An investing prof at Chicago puts this on the whiteboard at the start of semester, saying this is really all most people need to know and this class is unlikely to learn anything in his or any class that will let them, personally, do better.
Mostly on the tax side. Some specific examples:
- after maxing out your 401k what should you do next? IRA? Mega backdoor roth? Something else?
- If you have kids, how to best save for future education expenses? Hint: consider 529 plan.
- HSA is technically the best tax advantaged account, most high earners don’t realize it and “waste” the HSA funds to reimburse typical medical bills. HSA has triple tax benefits: contributions are tax-free, growth is tax-free, and withdrawals are also tax-free after age 65 for any reason, not just medical expenses. So basically investing without any tax obligation. You can also withdraw tax free before 65, but for medical expenses only.
i could go on…investing is great, but reducing your tax obligation is an even more powerful technique if you want to grow your net worth.
I wouldn’t consider those options needing much motivation or research. The key with all of them is investing early and leaving it alone.
I do agree people should call vanguard. But just blindly following steps they give you is unlikely to be productive if you don’t understand why you’re doing those steps. Furthermore, those people who don’t understand _why_ will freak out every time there’s a huge market correction. They get scared - because they don’t understand any of it.
I’m also curious, do they offer financial advice for your accounts outside vanguard? Genuinely curious since i’m unsure.
Replace Vanguard with any other firm but the key is picking low fee ETFs and leaving them alone. Vanguard tends to have a reputation for the lowest fees.
Max out contributions to the HSA
all medical expenses (except for premiums) since the beginning of the hsa account’s existence are eligible for reimbursement, decades later
One additional trick though is that it looks like you can pay for any HSA-eligible medical expenses (incurred after you created the HSA) out-of-pocket now, and reimburse your bills at any point in the future? Thus you can still earn interest on the cash before withdrawing it at any point in the future (treating it as tax-free liquidity).
(I don't fully understand this so these are questions not statements, but hopefully I'm correct!)
That's what I understood too. That claim that you can completely skip taxes looks wrong.
You can pay cash for a qualified medical expense in 2025 and take out that amount of money from the HSA decades later.
Has anyone tested this HSA claim approval amd reimbursement of 30/40/50 year old medical work before? Is there a chance the rules could change and the medical care has to be recent?
For keeping receipts, we have a process where we dump our eligible receipts into a folder on the NAS and have the scanner/printer setup with a one-button "medical scan" that also dumps paper bills into that folder. You only need receipts to substantiate your position during an audit if they decide to do one, so a big pile of receipts and a spreadsheet with the annual amounts is enough for my taste.
For a reduction of taxes at our full federal tax bracket plus our state income rate, it's worth keeping a folder on the NAS and pushing a button on the scanner a couple handful of times per year.
> Is there a chance the rules could change and the medical care has to be recent?
There's always a theoretical chance, but any prior (or likely then-current year) medical bills would almost surely still remain eligible for reimbursement. The worst case that I can see as being likely is a rule change to require that a 2026 expense would have to be claimed by April 15, 2027. But I wouldn't expect that and think there's precedent that they couldn't change the reimbursement eligibility for expenses incurred prior to the law change. US v Carlton is one where specifically a one-year period of retroactive change was found to be "supported by a legitimate legislative purpose furthered by rational means" which suggests to me (IANAL) that longer periods of retroactive change would likely be found to violate due process.
What I should have said is that after 65 you can spend it on non medical stuff without penalty. BUT if you do so you’ll owe tax that year (withdrawal).
So to summarize, you can avoid all tax if it’s spent on medical stuff. For non medical (post 65) it’s still good, but not as good.
Still an amazing deal because old people tend to spend a lot more on healthcare.
Cigna refused to lift a finger unless i sued them both.
yeah, i wouldn't recommend that.
529 plans can get a bit more complicated because you'll want one from your state (if your state has an income tax) and they may offer several, but then it's less about knowing tax code specifics than about what the differences are between their offerings.
It’s really not that hard and i don’t understand why more people aren’t interested. Let’s reframe for a minute…if i said a high earner could retire a year earlier, or maybe even a few years earlier just by learning some semi-advanced tax strategies. Should they do so? Yeah. They’d be crazy not to lol.
Even that is not a simple thing. What’s your benchmark? Is that the right benchmark for you and your goals? Agency has a cost.
1. Invest enough to get the company match in an S&P 500. It probably isn’t Vanguard that your company uses
2. Pay off all of your debt except your house (and maybe your car)
3. Max out your HSA - if you are married it’s - $8550
4. Max out your 401K - again that’s probably not through Vanguard - $23500
5. Step 5 - then call Vanguard and depending on your income just do a Roth up to $8000 (?).
(Unless you are over 50 then do catch up contributions as 4.5)
If you are under 50, you can do $40,500 tax advantaged and over 50 $48050
From what I understand it’s Medicare Part A+B and either Part C or Medigap.
Of course private insurance especially for older Americans like Part C and Medigap is Byzantine if you actually need it and some doctors don’t accept Medicaid (low income) and a few don’t even accept Medicare.
I don’t know much from either first hand or second hand experience because my mom and dad (83 and 81) are under my mom’s teacher’s retirement insurance and between them (two pensions + social security) medical expenses are more of a nuisance than something that they stress about.
If you're putting the maximum in your HSA each year, you're participating in a high-deductible healthcare plan.
> If you got your HSA-qualified HDHP through your employer, your average [premium] looked like $90 per month if you were single and $432 for your family.
> Median annual deductible for private industry workers participating in HDHP plans was $2,750.
> Average out-of-pocket maximum was $4,422 for single coverage.
Also, on step 4, you may need to do a backdoor Roth IRA if you’re over the Roth IRA income limits.
The issue is that most companies don’t allow it because of compliance reasons and rules regarding highly compensated employees. Of course the one company that did allow it was BigTech.
Not that I’m missing much. I doubt I will be in a higher tax bracket at retirement than I am now and I live in a state tax free state.
These are obviously champagne problems but if you’re a high earning W2 it’s worth considering.
https://news.ycombinator.com/item?id=44377380P
There is no secret. I’m 51 and the math says I won’t be able to retire until the earliest when I’m 66.5 and my wife turns 65 and probably won’t retire until I’m 68.5 and my wife turns 67. Since she will be claiming spousal social security (50% of mine) and that’s when hers doesn’t get any larger by waiting.
That’s with my projecting maxing out my 401K + catchup contributions + in a couple + in two years after another obligation falls off maxing out a Roth.
Don’t cry for me. I work remotely, we travel extensively and do the digital nomad thing sporadically. Like next year we are going to Costa Rica for a month and half in the winter and travel domestically in the summer. We live in a unit of a condotel we own and it gets rented out when we aren’t at home to cover the market.
The way I see it, no need to wait until retirement to travel and by the time I do, we will be doing longer stays in Costa Rica, Panama City, etc
I’m not rich, and I make around $200K as a staff consultant working at a third party cloud consulting company.
I had a class where the teacher did something similar, but she showed that if you started a ROTH today and contributed only the 4 years you were in college and then stopped forever. You would have nearly the same amount of money as someone who started 1 year after they completed college and invested every year until retirement.
Ultimately she was encouraging us to take out student loans and invest it or use any excess scholarship money to max out a ROTH IRA. She even advocated for investing all student loan money and opening credit cards tp actually pay for college, making minimum payments until graduation. Then moving away to a LCOL country and learn the language for 8-9 years while remaining in school taking 1 online class a year and travelling the world on student loans and not to worry about starting a career until 30 and start paying once you are back and start a job.
The gap is so big I’m going to be imprecise and won’t matter.
A Roth allows 7k a year I believe. So 4 years of school, 28k total.
Let’s be generous and say you start with 30k at age 18. At 65 you’ll have 700k.
I started at 26, my salary has been increasing at 6k a year average. I don’t max it out, but hover around 10-15%, I get a 100% match on up to 7% of my salary. I’m 10x ahead of the 18yo on the same projection and 5x ahead 10 years earlier.
Not even going to get into the interest rates and how you’re fucking up your finances tremendously for the rest of your adult life
If you start at 30, and put in $600 a month, each month, until 65. You would have ~$1,088,000.
Yes, in the end you get more, but that is with contributing for 35 years each month, vs just contributing in the beginning. I know those aren't the exact numbers that would be relevant because it was actually making the annual contribution for 4 years, not the lump sum. But the numbers were similar, yes you have more in the end, but you could also have a reasonably similar amount without actually working and contributing for 35 years.
I was lucky, my physics department administrator told me the same thing when I was graduating.
The 2ND best piece of advice is to rollover your 401k when you move to a new company -> this cost me at least 500k because they effectively stagnate when your company isn't paying the maintenance cost (AIUI).
Is this true? My understanding is that the fees come out of the account itself. There's other good reasons to roll over (primarily investment flexibility) but I have not heard of something like this.
https://markets.businessinsider.com/news/etf/bitcoin-etf-van...
It's definitely got a solid track record and good fees, but these are things I'd feel weird about advertising it on HN for.
- they have bad customer service - they have a bad website that hides important information - they don’t have cheaper funds than others - they were latest to the party on commission free trading.
It’s just a well-marketed brand.
This doesn’t make sense.
It's... less unique to Vanguard these days, as several of the large providers have equivalent low-cost funds you can invest in; but 15 years ago it was more significant, iirc.