Upticks: Planning for Elder Care, AI in Daily Life, Maximizing HSA Benefits, and Portfolio Rebalancing
By Jake Falcon on December 19, 2024
On this episode of Upticks, Jake and Cory address a recent client question about planning for elder care, emphasizing the importance of communication and financial planning. They share insights on how WSJ readers are integrating AI into their daily lives, discussing both the potential benefits and pitfalls.
They explore potential untapped benefits of Health Savings Accounts (HSAs) for retirement savings, highlighting the triple tax benefits and the need for better education on their use. Finally, they address the importance of rebalancing investment portfolios, especially after significant market movements, to help maintain a well-diversified and balanced investment strategy.
Thank you for joining us this week! If you have a topic that you would like Jake and Cory to discuss or debate live on Upticks, please email it directly to me at luke@falconwealthadvisors.com and I’ll be sure to ask them to bring it up on the show!
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Read a summary of the conversation below:
Let’s Discuss Planning for Your Parents’ Elder Care
Jake and Cory address the complex and often emotional topic of planning for elder care. Jake starts by sharing a question from clients who are unsure about how to manage their aging parents’ care. The first step should not be to empty out their bank accounts to qualify for Medicaid, as there is a five-year look-back period that could complicate matters. Let’s look at four highlights for planning elder care:
- Level of Care Required: Determine whether the parents need minimal help or 24/7 care.
- Budget: In-home care can be cost-effective, while nursing homes are typically the most expensive.
- Location: Consider proximity to family, friends, and medical facilities.
- Quality of Care: Research and interview potential care facilities.
Cory adds that communication with parents is important. There are resources available that can help families navigate the process of finding the right care facility. Jake and Cory agree that starting with a conversation with the parents and consulting with financial planners like Falcon Wealth Advisors can help families make informed decisions.
It is also important to consider the parents’ preferences and comfort. Jake mentions that families could involve their parents in the decision-making process to help ensure that their wishes are respected. This approach not only helps in making a more informed decision but also ensures that the parents feel valued and heard.
Cory shares a personal anecdote about a client who successfully navigated the elder care planning process by involving their parents and consulting with professionals. This story underscores the importance of a collaborative approach and the positive outcomes it can yield.
The Many Ways WSJ Readers Use AI in Their Everyday Lives
Wall Street Journal readers are using AI to help them in their daily lives. Jake highlights that media publishers are using AI technologies like recommendation engines and text-to-speech capabilities to engage readers and reach new audiences. These technologies help analyze vast amounts of data to provide personalized content and services, making the reading experience more enjoyable.
Cory shares that he has heard of people using AI for various purposes, such as finding the best deals on Black Friday or getting recipe ideas. He acknowledges that while AI can significantly boost productivity, there are also privacy concerns and the risk of over-reliance on technology. Jake adds that AI can make mistakes, so it’s important to fact-check the information it provides.
Jake encourages the audience to embrace AI by using it as a tool to enhance their work and personal lives. He mentions that Falcon Wealth Advisors uses AI to help improve their services, but they always make it a priority to fact-check and validate any information.
Cory elaborates on the potential of AI in various industries, including healthcare, finance, and education. He explains how AI can help streamline processes, reduce costs, and improve outcomes in these sectors. For instance, in healthcare, AI can assist in diagnosing diseases, personalizing treatment plans, and predicting patient outcomes.
Jake and Cory also discuss the ethical considerations surrounding AI. They emphasize the importance of transparency, accountability, and fairness in AI applications. They advocate for responsible AI use that prioritizes user privacy and avoids biases.
Are HSA Users Missing Out on Their Retirement Savings Potential?
Jake and Cory discuss the potential of Health Savings Accounts (HSAs) as a retirement savings tool. Cory explains that HSAs offer triple tax benefits: contributions are tax-deductible, the money grows tax-deferred, and withdrawals are tax-free if used for qualified medical expenses. Despite these benefits, a survey by the Plan Sponsor Council of America found that most employees use HSAs for current healthcare expenses rather than retirement savings.
Cory highlights that only about a third of employers educate their workers on the benefits of using HSAs for retirement, and fewer than 30% allow participants to view HSA balances alongside their retirement accounts. Jake adds that many employees leave their HSA funds in cash instead of investing them, missing out on potential growth.
Jake and Cory agree that HSAs should be included in retirement planning discussions. They emphasize the importance of educating employees and clients about the benefits of HSAs and how to use them effectively for long-term savings.
Jake also points out that HSAs can be a valuable tool for managing healthcare costs in retirement. He explains that healthcare expenses tend to increase with age, and having a dedicated account to cover these costs can help reduce financial burden in the future.
Cory shares tips on how to maximize the benefits of an HSA, such as contributing the maximum allowable amount each year, investing the funds for growth, and keeping track of medical receipts for tax-free withdrawals. He also suggests that individuals consult with a financial advisor to develop a comprehensive retirement plan that includes HSAs.
It’s Time for a Portfolio Reality Check
Jake and Cory discuss the importance of rebalancing investment portfolios, especially after significant market movements. Rebalancing involves adjusting the allocation of assets to maintain the desired risk level. Rebalancing can help prevent overexposure to any single asset class and encourages a systematic and disciplined investment strategy. However, Cory points out that frequent rebalancing can incur transaction costs and may trigger capital gains taxes. Jake emphasizes that while taxes should be considered, they should not be the primary factor in investment decisions.
Jake and Cory agree that rebalancing is important for maintaining a well-diversified portfolio. They encourage listeners to work with financial advisors to help ensure their portfolios are regularly reviewed and adjusted as needed. Cory adds that rebalancing can also provide an opportunity to review and update investment strategies based on changing market conditions and personal circumstances. He suggests that investors take a holistic approach to portfolio management, considering factors such as risk tolerance, time horizon, and financial goals.
Thank you for tuning in, we hope you have a great week!
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