17:03.994 Linda Ostovitz: One of the things that I have actually said in my later years 00:17:03.994 --> 00:17:12.364 of life was that I wish I had started earlier to tax plan, to invest in 00:17:12.364 --> 00:17:17.274 retirement, maybe invest in some of these vehicles that you have described here. 00:17:18.274 --> 00:17:22.694 And I don't know what age I was when I actually started doing it, 00:17:22.724 --> 00:17:24.154 but I wish I had done it early. 00:17:24.544 --> 00:17:28.619 Because now, as somebody at my age, I Recognize the value of that. 00:17:29.589 --> 00:17:36.379 So as somebody who is a planner, at what age should someone start looking at what 00:17:36.379 --> 00:17:40.939 they're investing in and planning and managing the items that we've discussed? 00:17:40.969 --> 00:17:43.154 Shaun Eddy: Yeah we really try to work with people almost as soon 00:17:43.154 --> 00:17:44.204 as they're getting a paycheck. 00:17:44.354 --> 00:17:47.944 The challenge of course is that when you're in your teens, your twenties, 00:17:47.944 --> 00:17:49.444 and sometimes even in your thirties. 00:17:49.774 --> 00:17:51.764 You're not thinking about financial planning. 00:17:51.984 --> 00:17:52.407 And so 00:17:53.440 --> 00:17:54.024 exactly. 00:17:54.024 --> 00:17:56.394 And so we may not yet have connected with those people. 00:17:56.534 --> 00:17:59.184 We try to get materials out there that hopefully these younger 00:17:59.184 --> 00:18:02.274 individuals will see, and that maybe it will resonate with them. 00:18:02.324 --> 00:18:04.664 When we're working with our clients that are older, we try 00:18:04.664 --> 00:18:07.084 to make sure that they're getting information to their children. 00:18:07.384 --> 00:18:09.620 And we're trying to make sure that education is out there. 00:18:09.620 --> 00:18:14.734 But it's amazing when you look at the time value of money of an individual that 00:18:15.024 --> 00:18:19.934 puts away a few thousand dollars every year for 10, 15 years, and then stops. 00:18:20.574 --> 00:18:24.994 Versus an individual that in their fifties starts putting some money away at a much 00:18:24.994 --> 00:18:29.860 higher level, the 50 year old or the 50 year and above almost never catches up 00:18:29.860 --> 00:18:33.750 with what that 20 year old did at a very modest level when they were younger. 00:18:33.780 --> 00:18:35.990 It's just so important if they can start early. 00:18:36.624 --> 00:18:40.714 I really love to see clients live within their means, live responsibly, 00:18:41.004 --> 00:18:44.744 have a lot of fun, but just don't go so crazy that they're not saving. 00:18:44.744 --> 00:18:48.104 And I think if they can really save aggressively when they're younger, 00:18:48.114 --> 00:18:51.584 which is often the age that they forget, they end up with an awful 00:18:51.584 --> 00:18:53.244 lot more choices in their forties. 00:18:53.454 --> 00:18:56.724 That takes a lot of stress away from them that a lot of people have. 00:18:56.754 --> 00:19:01.474 We see in this crazy world layoffs and reorganizations of companies where people 00:19:01.474 --> 00:19:03.104 suddenly find themselves unemployed. 00:19:03.574 --> 00:19:05.774 Wouldn't that be incredible if you're in your forties? 00:19:06.094 --> 00:19:10.234 And you were actually at a point where you could retire if you had to and or 00:19:10.234 --> 00:19:11.884 being laid off wasn't such a big deal. 00:19:11.884 --> 00:19:14.774 It gave you plenty of time to go ahead and make other choices. 00:19:15.774 --> 00:19:20.154 Linda Ostovitz: in your role, Shaun in the roles that we've discussed, do you 00:19:20.154 --> 00:19:25.589 make recommendations to your clients about where to invest their money? 00:19:25.714 --> 00:19:26.574 Shaun Eddy: Yeah, absolutely. 00:19:26.594 --> 00:19:28.344 So we look at every client. 00:19:28.754 --> 00:19:30.764 We look at their age, how long to retirement. 00:19:31.024 --> 00:19:32.454 We look at their risk tolerance. 00:19:32.694 --> 00:19:36.374 We do jokes sometimes because we go through an intensive process of trying 00:19:36.504 --> 00:19:38.004 to determine someone's risk tolerance. 00:19:38.349 --> 00:19:42.179 And there's a lot of metrics that go into that, but then there's a Mike 00:19:42.209 --> 00:19:46.043 Tyson reference that says no one really knows what their game plan 00:19:46.043 --> 00:19:47.353 is until they get hit in the face. 00:19:47.703 --> 00:19:51.163 And if you have , a fight plan and you're fighting Mike Tyson and suddenly he 00:19:51.163 --> 00:19:54.353 cracks you upside the head, your fight plan may have just gone out the window. 00:19:54.353 --> 00:19:56.673 And so we find the same thing when you have a risk tolerance. 00:19:56.943 --> 00:19:59.873 You think that you can handle a lot of volatility in the market 00:20:00.103 --> 00:20:03.693 and all of a sudden the market goes through an absolutely crazy time. 00:20:04.128 --> 00:20:06.308 And you're panicked and you didn't think you would be panicked. 00:20:06.308 --> 00:20:08.798 So it's something we have to monitor very closely. 00:20:09.088 --> 00:20:12.338 But then once we understand that and we, we work very closely with our 00:20:12.338 --> 00:20:15.498 clients, we want to make sure that we're recommending an allocation that 00:20:15.508 --> 00:20:20.058 has a really strong opportunity to grow for the future that is within the 00:20:20.058 --> 00:20:21.458 risks that they are comfortable with. 00:20:21.798 --> 00:20:25.098 And we want to make sure that it's also tax efficient as possible. 00:20:25.408 --> 00:20:29.408 And so some of the things we do there where if a client is younger 00:20:29.408 --> 00:20:32.878 and growing their assets, we want to see more of their income generating 00:20:32.888 --> 00:20:34.608 assets in their retirement accounts. 00:20:35.058 --> 00:20:37.668 And we want to see more of the assets that are going to be benefiting 00:20:37.668 --> 00:20:41.168 from capital gains in their non retirement account, then that ends 00:20:41.168 --> 00:20:43.288 up being a lot more tax efficient. 00:20:43.638 --> 00:20:47.188 And the reverse may be true as a client gets into retirement and has to take 00:20:47.188 --> 00:20:48.878 an income out of their portfolio. 00:20:49.631 --> 00:20:52.981 Other things that we can do, we can look at tax efficient investments 00:20:52.981 --> 00:20:55.011 such as municipal bonds, treasuries. 00:20:55.291 --> 00:20:58.421 Things like that that are more tax efficient and or may not 00:20:58.431 --> 00:20:59.981 have any taxes charged to them. 00:21:00.271 --> 00:21:04.231 And those can help lower the overall taxes that a person pays in their accounts. 00:21:04.840 --> 00:21:09.180 Linda Ostovitz: I want to go back to this scenario of starting young and 00:21:09.620 --> 00:21:14.430 I think about this subject matter I think about people in business And 00:21:14.430 --> 00:21:18.540 getting to the point in their life or in their career where it's time 00:21:18.540 --> 00:21:21.330 to make a decision to hire someone. 00:21:22.300 --> 00:21:25.940 And, you're in that space where, gee, I really need advice. 00:21:25.940 --> 00:21:28.710 I really need something, but oh my goodness, it's going to cost 00:21:28.710 --> 00:21:31.070 me money in order to get it. 00:21:31.654 --> 00:21:37.554 If we take that issue and drop it into your lap, Shaun, if we have somebody, 00:21:37.564 --> 00:21:42.314 we're talking about young people getting in there sooner rather than later, making 00:21:42.324 --> 00:21:49.813 plans, investing in long term solutions, for their financial health and wealth. 00:21:50.594 --> 00:21:54.140 What do you say to somebody who says, I don't have the money 00:21:54.140 --> 00:21:56.150 to have a financial advisor. 00:21:56.200 --> 00:22:02.360 I can't afford to have somebody help me plan the rest of my financial life. 00:22:02.800 --> 00:22:05.040 What would you say to somebody who has that concern, 00:22:05.345 --> 00:22:05.555 Shaun Eddy: Yeah. 00:22:05.725 --> 00:22:06.565 Another great question. 00:22:06.905 --> 00:22:09.825 We really talk to people about the whole planning process 00:22:09.825 --> 00:22:12.145 itself and the value that we add. 00:22:12.145 --> 00:22:15.645 There's a lot of studies out there that show the average person, one, 00:22:15.765 --> 00:22:18.715 they're making a lot of mistakes in their planning, in their taxes, 00:22:18.885 --> 00:22:20.045 and the choices they're making. 00:22:20.045 --> 00:22:23.455 So that, that sets them apart and gives them a disadvantage. 00:22:23.485 --> 00:22:27.290 And then in addition, the investments that the average person puts 00:22:27.290 --> 00:22:30.480 in, into force for themselves, the average investor across the 00:22:30.480 --> 00:22:34.300 country is not earning any more than inflation, which is a very low number. 00:22:34.570 --> 00:22:39.390 With an advisor, one, all of the strategies are vetted, we're looking 00:22:39.390 --> 00:22:44.460 at stuff that's specifically focused on that individual client, it's not a cookie 00:22:44.460 --> 00:22:47.840 cutter that one size fits all, it's, we're looking at the client individually, 00:22:48.170 --> 00:22:52.070 we really like to tell them that if we're doing our job correctly, You're 00:22:52.070 --> 00:22:55.560 actually going to feel like you're not paying a fee because you're going to be 00:22:55.870 --> 00:22:58.510 earning more from the other investments. 00:22:58.750 --> 00:23:00.450 We're not saying you're not paying a fee. 00:23:00.580 --> 00:23:02.370 It's, gotta be careful how we word that. 00:23:02.570 --> 00:23:06.260 But we're really trying to say, look, our fee is more than offset by the 00:23:06.260 --> 00:23:10.680 good choices that are going to be made, by things that you hear in the 00:23:10.680 --> 00:23:14.050 market that you come to us with that we say aren't such a good idea, and the 00:23:14.060 --> 00:23:18.260 actual performance of your portfolio typically will far outperform That 00:23:18.260 --> 00:23:19.740 of what an average investor will do. 00:23:19.740 --> 00:23:21.390 So that, it's a very important area. 00:23:21.620 --> 00:23:24.340 We really do think that we add an awful lot of value to our clients. 00:23:24.901 --> 00:23:27.321 Linda Ostovitz: Well, you really do have to be careful how you say that because 00:23:27.321 --> 00:23:29.261 you know, there are lawyers every, 00:23:29.401 --> 00:23:33.291 Shaun Eddy: are we are in a business that has a lot of disclaimers and liabilities, 00:23:33.291 --> 00:23:36.691 so we do try to always be very careful and of course we can't guarantee future 00:23:36.701 --> 00:23:40.121 return, but at the same time, we do know that historically we're able to 00:23:40.141 --> 00:23:41.451 add an incredible amount of value. 00:23:42.451 --> 00:23:45.991 Linda Ostovitz: Well, again, in business, and I use this term generally, 00:23:46.021 --> 00:23:48.121 you got to spend money to make money. 00:23:48.711 --> 00:23:54.211 And I think it is a hard decision to make sometimes to get to the point at which 00:23:54.241 --> 00:24:00.541 you say, okay, wait a minute, is the return going to be worth my investment? 00:24:01.001 --> 00:24:04.191 Is the investment going to enable me to go do something else that 00:24:04.201 --> 00:24:08.031 provides growth in my business, because I'm not doing something 00:24:08.031 --> 00:24:09.861 that someone else could do for me. 00:24:10.861 --> 00:24:14.581 So it's part of the whole ecosystem, I guess is the right term to use 00:24:14.826 --> 00:24:15.506 Shaun Eddy: Absolutely. 00:24:16.466 --> 00:24:17.776 We love working with entrepreneurs. 00:24:17.776 --> 00:24:21.556 And so, I think some of the entrepreneurs are not as typically the 20 year 00:24:21.556 --> 00:24:25.276 olds, but you do see 20 and 30 year olds that are more entrepreneurial. 00:24:25.276 --> 00:24:28.496 And typically, those are the people that start to realize that things 00:24:28.496 --> 00:24:30.056 need to be delegated more quickly. 00:24:30.256 --> 00:24:32.056 It's often the younger people that aren't yeah. 00:24:32.106 --> 00:24:34.646 entrepreneurial that are just working a job for someone else. 00:24:35.136 --> 00:24:37.956 They're not as quick to realize some of the things that can be delegated and 00:24:37.966 --> 00:24:41.476 it may take them a few more years to actually start to realize, wow, I really 00:24:41.476 --> 00:24:42.786 could use some help in these areas. 00:24:43.786 --> 00:24:48.696 Linda Ostovitz: So it's January and we've discussed really important 00:24:48.736 --> 00:24:54.596 items here, but what is the advice that you would give to our audience 00:24:54.596 --> 00:24:58.506 here today for what to do in January? 00:24:59.156 --> 00:25:01.986 Understanding that what they do will have an impact that. 00:25:02.986 --> 00:25:05.386 Exceeds potentially even the end of this year, 00:25:05.821 --> 00:25:06.021 Shaun Eddy: Yeah. 00:25:06.021 --> 00:25:10.031 I would always say whether you're an individual or a married couple look at 00:25:10.031 --> 00:25:14.801 your budget, really determine what's the maximum amount that I could save that 00:25:14.801 --> 00:25:16.721 I could put away on an annual basis. 00:25:17.036 --> 00:25:20.486 And be comfortable with without totally taking away from some 00:25:20.486 --> 00:25:21.566 of the fun that we want to have. 00:25:21.566 --> 00:25:24.146 We do want to make sure our clients have some fun out there. 00:25:24.436 --> 00:25:27.606 Really, and then really live by that budget and put that money away. 00:25:27.826 --> 00:25:31.876 And then do it as tax efficiently as possible and keep at it throughout 00:25:31.876 --> 00:25:35.696 the year as things go up and down, if you get raises or if you get bonuses, 00:25:35.866 --> 00:25:39.086 look at some additional savings opportunities out of that, and don't 00:25:39.086 --> 00:25:41.156 spend all the money on fun stuff. 00:25:41.256 --> 00:25:42.026 Have some fun. 00:25:42.301 --> 00:25:46.081 But make sure you also reward yourself for retirement opportunities and things 00:25:46.081 --> 00:25:47.771 like that with some of those extra funds. 00:25:48.771 --> 00:25:54.951 Linda Ostovitz: For 43 years, I have practiced law and for most of those 43 00:25:54.961 --> 00:25:57.251 years, it's been in a divorce arena. 00:25:58.191 --> 00:26:02.151 And I see some people come through my door who have credit card debt 00:26:02.421 --> 00:26:03.861 that would scare the hell out of me. 00:26:04.281 --> 00:26:05.711 And I am a lot more. 00:26:06.096 --> 00:26:12.115 Established and stable and they are when you talk about the budget and 00:26:12.258 --> 00:26:15.548 coming up with a budget and living within a budget, and so forth. 00:26:16.548 --> 00:26:22.428 How do you advise people to stay away from the lure of a credit card that maybe 00:26:22.428 --> 00:26:23.928 you don't have to pay off every month? 00:26:24.108 --> 00:26:29.208 Shaun Eddy: Yeah, credit cards are great for just revolving cash flow, but we 00:26:29.208 --> 00:26:32.978 really try to recommend that people do not build up balances on those, they pay 00:26:32.978 --> 00:26:34.988 those balances off every single month. 00:26:35.358 --> 00:26:39.611 The interest rates on those are astronomical high double digits into 00:26:39.611 --> 00:26:43.571 the 20 percent range, and you're never going to get ahead of that transaction. 00:26:43.891 --> 00:26:47.501 We recognize that people do have emergencies and there's things that occur 00:26:47.501 --> 00:26:51.411 sometimes where an emergency occurs and they have a balance that will carry over. 00:26:51.821 --> 00:26:55.971 But really go out of your way to not build up balances on credit cards. 00:26:56.271 --> 00:26:59.731 There's going to be times where people, it just, it happens and we understand 00:26:59.731 --> 00:27:03.021 that and we work with our clients and find creative ways to get those paid 00:27:03.031 --> 00:27:05.041 down quicker and things like that. 00:27:05.041 --> 00:27:09.461 But whenever we see clients with credit card debt, that is always the single 00:27:09.461 --> 00:27:13.791 most important thing to get rid of as quickly as possible because it's hard 00:27:13.791 --> 00:27:16.041 to get any account to grow consistently. 00:27:16.461 --> 00:27:19.351 At 20 to 24 percent year after year. 00:27:19.511 --> 00:27:21.431 So we need to get rid of that as quickly as possible. 00:27:22.411 --> 00:27:26.061 Linda Ostovitz: Shaun, thank you so much for joining me today and talking 00:27:26.071 --> 00:27:32.176 about HSAs and some of the ways to reduce tax liability understanding that 00:27:32.176 --> 00:27:37.206 there are many ways to accomplish that and I know you just hit the surface 00:27:37.236 --> 00:27:38.716 with what we talked about today. 00:27:38.756 --> 00:27:43.710 But I appreciate the benefit of your thoughts and your expertise. 00:27:44.270 --> 00:27:46.130 And thanks so much for being with us today. 00:27:46.210 --> 00:27:46.955 Shaun Eddy: Aw, thank you, Linda. 00:27:46.955 --> 00:27:47.835 Thank you for having me. 00:27:48.035 --> 00:27:49.135 I enjoyed the conversation. 00:27:49.546 --> 00:27:50.176 Linda Ostovitz: It's a pleasure.