Welcome to the first post in a brand-new format for the Rall Capital Management blog. Actually, it’s a return to a style of posting that we used a few years ago and have decided to bring back. For the last few years, we’ve written long-form articles, each narrowly focused on a financial subject. While we hope that those posts have been helpful, we’ve realized that there are just too many subjects that we would like to address, with just a limited amount of time to do so.
With the Financial Weekly Reader format, we’ll post about some of the most important financial planning articles that we see each week. We’ll provide links to the articles and a bit of commentary on why we think each is important. We plan to bring you three to four articles a week. Some might be timely for you and can help you make an important financial decision. Some won’t be pertinent to you—at this time. The subjects that aren’t important to you now may be later on. Or, you may have a friend or family member that the article could help. Feel free to share any or all.
This week we’re bringing you an article on health savings accounts (HSAs); an article that can help you easily estimate the cash flow you’ll need in retirement; and finally, an article to put the importance of an 800 credit score in perspective. We hope that you enjoy the posts!
This article from Kiplinger discusses one of the best-kept secrets in the retirement planning world, a health savings account. If you are not familiar with HSAs (or even if you are!), you might be wondering what a health savings account has to do with retirement planning. The HSA is the only account that offers triple tax-saving benefits. Contributions to the account are made with pre-tax dollars; any growth that occurs in the account grow tax-deferred; and when you take money out, the distributions are tax-free if used for qualified medical expenses.
Not everyone can have an HSA. To qualify, you must have a high-deductible health insurance plan. The HSA is usually used to pay the out-of-pocket medical expenses like co-pays and deductibles. If you can afford to pay those costs without accessing the HSA, you can invest in the account and let it grow, using the funds in your retirement years, when medical expenses are usually the highest. Check out the article and learn more about how an HSA can become a big part of your retirement plan.
Planning for retirement starts with trying to get an idea of how much you will need to live on. But for most people, that’s not an easy number to come up with. In fact, as this article from Money.com points out, only 28% of Americans have even attempted to answer it. But knowing how much income you’ll need in retirement is important.
No one likes to go through the budgeting process, trying to track where you spend all your money. There are some apps, like Mint.com, that can help. But as this article discusses, the amount of your take-home pay is a good place to start. It’s just a ballpark estimate, but it’s a good place to start. Read the article for ideas on how to start wrapping your arms around your number.
Your credit score is a critical number. It is the number that lenders will look at when you apply for any kind of credit—a mortgage, a car loan, credit cards, etc. A high credit score will make you look like a low risk for a lender. You’ll get lower interest rates and may qualify for better terms from cable companies, credit card issuers, and even insurance companies.
But, as this article from Clark.com points out, you don’t need to obsess over an 800 score. A lot of people look at their score as a competition or a measure of their success. While it’s important to keep your number high, you won’t receive any better deals once your score is above 760.