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Retire Rich: The Ultimate Guide to IRAs, 401(k)s, & HSAs! · Earn Your Leisure

• 0:01
  Speaker 1: Earners.
• 0:01
  Speaker 2: What's up.
• 0:02
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  Speaker 1: can keep pushing your vision forward. This episode is brought
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• 1:12
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• 1:16
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• 1:48
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• 1:51
  Speaker 3: IRA is in retirement accounts. What are the options? Guys?
• 1:57
  Speaker 3: These are things Rasha alluded to this. You have some
• 2:01
  Speaker 3: of these already. Some of you have been investing blindly
• 2:04
  Speaker 3: and passively just through your job and dollar cost averaging.
• 2:09
  Speaker 3: So some of the things we talked about in our
• 2:11
  Speaker 3: lesson today you have been doing just by happenstance. Traditional
• 2:17
  Speaker 3: roth ira roth ira are some investment in retirement accounts.
• 2:24
  Speaker 3: You have your four to one K. You guys all
• 2:26
  Speaker 3: may be familiar with that. If you have a W
• 2:29
  Speaker 3: two type of job, your four or three B. Myself
• 2:34
  Speaker 3: and Troy. We are former educators, and so we know
• 2:37
  Speaker 3: about the four fifty seven. You got your health savings account.
• 2:42
  Speaker 3: You have various IRA and retirement vehicles to investing. Let
• 2:48
  Speaker 3: me break down this traditional roth ira okay and the
• 2:53
  Speaker 3: roth ira. These two vehicles, okay, not that there is
• 3:01
  Speaker 3: a knock. There's never no knock to investing. But they
• 3:04
  Speaker 3: have caps, they have limitations, they have income limits, okay,
• 3:10
  Speaker 3: and so if you make a certain amount over a
• 3:12
  Speaker 3: certain threshold, then this might not be readily available to you.
• 3:17
  Speaker 3: You might have to do a roth conversion. Okay, you
• 3:21
  Speaker 3: have to do something different. But a wroth ira is
• 3:24
  Speaker 3: after tax dollars that you guys will be investing. So
• 3:28
  Speaker 3: after your money has went into your work for one
• 3:31
  Speaker 3: CA that they automatically debited out of your account into
• 3:34
  Speaker 3: your retirement. Hopefully you got that at least seven percent
• 3:37
  Speaker 3: or fifteen percent. We got to do better with our allocation, okay.
• 3:42
  Speaker 3: After tax dollars would then go into your wroth ira.
• 3:47
  Speaker 3: Similar to what Rashard told you guys earlier with you
• 3:50
  Speaker 3: need to get your own brokerage account. You got to
• 3:54
  Speaker 3: have inside that brokerage account a roth ira as well.
• 4:00
  Speaker 3: So that you can put up to the limit, which
• 4:02
  Speaker 3: this year is seven thousand dollars into that, and if
• 4:06
  Speaker 3: you're over fifty, you can put up another thousand, which
• 4:09
  Speaker 3: will get you up to eight thousand dollars on a year.
• 4:12
  Speaker 3: And so these are other things you can do in
• 4:16
  Speaker 3: addition to your stocks, in addition to your ETFs, in
• 4:20
  Speaker 3: addition to trading options, in addition to your money markets.
• 4:24
  Speaker 3: These are things you can do as well on the
• 4:27
  Speaker 3: wealth building journey, even as a beginner.
• 4:31
  Speaker 2: Yeah, an HSA thing is something that people don't talk
• 4:33
  Speaker 2: about a lot of either because they don't that's important.
• 4:37
  Speaker 3: That's the game changer for me. The HSA Health Savings
• 4:40
  Speaker 3: Account guys, just so you know, the acronym health savings account.
• 4:43
  Speaker 3: So whether you're married and or single, if your insurance
• 4:49
  Speaker 3: has a HSA a health savings plan, you can use
• 4:55
  Speaker 3: the money to take care of doctor Bill's appointments co pays.
• 5:00
  Speaker 3: But whatever money isn't used, the HSA invest in it
• 5:04
  Speaker 3: invested for you. Inside some of their allocations. They have
• 5:09
  Speaker 3: mutual funds that you can pick from growth tech some
• 5:12
  Speaker 3: of the things that Shad told you guys about earlier.
• 5:14
  Speaker 3: Growth tech. You can do energy. They have it all
• 5:18
  Speaker 3: inside the HSA. Just type health savings account, okay, and
• 5:24
  Speaker 3: you will see health equity dot Com will come up.
• 5:28
  Speaker 3: You will see certain things come up. And if you
• 5:30
  Speaker 3: invest inside that I know, being married, we can put
• 5:33
  Speaker 3: up to seven a little over seven thousand, maybe seventy
• 5:36
  Speaker 3: eight hundred a year into this and guess what, guys,
• 5:40
  Speaker 3: it reduces your taxable income. Okay, So there's another way
• 5:45
  Speaker 3: for on that front, for you guys to also be
• 5:49
  Speaker 3: doing the right thing by your money, doing right by
• 5:51
  Speaker 3: your money, but also reducing your taxable income. And that money,
• 5:56
  Speaker 3: if not used for a copay, simply is there growing
• 6:01
  Speaker 3: on your behalf and that can stow pile pretty big
• 6:06
  Speaker 3: for those of you that stay on top of your
• 6:08
  Speaker 3: health and wealth.
• 6:10
  Speaker 2: You can use it. You get sixty five. So if
• 6:14
  Speaker 2: that's gonna be a question people like, well, if I
• 6:15
  Speaker 2: don't use you're supposed to use it for medical expenses.
• 6:18
  Speaker 2: If you don't use it for medical expenses, if you
• 6:20
  Speaker 2: can use it after sixty five without getting penalized, yeah,
• 6:23
  Speaker 2: it's like it's another form of retirement, right, another form
• 6:27
  Speaker 2: of saving money that you have to pay like a
• 6:30
  Speaker 2: deductibles or like you said, out of the pocket medical expenses,
• 6:32
  Speaker 2: but it's invested in the market. But as that's growing,
• 6:35
  Speaker 2: if the money that you don't spend. So if you're
• 6:38
  Speaker 2: sixty five years old, you have one hundred thousand dollars
• 6:40
  Speaker 2: in HSA. Now that effectively is like another IRA for
• 6:44
  Speaker 2: you because you can use that for your retirement without
• 6:47
  Speaker 2: getting penalized. So if you use it before that for
• 6:51
  Speaker 2: anything other than medical expenses, you get penalized. But if
• 6:53
  Speaker 2: you use it after sixty five, that's important for people
• 6:57
  Speaker 2: to fully understand. So it's a way to definitely, you know,
• 7:01
  Speaker 2: kind of hedge with the medical aspect of it, but
• 7:06
  Speaker 2: also it's like a double edged sword when you save
• 7:08
  Speaker 2: it for retirement. Also if you don't use it.
• 7:10
  Speaker 1: Chris, you brought something in terms of education. I was
• 7:13
  Speaker 1: both being in education about maximizing these allocations. Now at
• 7:18
  Speaker 1: twenty five, I'm fresh into the game. I'm about to
• 7:21
  Speaker 1: make sixty five thousand dollars for the year seventy doin
• 7:25
  Speaker 1: You're not thinking, hey, I should take the largest percentage,
• 7:28
  Speaker 1: just like, all right, what's the lowest I could put
• 7:30
  Speaker 1: three percent? I'm gonna do that. Talk about the mindset
• 7:33
  Speaker 1: and the ship because people are looking like what can
• 7:35
  Speaker 1: I do right now, Like this is something that you
• 7:37
  Speaker 1: can go to your HR department like on Monday right
• 7:41
  Speaker 1: and say, hey, I want to actually max out my
• 7:44
  Speaker 1: four or three B Talk about the importance of that,
• 7:45
  Speaker 1: because I don't think people really understand it. Is that
• 7:47
  Speaker 1: one guy that comes once a year to talk to
• 7:49
  Speaker 1: you about it at lunch and you never see him
• 7:51
  Speaker 1: and then you just forget about it. Talk about the importance.
• 7:53
  Speaker 3: It's so important because time is our greatest asset, and
• 7:58
  Speaker 3: so the earlier you can do these things, take advantage
• 8:01
  Speaker 3: of all these vehicles, the bigger your pot will be,
• 8:05
  Speaker 3: the bigger your nest egg will be when it's all
• 8:07
  Speaker 3: said and done. So listen to this. You can't miss
• 8:09
  Speaker 3: what you never had. You can miss what you never seen.
• 8:13
  Speaker 3: If you take that allocation that they're gonna buy default,
• 8:16
  Speaker 3: have it at between one and three percent, If you
• 8:19
  Speaker 3: move it to seven percent or fifteen percent, and you
• 8:22
  Speaker 3: get used to living your lifestyle around what your check
• 8:25
  Speaker 3: will then be when that comes to you every two
• 8:28
  Speaker 3: weeks or how often you get paid, you won't miss
• 8:32
  Speaker 3: it because you didn't see it. It's only when you see,
• 8:37
  Speaker 3: oh man, my check three thousand dollars you think you
• 8:40
  Speaker 3: got three thousand dollars to spend, Okay, but if you
• 8:43
  Speaker 3: never seen three thousand or whatever your check may be,
• 8:46
  Speaker 3: because it is going to something that's going to your
• 8:49
  Speaker 3: future self is gonna thank you for. That's how you
• 8:52
  Speaker 3: get ahead of the game. And so the earlier, if
• 8:54
  Speaker 3: you're twenty four years old and you're seeing this, the
• 8:57
  Speaker 3: earlier you can go into your employer, your place of
• 9:00
  Speaker 3: employment and tell them, if I'm receiving a four to
• 9:03
  Speaker 3: one K contribution, can you make sure my allocation is
• 9:06
  Speaker 3: at least seven to twelve percent. Fifteen percent is on
• 9:11
  Speaker 3: the higher end, but that would even be good if
• 9:12
  Speaker 3: you can make that shake. If you're still living at
• 9:14
  Speaker 3: home and you don't have and your mom is letting
• 9:17
  Speaker 3: you do your thing, and you not having a whole
• 9:19
  Speaker 3: bunch of responsibility, put it at fifteen percent util you
• 9:23
  Speaker 3: get your own place, and then scale it back down
• 9:25
  Speaker 3: to seven. But you can't miss what you never had, okay.
• 9:28
  Speaker 3: And so if you get that mindset early, you're off
• 9:32
  Speaker 3: into the races. Okay. For me, it kind of clicked
• 9:35
  Speaker 3: when I was around twenty seven. Between that twenty seven
• 9:40
  Speaker 3: and twenty nine year range for me, you know what,
• 9:43
  Speaker 3: I'm saying, but listen to how it happened. Though my
• 9:45
  Speaker 3: wife I saw her for a one k killing mine.
• 9:49
  Speaker 3: I'm looking like, what am I doing? My allocation was poor,
• 9:54
  Speaker 3: My allocation wasn't where it needed to be. I'm looking like, man,
• 9:56
  Speaker 3: I've been I was the administrator in higher education for
• 10:00
  Speaker 3: ten years. I'm what am I doing? My investments because
• 10:05
  Speaker 3: of what I was controlling? Blew my higher education job,
• 10:10
  Speaker 3: which was good benefits, It blew those in They blew
• 10:13
  Speaker 3: that four one came out the water. That showed me
• 10:18
  Speaker 3: the importance of man. My wife retirement was way higher
• 10:22
  Speaker 3: than mine, simply because hers was like at twelve or fifteen,
• 10:26
  Speaker 3: the whole teen years she was in the health field.
• 10:29
  Speaker 3: And so Troy brought it up. But it's need to
• 10:32
  Speaker 3: be said, do it as early as you can. Your
• 10:36
  Speaker 3: future self will thank you later.
• 10:38
  Speaker 2: And then also before we leave this topic, it's impoint.
• 10:40
  Speaker 2: People don' understand the four one came forth to be
• 10:44
  Speaker 2: four fifty seven. Like they'll give you a bunch of
• 10:46
  Speaker 2: different options. A lot of time people don't invest because
• 10:48
  Speaker 2: they don't know how to go about and the intimidated.
• 10:51
  Speaker 2: One of the easiest ways is to pick a target
• 10:53
  Speaker 2: date fund. So a target date fund is that it
• 10:56
  Speaker 2: calculates your age and the age that you would be
• 10:59
  Speaker 2: like around sixty year old postal retirement, so it might
• 11:01
  Speaker 2: be twenty thirty, twenty forty, twenty fifty, depends on how
• 11:03
  Speaker 2: old you are. And the whole theory with retirement plan
• 11:07
  Speaker 2: is that you got to be aggressive when you're young
• 11:09
  Speaker 2: and conservative when you get older, so it automatically changes
• 11:11
  Speaker 2: over the course of time. So that's a very cookie cutter,
• 11:15
  Speaker 2: easy approach to take if you if you are like
• 11:18
  Speaker 2: unsure of like twenty different options that you have available
• 11:22
  Speaker 2: to you. The target date is something that is recommendable.
• 11:27
  Speaker 2: I used to recommend it when I was in a visor.
• 11:29
  Speaker 2: It's like that's something that is kind of does the
• 11:33
  Speaker 2: work for you and you don't have to worry about
• 11:36
  Speaker 2: changing in every five years and switching the allocations. And
• 11:39
  Speaker 2: then sometimes you have a rough fur one kke component
• 11:42
  Speaker 2: two in your job. That's important to acts because the
• 11:45
  Speaker 2: wrong The difference between the row and the traditional is
• 11:48
  Speaker 2: that one takes money you save money today which is
• 11:50
  Speaker 2: a traditional, when you save money later, which is the WROTH.
• 11:53
  Speaker 2: So it depends on your situation. But if you have
• 11:57
  Speaker 2: let's say a million dollars in retirement, and you took
• 12:00
  Speaker 2: out that whole million dollars at one time from your
• 12:02
  Speaker 2: four one K, you you would get like six hundred
• 12:05
  Speaker 2: thousand net because that is fully taxable. So that's important
• 12:11
  Speaker 2: for people to fully understand, especially when you think about
• 12:12
  Speaker 2: your retirement, you think that you got a certain amount
• 12:15
  Speaker 2: of money, but you don't. You don't realize that that's
• 12:17
  Speaker 2: taxable state and federal tax. That's why a lot of
• 12:20
  Speaker 2: people moved to Florida when they retire because there's no
• 12:22
  Speaker 2: there's no state tax, but regardless the way you look,
• 12:24
  Speaker 2: you still got to pay federal tax. But if you
• 12:26
  Speaker 2: have the raw, if you have a million dollars hypothetically
• 12:30
  Speaker 2: and you took out all a million dollars at one time,
• 12:32
  Speaker 2: you would get one million dollars because it's not taxable,
• 12:35
  Speaker 2: but you didn't you didn't get a tax benefit when
• 12:38
  Speaker 2: you put the money in today. So that's important for
• 12:42
  Speaker 2: people to understand as far as a tax because we
• 12:44
  Speaker 2: don't talk about taxes at all, but even like capital.
• 12:46
  Speaker 1: Gains short term, long term.
• 12:48
  Speaker 2: That's important for people because it's like you do a
• 12:50
  Speaker 2: lot of like trading or selling stocks and you don't
• 12:54
  Speaker 2: realize that you you're racking up a tax bill and
• 12:57
  Speaker 2: then at the end of the year you like, damn,
• 13:00
  Speaker 2: I gotta pay taxes. I didn't even know I had
• 13:02
  Speaker 2: to pay taxes on this, Like I kept it in
• 13:03
  Speaker 2: my broke with account and I didn't put it in
• 13:05
  Speaker 2: my bank account. But if you sell a stock, you
• 13:08
  Speaker 2: pay capital gains tax on that stock. You don't pay
• 13:11
  Speaker 2: capital gains tax on your retirement, but you do pay
• 13:15
  Speaker 2: federal and state tax if it's not a roth. So
• 13:18
  Speaker 2: understanding that is important because you don't want to get
• 13:23
  Speaker 2: like twenty years down the line and it's like, damn,
• 13:25
  Speaker 2: I wish I had a rough because now I gotta
• 13:27
  Speaker 2: pay hundreds of thousands of dollars because I have millions
• 13:30
  Speaker 2: of dollars in my four to one K.
• 13:32
  Speaker 1: Yeah, and you don't want to put the profits if
• 13:34
  Speaker 1: you're talking about stocks into your account and say, oh,
• 13:36
  Speaker 1: this is all profit. Now, there's a percentage of that
• 13:38
  Speaker 1: that's going to be for taxes if it's been if
• 13:41
  Speaker 1: you sold it within a year and a day, that's
• 13:44
  Speaker 1: going to be short term capital gains. And depending on
• 13:46
  Speaker 1: your tax threshold, that's the allocation that you're gonna have
• 13:49
  Speaker 1: to pay for it. If it's over a year and
• 13:52
  Speaker 1: a day, it's long term. And again there's a cap
• 13:54
  Speaker 1: on that things like fifteen percent for the most part.
• 13:57
  Speaker 1: Sometimes it does go up to twenty. But that's a
• 13:59
  Speaker 1: big percentage, right. You know in the short times you
• 14:00
  Speaker 1: can get up to thirty seven to thirty nine percent.
• 14:03
  Speaker 1: So you talking about a twenty percent difference if you
• 14:06
  Speaker 1: just hold long term. That's why we always stress it.
• 14:08
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