You did it. You filed your taxes, maybe breathed a sigh of relief, and now you’re ready to get back to life. But before you close the books until next April, there’s something most medical professionals overlook: what you do right after tax season can shape your entire financial year.

This isn’t about obsessing over receipts or spreadsheets. It’s about stepping back, taking stock, and asking: Is my financial life really working for me?

Because when you're constantly on call, juggling patients, charting, certifications, and maybe even planning for retirement, your finances can end up on autopilot—which is exactly where costly mistakes hide.

Here’s your guide to a post-tax-season reset, created specifically for medical professionals who want to stay in control, not just compliant.

1. Use Your Tax Return as a Mirror

That tax return you just filed? It’s not just a form. It’s a snapshot of your financial behavior over the last year.

• Did you get a large refund? That might mean you're overpaying in taxes and giving the government an interest-free loan.

• Owed more than expected? Your withholdings or estimated payments may be off.

• Saw big income swings? This is key if you work per diem, moonlight, or have recently made a career change.

Action step: Schedule 30 minutes to review your return (yes, again). Ask: Where did my money actually go? What surprised me? What should change before next year?

2. Recalibrate Withholdings and Estimated Taxes

Medical professionals often have complex income streams—multiple W-2s, 1099s, bonuses, stipends, or self-employment income from consulting or part-time work.

After tax season, it’s the perfect time to adjust:

• Update W-4 forms to reflect your actual withholding needs.

• Adjust quarterly estimated taxes if you earn 1099 income.

• Account for any changes—marriage, kids, new job, business launch, or upcoming retirement.

Action step: Use the IRS withholding calculator or talk to your financial planner. A few changes now can save a big headache later.

3. Refresh Your Savings & Investment Strategy

You spend your days making critical decisions for others. But how often do you make those same calls for your own money?

Post-tax season is a natural time to ask:

• Am I contributing enough to my retirement accounts?

• Should I increase my HSA or FSA contributions?

• Are my investments aligned with my goals, timeline, and risk tolerance?

And if you're within 2-5 years of retirement:

• Has my risk tolerance changed as I near retirement?

• Can I afford to weather the market fluctuations?

• Do I have a distribution plan, and is it optimal?

Action step: Review your contributions, allocations, investment performance, risk tolerance, and capacity. Consider rebalancing your portfolio.

4. Review Debt Management (Especially Student Loans)

For many medical professionals, student loans are the elephant in the room. Even if payments feel manageable, that doesn’t mean you’re on the best path.

• Are you eligible for student loan forgiveness (PSLF or IDR)?

• Should you refinance?

• Are you missing student loan interest deductions?

And if you're nearing retirement and still carrying debt:

• Should you accelerate payments to be debt-free before you retire?

• How does debt in retirement affect your lifestyle?

• Is this debt affecting your retirement timeline?

Action step: Run a projection with and without refinancing or early payoff. Choose the strategy that aligns with your long-term goals, not just short-term relief.

5. Run a Retirement Reality Check

Whether retirement is 5 years away or 25, now is a great time for a check-in.

• Are you on track to retire when and how you want?

• Do you know how much monthly income you’ll realistically have?

• Are you factoring in healthcare, long-term care, and inflation?

If you’re already retired:

• Is your withdrawal rate sustainable?

• Is your investment mix still appropriate?

• Are you using tax-efficient strategies to minimize your tax liability?

Action step: Meet with your advisor to model your retirement plan under different market, inflation, and spending conditions. Don't wait until you're "close enough."

6. Audit Your Insurance Coverage

Life changes fast, especially in healthcare. Are your policies still relevant?

• Life insurance: Still needed? Still the right amount?

• Disability insurance: Does it reflect your current income?

• Health insurance: Do you maximize your FSA and HSA? What will it be in retirement?

Action step: Gather your policies and check for outdated beneficiaries, coverage gaps, or missed savings opportunities.

7. Revisit Your Goals (Yes, You Get to Have Some Too)

Medical professionals are often so focused on others that their own life plans get blurry.

• Do you want to start a private practice?

• Reduce clinical hours?

• Take a sabbatical? Travel more?

• Retire early?

Action step: Use this mid-year moment to reflect. Real financial planning isn’t about spreadsheets. It’s about building a life you actually want.

Final Word: Progress, Not Perfection

You don’t need to solve everything this week. But by taking just one or two of these steps now, you set a tone for the rest of the year. You stop being reacting and start being proactive.

At Outside The Box Financial Planning, LLC, we specialize in helping medical professionals and retirees create financial plans that actually work for their lives—not someone else’s idea of a checklist.

Need help reviewing your plan? Let’s talk. This isn’t just about money. It’s about building the life you’ve worked so hard for.

Navigating the 2025 Tax Reforms: What Medical Professionals Need to Know

As a dedicated medical professional, you’ve poured years—likely decades—into honing your skills, serving patients, and building a life around helping others. But how often have you had the time to sit down and fully map out your financial future? If the answer is “not often,” you’re not alone. The demands of your profession are unique—and so are the financial challenges.

Now, with sweeping tax reforms proposed for 2025, it’s time to take a breath and ask: What does this mean for me and my future? Whether you’re a physical therapist, nurse practitioner, radiologist, or anyone in the medical field, understanding what’s ahead can help you make smarter choices today.

What’s Changing in 2025? A Quick Overview

The Trump administration has released a set of tax reform proposals as part of the FY2025 House budget reconciliation. Some of these reforms are extensions of prior legislation, while others introduce new directions. Let’s take a high-level look:

• Extension of the 2017 Tax Cuts and Jobs Act (TCJA) Provisions: The TCJA brought significant reductions in individual income tax rates, nearly doubled the standard deduction, and eliminated personal exemptions. These provisions were set to expire after 2025—but under the new proposal, they could stick around.

• Elimination of Taxes on Social Security Benefits: A move designed to ease the tax burden for retirees, especially those relying heavily on Social Security.

• Extension of Business Tax Provisions: Including a continuation of lower corporate tax rates and provisions beneficial to pass-through entities like S-corporations and LLCs—potentially important for self-employed medical professionals or those running private practices.

Sounds promising on the surface—but there’s more to the story. According to the Penn Wharton Budget Model, these reforms would increase primary federal deficits by $5.1 trillion over the next 10 years, even after factoring in proposed spending cuts. So while there are individual benefits, they come with long-term fiscal implications that could affect future tax policy, government programs, and interest rates.

What This Means for You: A Medical Professional’s Perspective

Let’s get into the details that matter to you.

1. Income Tax Rates: Where You Might Stand

If the TCJA provisions are extended, here’s what you might expect to continue:

For most earners, especially those in the medical field who often fall in the 22% to 35% brackets, this means a continuation of reduced tax rates—if the extensions go through.

But here’s the key: If the TCJA expires instead, you could see a jump of 3–7 percentage points in your federal tax bracket, depending on your income level. That could mean thousands more in taxes owed each year.

🔍 What to do:

• Review your adjusted gross income (AGI) from recent years and calculate how a rate shift might affect your net income.

• Consider maximizing your tax-advantaged accounts—like HSAs, 401(k)s, and IRAs—especially if you expect higher rates in the future.

2. Student Loan Strategies: Know Your Deductions

Many medical professionals carry a heavy student loan burden. Under the TCJA, the student loan interest deduction (up to $2,500 per year) was preserved, even though other deductions were slashed. With the proposed extension, that deduction will likely remain in place.

But if TCJA isn’t extended, and if additional tax reforms restructure educational deductions, your repayment strategy might need to pivot—especially if you’re relying on income-driven repayment plans or Public Service Loan Forgiveness (PSLF).

🔍 What to do:

• Track the status of your current loan repayment plan.

• Evaluate whether refinancing makes sense if federal forgiveness programs change.

• Be mindful of how interest deductions affect your total tax liability each year.

3. Business Owners and Independent Contractors: Don’t Miss This

If you operate a private practice or work as an independent contractor, the Qualified Business Income (QBI) deduction has likely been a valuable benefit, allowing you to deduct up to 20% of your business income. The new proposals would extend this deduction.

Without it, many self-employed medical professionals could face an effective tax increase, especially in high-cost states.

🔍 What to do:

• Evaluate your current business structure—would forming an S-corp offer additional tax advantages under current law?

• Work with an advisor to plan for potential QBI sunset scenarios.

Retirement on the Horizon? Here’s What You Need to Know

You don’t have to be a medical professional for this part to matter. If you’re within 10 years of retirement—or already retired—the tax landscape may look quite different for you.

1. Social Security Benefits Could Be Tax-Free

Currently, depending on your income, up to 85% of your Social Security benefits may be taxable. The proposed reforms aim to eliminate this tax altogether.

✅ More income in retirement
✅ Greater flexibility with withdrawals from other retirement accounts
✅ Lower adjusted gross income = potential savings on Medicare premiums

🔍 What to do:

• Revisit your retirement income strategy. How will your mix of Social Security, pensions, and investment income change if one piece becomes tax-free?

• Consider delaying Social Security to maximize benefits—especially if they’ll be fully tax-free in the future.

2. Roth vs. Traditional: What’s the Smart Move Now?

With the potential for tax rates to rise in the future (if the TCJA expires later or new reforms are needed to reduce deficits), paying taxes now in a lower-rate environment might be a wise move.

Enter the Roth IRA or a Roth conversion.

🔍 What to do:

• Evaluate whether a partial Roth conversion makes sense in 2025.

• Be strategic—convert just enough to avoid jumping into a higher tax bracket.

3. Legacy and Estate Planning: Eyes on the Exemption

Another TCJA provision that’s set to expire in 2026 is the doubled estate tax exemption—currently at $13.61 million per person. Without an extension, this could drop by roughly half.

If you plan to pass on substantial assets, this matters more than ever.

🔍 What to do:

• Review your estate plan with an advisor.

• Explore gifting strategies and trust structures to preserve more of your legacy.

Final Thoughts: Change Is Coming—But You’re in Control

Tax reforms often sound intimidating. But this isn’t about guessing the future—it’s about preparing for it.

Whether you’re caring for patients or planning your next chapter in retirement, the best financial outcomes come from awareness, action, and adaptability. The 2025 tax proposals present real opportunities—but also potential blind spots if you’re not paying attention.

By staying informed and working with a financial advisor who understands your unique situation, you can take full advantage of what’s available—and avoid unnecessary surprises.

Let’s Plan Ahead, Not Fall Behind

At Outside The Box Financial Planning, LLC, we specialize in helping professionals like you make sense of change—and turn it into strategy. Whether you’re navigating a high income, planning for retirement, or simply want peace of mind, we’re here to help you stay two steps ahead.

Let’s see if we’re the right fit. Click the button below to schedule a complimentary “Fit” meeting today and take the first step toward financial clarity and confidence.

As the holiday lights come down and the New Year’s champagne glasses are put away, February brings another kind of season—tax season. For many families, this time of year can feel overwhelming. Between juggling your career, kids’ schedules, and household responsibilities, adding tax preparation to the mix might feel like one too many plates to spin. But with a little organization and a clear game plan, you can tackle tax season confidently—and maybe even uncover a few last-minute savings.

Here’s a breakdown of what to expect as tax documents roll in, tips for staying organized, and strategies to ensure nothing is missed when meeting with your CPA.

1. Key Tax Documents to Watch For

The first step in tax prep is knowing what to expect in the mail—or your inbox. These documents will serve as the foundation for your tax return, so keep an eye out for:

• W-2s: If you or your spouse are employees, your employer will issue this form, summarizing wages and taxes withheld.

• 1099s: These come in various forms if you’re a freelancer, investor, or receive other income. Common types include:

• 1099-INT (interest income)

• 1099-DIV (dividends)

• 1099-B (brokerage transactions)

• 1099-NEC (non-employee compensation)

• 1099-G (unemployment income)

• Form 1098: Documents related to mortgage interest, student loan interest, or tuition payments.

• Investment Statements: You’ll receive year-end summaries for taxable accounts, retirement accounts (such as IRAs or 401(k)s), and HSAs. These will detail contributions, withdrawals, and gains or losses.

• K-1s: If you have income from partnerships, estates, trusts, or S-corporations, this form will show your share of income, deductions, and credits.

• Childcare or Educational Expense Receipts: If you paid for daycare, after-school care, or college tuition, gather those records.

Pro Tip: Create a checklist of all expected documents, and cross them off as they arrive. If something is missing by mid-February, follow up promptly.

2. Organizing Your Tax Prep

Think of tax preparation like packing for a family road trip. You wouldn’t hit the road without a checklist, right?

Here’s how to ensure your financial “luggage” is in order:

• Create a Tax Folder: Set up a physical folder or a digital one on your computer. Label it “2025 Taxes” (for the 2024 tax year) and store all relevant documents there.

• Gather Receipts: If you itemize deductions, keep receipts for medical expenses, charitable donations, and business expenses.

• Review Last Year’s Return: Use last year’s tax return as a guide for this year. It’s a great way to spot potential deductions or forms you might overlook.

• Track Retirement Contributions: If you made contributions to an IRA, Roth IRA, or HSA, ensure you have documentation.

• Log Miles: If you drove for work, volunteering, or medical purposes, track those miles. They may be deductible.

3. Don’t Overlook These Tax-Saving Opportunities

Even as the calendar turns to 2025, you can still implement a few strategies to maximize your 2024 tax return. Here are some last-minute moves to consider:

• Fund a Traditional IRA or Roth IRA: You have until April 15, 2025, to make contributions for the 2024 tax year. The maximum contribution is $7,000 (or $8,000 if you’re 50 or older). Depending on your income, you may qualify for a tax deduction or grow your investments tax-free in a Roth IRA.

• Contribute to a Health Savings Account (HSA): If you have a high-deductible health plan, you can still contribute to your HSA until the tax deadline. The 2024 limits are $4,850 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution for those 55 or older.

• Make a SEP-IRA Contribution: If you’re self-employed, consider a SEP-IRA. You can contribute up to 25% of your net earnings, with a cap of $69,000 for 2024.

• Harvest Tax Losses: If you sold investments at a loss in 2024, those losses can offset capital gains—and up to $3,000 of ordinary income.

Pro Tip: Before executing any of these strategies, consult your CPA or financial planner to confirm eligibility and ensure alignment with your overall financial goals.

4. Tips for Your CPA Meeting

Your CPA is like your family’s tax-prep co-pilot, helping to steer you through the complexities of tax season. Here’s how to make the most of your time together:

• Come Prepared: Bring your organized tax folder and checklist. The more complete your documents, the smoother the process.

• Ask Questions: If you’re unsure about certain deductions, credits, or strategies, don’t hesitate to ask.

• Discuss Life Changes: Did you have a baby, buy a home, or switch jobs in 2024? These events can have significant tax implications.

• Plan for 2025: Use your CPA meeting to set the stage for a better tax year ahead. Ask about estimated payments, withholding adjustments, or potential opportunities to reduce your tax burden next year.

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Wrapping It All Up: Stay Prepared Beyond Tax Season

Tax season is just one part of your financial journey. Staying organized and making informed decisions now can set you up for long-term success. Whether it’s optimizing deductions, planning for future tax years, or making smart financial moves, a little strategy goes a long way.

If you ever have questions about how taxes fit into your bigger financial picture—whether it’s retirement planning, saving for your children’s education, or managing debt—consider speaking with a financial planner. A well-thought-out plan can help you make the most of your money, not just in tax season, but all year round.

Here’s to a smooth tax season and a financially confident future!

Your financial future deserves a strategy tailored to your goals. At Outside The Box Financial Planning (OTBFP), we provide fee-only, fiduciary advice with full transparency, so your best interests always come first.

Let’s see if we’re the right fit. Click here to schedule a complimentary “Fit” meeting today and take the first step toward financial clarity and confidence.

Every January, millions of people make New Year’s resolutions with the best of intentions. They vow to lose weight, exercise more, or get their finances in order. Yet, by February, most resolutions have fizzled out. Studies show that 80% of resolutions fail before the year even reaches March. So why does this happen? And more importantly, how can middle-aged married couples set financial goals that actually stick?

The answer lies in shifting from quick fixes to sustainable habits. Financial success, like good health, doesn’t come from crash diets or one-time changes. It’s about crafting a plan tailored to your unique situation and sticking to it consistently.

Let’s dive into why resolutions fail and how you can create financial goals that will help you and your spouse thrive—not just in January but all year long.

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Why Most New Year’s Resolutions Fail

Think of New Year’s resolutions like crash diets. You start strong and full of enthusiasm, but eventually, the restrictions or unrealistic expectations wear you down. The same thing happens with financial resolutions.

Here are the three main reasons resolutions fail:

1. They’re Too Vague

“I want to save more money” or “We need to stop overspending” are common financial resolutions. But without specifics, these goals are like saying, “I want to be healthier,” without defining what that means. Do you want to save $5,000 this year? Cut dining-out expenses by 20%? Pay off a specific debt? Clarity is key.

2. They’re Unrealistic

Many resolutions fail because they’re too ambitious. A couple trying to save 50% of their income when they’ve historically saved 5% is setting themselves up for failure. Big changes are intimidating, and when the initial motivation fades, it’s easy to give up.

3. No Plan, No Progress

A resolution without a plan is like a treatment without a diagnosis. You need to understand your current financial situation and have a step-by-step plan to achieve your goals. Without actionable steps, your resolution remains a wish, not a goal.

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How to Set Financial Goals That Actually SticK

1. Start with a Financial Check-Up

Before setting goals, take stock of your current financial health. Sit down with your spouse and answer these questions:

What is our total income?

How much do we spend each month, and on what?

What debts do we owe, and what are the interest rates?

How much have we saved for retirement or other goals?

This “financial check-up” is like a physical exam—it identifies strengths and areas that need improvement. Use this baseline to set goals that are both realistic and impactful.

2. Set SMART Goals

To make your financial goals stick, follow the SMART framework:

Specific: Clearly define what you want to achieve. For example, “Save $10,000 for a vacation in 2026” is more actionable than “Save money.”

Measurable: Set benchmarks to track progress. Instead of saying, “Pay off debt,” specify, “Pay an extra $500 per month toward our credit card balance.”

Achievable: Be realistic about what you can accomplish, given your income and expenses. If saving $10,000 in one year feels overwhelming, break it into smaller chunks over several years.

Relevant: Align your goals with your values. If spending time with family is important to you, focus on saving for vacations or reducing work-related stress by paying off debt.

Time-Bound: Set deadlines to keep yourself accountable. For example, “Build an emergency fund of $15,000 by December 2025.”

3. Divide Goals into Short, Medium, and Long-Term

Breaking goals into timeframes helps you focus on what’s most urgent while keeping an eye on the big picture. Here’s how to structure them:

Short-Term (1 Year): Build an emergency fund, pay off high-interest debt, or stick to a budget.

Medium-Term (1-5 Years): Save for a down payment on a house, fund a vacation, or tackle student loans.

Long-Term (5+ Years): Plan for retirement, fund your children’s college education or save for major life milestones.

Think of it like triaging a patient—address the most urgent needs first, but always plan for long-term health.

5. Budget with Intention

A budget isn’t about deprivation; it’s about aligning your spending with your priorities. Use the 50/30/20 rule as a starting point:

50% for Needs: Mortgage, utilities, groceries, insurance.

30% for Wants: Dining out, entertainment, hobbies.

20% for Savings and Debt Repayment: Retirement accounts, emergency fund, paying off loans.

For middle-aged couples, budgeting is like prescribing medication—it ensures you allocate resources where they’re most needed.

7. Revisit and Adjust Regularly

Financial goals aren’t set-it-and-forget-it. Just as a doctor adjusts a treatment plan based on progress, you and your spouse should review your finances regularly. Schedule quarterly “money dates” to discuss progress, celebrate wins, and make adjustments.

For example:

Did a medical expense or home repair set you back? Adjust your timeline, but stay committed to the goal.

Got a raise or bonus? Use part of it to accelerate your progress.

Flexibility is key to staying on track.

4. Automate Your Savings

Automation is the secret weapon for financial success. Once you’ve set your goals, set up automatic transfers to savings accounts or retirement plans, this ensures you stick to your plan without relying on willpower.

For example:

Direct deposit a portion of your paycheck into a high-yield savings account for your emergency fund.

Set up automatic contributions to a 401(k) or IRA.

Use apps to round up purchases and invest the spare change.

By automating, you eliminate the temptation to spend money earmarked for savings.

6. Celebrate Small Wins

One reason resolutions fail is that people don’t celebrate progress along the way. If you and your spouse pay off a credit card or hit a savings milestone, take time to celebrate. Rewarding yourself reinforces positive behavior and keeps motivation high.

8. Work with a Financial Planner

Sometimes, DIY isn’t enough. As you would consult a specialist for complex medical issues, working with a Certified Financial Planner™ (CFP®) can help you navigate big financial decisions. A CFP® can help you:

Maximize tax efficiency.

Create a sustainable retirement plan.

Optimize employee benefits like 401(k) matches or Health Savings Accounts (HSAs).

Fee-only fiduciary planners work in your best interest, ensuring unbiased advice tailored to your goals.

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Why This Matters for Middle-Aged Couples

Middle age is a pivotal time for financial planning. You’re juggling competing priorities—raising kids, caring for aging parents, and preparing for retirement. Setting goals together as a couple ensures you’re working as a team, not at cross-purposes.

Think of it like running a hospital department: You need clear communication, shared objectives, and a plan for emergencies. By setting SMART goals and following through, you’ll create financial stability and peace of mind.

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Forget Quick Fixes—Focus on the Long Game

Financial success isn’t about quick fixes or overnight transformations. It’s about creating a roadmap that works for you and your spouse and committing to the journey. Remember, small, consistent steps are more effective than grand, unsustainable gestures.

As you enter the New Year, ditch the vague resolutions and focus on actionable financial goals that align with your values. By treating your finances like a patient in need of long-term care, you’ll set yourself up for a healthier, wealthier future.

This year, make a resolution you’ll actually keep: building the financial life you and your family deserve. And if you need guidance along the way, don’t hesitate to reach out to a financial planner who can help you turn those goals into reality.

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

As a healthcare professional, you’ve spent years navigating the complex world of patient care, deciphering lab results, and tackling the ever-changing challenges of medicine. Planning for retirement might feel like stepping into uncharted territory, but there’s one key concept that parallels your work: staying ahead of a condition before it becomes critical. In the financial world, that “condition” is inflation, and “preventative care” is a little acronym called COLA—Cost-of-Living Adjustment.

Just like monitoring a patient’s vital signs helps you adjust treatment plans, COLA keeps your retirement income healthy by adjusting for the rising cost of living. Let’s break down how this works, why it’s essential, and how you can structure your retirement plan to weather inflation’s long-term impact.

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Handwritten list of amenities that go up in time.

What is COLA? A Prescription for Inflation Protection

Imagine inflation as a chronic condition. It slowly diminishes your purchasing power over time. You might not notice it day-to-day, but over a decade or two, it can significantly affect your lifestyle. That gallon of milk that costs $4 today could cost $6 in 15 years. For retirees on fixed incomes, inflation is a sneaky adversary, quietly diminishing their ability to cover essential expenses.

COLA is the financial antidote to this issue. It’s a mechanism built into certain retirement income streams—like Social Security or some pensions—that automatically adjusts payments to keep pace with inflation. The idea is simple: as the cost of living rises, so does your income.

For healthcare professionals, COLA is like titrating medication dosages for a patient whose condition fluctuates. You adjust the dose to ensure the treatment remains effective, preventing a crisis. Similarly, COLA ensures your income doesn’t lose effectiveness as inflation creeps upward.

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Medical ventilator.

How COLA Works: A Financial Ventilator for Your Income

In the same way that ventilators adapt to meet a patient’s oxygen needs, COLA adapts your retirement income to keep it “breathing” in an inflationary environment. Social Security, for instance, applies an annual COLA based on changes in the Consumer Price Index (CPI). The CPI measures the cost of goods and services, from groceries to medical care, and reflects the average rate of inflation.

Let’s look at an example:
Suppose you retire today and start receiving $2,000 a month in Social Security benefits. If inflation averages 2% per year, your purchasing power would shrink by nearly 22% over 10 years without adjustments. However, if your benefits are tied to COLA, they increase annually to match inflation, maintaining their real value.

While Social Security is a vital source of inflation-protected income, not all retirement income streams include COLA. Many private pensions and annuities are fixed, meaning their purchasing power erodes over time. That’s why understanding which income sources have built-in COLA and which don’t is crucial for planning your retirement.

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Man being vaccinated on upper arm.

Inflation in Action: Why COLA Matters to Healthcare Professionals

As a healthcare provider, you know the importance of planning for worst-case scenarios. You wouldn’t discharge a patient recovering from surgery without ensuring they have the resources for post-operative care. Similarly, planning for retirement means preparing for the inevitable rise in expenses over time.

Healthcare professionals face unique challenges with inflation, especially considering how medical costs tend to outpace general inflation. Fidelity estimates that the average 65-year-old couple retiring today will need over $315,000 to cover healthcare expenses in retirement—and that figure doesn’t include long-term care.

Think of COLA as a financial vaccine that bolsters your retirement plan against these rising costs. Social Security’s COLA is a start, but it’s just one part of a comprehensive strategy to maintain your financial “vital signs” throughout retirement.

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The Anatomy of a COLA-Proof Retirement Plan

Creating a COLA-proof retirement plan is like designing a care plan for a complex patient. You need a mix of treatments that address both immediate needs and long-term risks. Here’s how to build a retirement strategy that stands up to inflation:

1. Maximize Social Security Benefits

Social Security is the backbone of many retirees’ income plans because of its guaranteed payments and COLA protection. As a healthcare professional, you’re no stranger to maximizing resources, and Social Security offers a significant opportunity.

Key Steps:

• Delay Filing: By delaying benefits past your full retirement age (FRA), you increase your monthly payment by about 8% per year until age 70. This higher base amount benefits from COLA, amplifying its impact.

• Coordinate with Spousal Benefits: Married couples can use strategies to maximize lifetime Social Security income, such as one spouse claiming early while the other delays.

Think of it like using a staged treatment plan for a patient: the early intervention provides immediate support while delaying certain treatments maximizes long-term results.

2. Supplement with Inflation-Protected Investments

Beyond Social Security, you’ll need other income streams to cover your expenses. Here’s where investment planning comes into play.

Options to Consider:

• Treasury Inflation-Protected Securities (TIPS): These are government bonds designed to protect against inflation. Their principal value adjusts with the CPI, ensuring your investment keeps pace with rising costs.

• Dividend-Growing Stocks: Some companies regularly increase their dividends, which can provide a growing income stream over time.

• Real Estate: Rental properties or REITs (Real Estate Investment Trusts) can offer income that tends to rise with inflation.

Think of these options like supplemental oxygen for your retirement plan, ensuring you can “breathe easy” even as costs rise.

4. Incorporate Flexible Spending Strategies

Flexibility is key when managing a chronic condition, and the same goes for your finances. A mix of fixed and variable income sources gives you the adaptability to adjust as inflation fluctuates.

Examples:

• Use fixed income sources (like a pension) to cover essential expenses.

• Use variable income (such as portfolio withdrawals) to manage discretionary spending, adjusting withdrawals based on market performance and inflation.

It’s like creating a care plan with both baseline treatments and as-needed medications, ensuring you can handle both predictable and unexpected costs.

3. Plan for Healthcare Costs

Healthcare inflation is like a rare but aggressive disease—it requires special attention. Medicare provides a baseline of coverage, but out-of-pocket costs can add up quickly.

Strategies:

• Health Savings Accounts (HSAs): If you’re still working, max out your HSA contributions. These accounts offer tax-free growth and withdrawals for qualified medical expenses, making them a powerful tool for managing healthcare inflation.

• Medigap Policies: Consider supplemental insurance to cover expenses Medicare doesn’t, such as copays and deductibles.

This is your financial equivalent of specialty care: targeted strategies for a high-risk area of your retirement plan.

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Woman getting her blood pressure taken by medical professional.

The Long Game: Monitoring and Adjusting Your Plan

Retirement planning isn’t a set-it-and-forget-it process, just as patient care requires ongoing monitoring. Regular check-ups with your financial advisor can help you adjust your strategy to reflect changes in inflation, healthcare costs, or personal circumstances.

Questions to Ask During a Financial Check-Up:

• Are my income sources still aligned with my expenses?

• How has inflation impacted my budget in the past year?

• Do I need to adjust my investment allocations to maintain purchasing power?

This ongoing oversight ensures your financial health stays on track, much like tracking a patient’s recovery trajectory.

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Closing Thoughts: A Retirement as Resilient as Your Career

As a healthcare professional, you’ve dedicated your career to improving others’ quality of life. Your retirement years should reflect the same level of care and intentionality you give your patients. By understanding the role of COLA and building an inflation-resistant strategy, you can transition from scrubs to sunshine with confidence.

Retirement is your time to thrive—not just survive. With a well-designed plan that accounts for inflation, you’ll have the financial stability to enjoy your hard-earned freedom, whether that means traveling, pursuing hobbies, or simply savoring time with loved ones.

After all, just as you wouldn’t discharge a patient without a robust recovery plan, you shouldn’t embark on retirement without ensuring your income is prepared for the long haul. COLA is one of the key tools to keep your retirement healthy and vibrant, no matter how the cost of living changes over time.

By planning proactively and staying adaptable, you’ll ensure your retirement lifestyle doesn’t just survive inflation—it thrives in spite of it. If you need help designing a COLA-proof plan, let’s talk. After all, every great retirement plan starts with a clear diagnosis and the right “treatment.”

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

Social Security cards laying on top of American twenty dollar bills

When it comes to retirement planning, Social Security is a critical income stream that often serves as the foundation for many retirees' financial well-being. Much like creating a treatment plan for a patient, your Social Security strategy needs to be carefully coordinated with other elements of your financial life to achieve the best outcome.

This blog will walk you through how to maximize your benefits, including spousal options, how working affects your Social Security, and how to incorporate it all into a broader retirement income plan. With the right strategy, you can ensure your Social Security works as efficiently as possible, whether you claim early or late, and whether you continue working or transition fully into retirement.

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1. Understanding When to Claim Social Security: The Age Matters

Social Security offers flexibility in when you can start receiving benefits. The timing of your claim has a big impact on how much you’ll receive for the rest of your life.

1. Early Claiming (Age 62): The earliest you can start collecting Social Security.

Benefit: Income starts flowing sooner.

Drawback: Monthly benefits are permanently reduced by about 25-30% if you claim before your full retirement age (FRA).

When it makes sense: If you have a shorter life expectancy or need income immediately, this can be the right choice.

Full Retirement Age aka FRA (66-67, depending on your birth year): Claiming at your FRA means you’ll receive 100% of your benefit based on your earnings history.

Delayed Retirement (Age 70): For every year you delay past FRA, your benefit increases by 8% annually up to age 70.

When it makes sense: If you are healthy and have other income sources, delaying Social Security provides a larger monthly income for the rest of your life.

Key Takeaway: If you want to maximize your benefit and can afford to wait, delaying until 70 offers the highest payout. However, if you need income sooner or have health concerns, claiming earlier might make more sense.

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2. Optimizing Spousal Benefits: Don’t Leave Money on the Table

Spousal benefits can be a powerful way to boost household income in retirement. Here’s how it works:

• Eligibility: The lower-earning spouse can receive up to 50% of the higher-earning spouse’s benefit if claimed at FRA.

• Claiming Early: If the spouse claims before FRA, their spousal benefit will be reduced.

• Both Spouses Delaying: Even if the lower-earning spouse delays their own benefit, spousal benefits max out at FRA—delaying past FRA won’t increase the spousal benefit.

• Widow(er) Benefits: A surviving spouse can switch to 100% of the deceased spouse’s benefit if it’s higher than their own.

Example:
If your spouse's benefit is $3,000 at their FRA and you are eligible for a spousal benefit, you could receive up to $1,500. If your own benefit is smaller than that amount, it makes sense to claim the higher spousal benefit.

Strategy Tip: Coordinating when each spouse claims benefits can maximize household income. For example, the lower-earning spouse may claim their benefit early, while the higher-earning spouse delays until age 70 to lock in the highest possible payout.

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3. Integrating Social Security into a Comprehensive Income Plan

Just as doctors treat the whole patient—not just the symptoms—you need a plan that integrates Social Security into your broader financial picture. The key is to ensure Social Security works harmoniously with other income streams, such as pensions, 403(b)s, or IRAs.

Scenario 1: If You Continue Working After Claiming Social Security

If you plan to keep working after starting Social Security, it’s essential to understand how earning income impacts your benefits:

• Before Full Retirement Age: If you claim Social Security and work, your benefits could be reduced if your earnings exceed the annual limit ($21,240 in 2024). For every $2 you earn above the limit, $1 is temporarily withheld from your benefits.

• The Year You Reach FRA: The income limit increases significantly ($56,520 in 2024), and only $1 is withheld for every $3 earned above the limit.

• After FRA: Once you reach full retirement age, there’s no reduction in benefits, no matter how much you earn.

Planning Tip: If you plan to keep working, it may make sense to delay Social Security to avoid penalties and maximize your future benefits. Alternatively, you could claim early and accept reduced benefits if you need the cash flow.

Scenario 2: If You Fully Retire After Claiming Social Security

For those fully retiring, the goal is to create a steady, sustainable income stream. Social Security will play a major role, but coordinating withdrawals from other accounts is essential to minimize taxes and ensure your savings last.

INCOME PLANNING FOR RETIREES:

• Rebalancing Your Portfolio:
  Incorporate Social Security as a fixed income source in your overall asset allocation. With Social Security acting like a bond, you may be able to take on more growth-oriented investments in your other accounts.

• Sequence of Withdrawals:

  Instead of a one-size-fits-all approach, consider a coordinated withdrawal strategy. Balancing distributions from taxable, tax-deferred (like IRAs and 401(k)s), and even tax-free accounts can help you maintain your desired tax bracket, optimize Social Security taxation, and make your retirement savings last longer. A tailored plan ensures that each dollar works smarter for your overall financial health.

• Minimize Social Security Taxes:

  Up to 85% of your Social Security benefits can be taxed if your combined income (Social Security + other income) exceeds certain thresholds. Instead of relying on Roth IRA withdrawals early in retirement, consider implementing a Roth conversion strategy during years of low or no income—often before Social Security benefits begin or while delaying them until age 70. This approach allows you to move assets from tax-deferred accounts to a Roth IRA at lower tax rates, potentially reducing your taxable income later in retirement and minimizing the impact on your Social Security benefits.

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4. Social Security in the Context of Longevity and Inflation

While Social Security provides a reliable income stream, it’s important to think about the long-term risks you may face in retirement—especially longevity risk and inflation.

• Longevity Risk: If you live well into your 90s, delaying Social Security can help make sure you have a higher income stream later in retirement and preserve your savings. Example: A retiree who claims at 70 will receive a larger monthly check that will continue to grow with inflation over the years.

• Inflation Protection: Social Security benefits include Cost of Living Adjustments (COLAs). In high-inflation environments, these COLAs help maintain your purchasing power. While COLAs may not keep up with every expense, they offer more protection than many fixed-income sources.

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5. Putting It All Together: A Holistic Approach to Retirement Income

Here’s how to pull all these pieces together into a cohesive Social Security and retirement income plan:

1. Evaluate Your Health and Longevity Prospects: If you expect to live a long life, delaying benefits makes more sense. If health concerns arise, early claiming may be better.

2. Coordinate with Your Spouse: Decide when each spouse should claim benefits to maximize total household income.

3. Plan Around Your Work Status: If you continue working, consider delaying Social Security to avoid reductions and taxes.

4. Incorporate Social Security with Other Income Sources: Use a tax-efficient withdrawal strategy to balance Social Security with pensions, investments, and other savings.

5. Account for Inflation and Longevity Risk: Ensure your plan remains flexible to account for rising costs and a potentially long retirement.

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Conclusion: Social Security as Part of Your Retirement Treatment Plan

Planning for Social Security is like creating a well-thought-out treatment plan—it requires understanding your options, making the right decisions at the right time, and coordinating with other elements of your financial life. Whether you continue working after claiming Social Security or fully retire, your strategy should reflect your unique circumstances, health, and goals.

Remember, Social Security isn’t just about when you claim—it’s about how you integrate it into a larger income plan that keeps you financially healthy throughout retirement. Much like medicine, there’s no one-size-fits-all solution. A thoughtful strategy, tailored to your needs, can ensure your retirement income plan works just as well as a carefully prescribed course of treatment.

If you’re ready to build or adjust your Social Security strategy, consider sitting down with a financial planner to create a customized plan for your future. After all, the right prescription can make all the difference.

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

When it comes to managing healthcare expenses efficiently, Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) can be powerful tools. Think of them like different types of medical tools in a healthcare professional’s kit—each designed for specific uses and benefits. However, just like choosing the right treatment plan for a patient, it’s important to understand how these accounts work so you can make the most of them. In this post, we’ll explore the features, advantages, and strategies to optimize FSAs and HSAs, helping you keep more of your hard-earned money while managing your healthcare costs effectively.

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FSA vs. HSA: What's the Difference?

Both FSAs and HSAs allow you to set aside money tax-free to cover medical expenses, but they have different rules and purposes. Let’s break it down by using a relatable analogy:

Imagine FSAs and HSAs as two types of gym memberships. One gym gives you a “use-it-or-lose-it” deal—if you don’t show up and use your sessions by the end of the year, they disappear (that’s your FSA). The other gym allows you to carry over unused sessions from year to year, even building them up for the long term (that’s your HSA). Both memberships offer value, but they’re structured very differently.

The Basics of FSAs:

• Offered through employers: You must sign up during open enrollment.

• Use-it-or-lose-it rule: Most of the money must be spent within the plan year, though some employers allow a grace period or carry over a small amount (typically $610 in 2024).

• Annual contribution limit: $3,200 per employer in 2024.

• Expenses covered: Things like doctor’s visits, prescriptions, copays, and medical supplies.

• Pre-tax savings: Contributions are not subject to federal income tax, Social Security tax or Medicare tax, saving you money on taxes.

The Basics of HSAs:

• Paired with a high-deductible health plan (HDHP): Only available if you have a qualifying health insurance plan.

• No expiration date: Your savings roll over from year to year and can be invested for growth.

• Annual contribution limits (2024): $4,150 for individuals and $8,300 for families. If you’re 55 or older, you can add a $1,000 catch-up contribution.

• Triple tax benefit: Contributions are pre-tax, the growth is tax-free, and withdrawals for qualified expenses are tax-free.

• Expenses covered: Same as FSAs, plus additional flexibility like using funds for Medicare premiums or long-term care in retirement.

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Which One Should You Use?

Choosing between an FSA and an HSA depends on your health plan and personal situation. It’s similar to deciding between a sprint or a marathon. FSAs are built for short-term, planned expenses—like sprinting toward the finish line by the end of the year. HSAs, on the other hand, are better for those playing the long game—saving for healthcare expenses years, or even decades, down the road.

When to Use an FSA

• You have predictable medical expenses: If you know you’ll need glasses, dental work, or prescriptions this year, an FSA can help cover those costs tax-free.

• Your employer offers a grace period or rollover: If you have some flexibility with unused funds, you’re less likely to lose what you contribute.

• You don’t qualify for an HSA: FSAs can be the next best thing if you aren’t enrolled in a high-deductible health plan (HDHP).

When to Use an HSA

• You have an HDHP: If you’re enrolled in a high-deductible health plan, maximizing your HSA contributions is often a smart move.

• You want to build a healthcare nest egg: Think of your HSA as a retirement account for medical expenses. Over time, those unused dollars grow, providing a valuable safety net for future healthcare needs.

• You’re looking for investment opportunities: Some HSAs allow you to invest your contributions, helping your savings grow tax-free.

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How to Optimize FSAs and HSAs in Your Life

Once you’ve chosen the right account—or maybe you’re lucky enough to have access to both—it’s time to optimize them. Let’s dive into a few strategies that will help you get the most out of these accounts.

Strategy #1: Plan Your Contributions Wisely

Contributing to these accounts can feel a bit like ordering supplies for the hospital floor—you want to ensure you have enough on hand without overstocking. With an FSA, aim to contribute an amount close to what you know you’ll need. Too little, and you miss out on tax savings; too much, and you risk forfeiting unused funds.

With an HSA, on the other hand, maxing out contributions (if possible) can be a great long-term strategy. If you don’t use all the funds this year, they’ll be there when you need them—and you’ll benefit from compounding growth over time.

Strategy #2: Use Your FSA for Predictable Expenses

Think of an FSA as a tool for those everyday medical expenses you know are coming. Dental check-ups, vision exams, prescriptions—these are all perfect candidates for FSA funds.

If your employer offers an FSA rollover, make sure to keep track of how much can carry over into the next year, so you don’t accidentally leave money on the table.

Strategy #3: Treat Your HSA Like a Retirement Account

If your HSA funds aren’t needed for immediate medical expenses, consider investing them. This can be a powerful way to grow your savings for future healthcare costs, much like building a retirement portfolio. In fact, many people don’t touch their HSA funds at all during their working years, opting to let the balance grow until retirement. Once you reach age 65, you can even use HSA funds for non-medical expenses (though you’ll pay regular income tax on those withdrawals, similar to a traditional IRA).

Strategy #4: Keep Receipts and Stay Organized

Managing these accounts is like keeping patient records—good organization makes all the difference. For both FSAs and HSAs, it’s essential to keep receipts for your expenses. FSAs often require proof of eligible purchases, and HSAs are subject to IRS audits if withdrawals are questioned.

Some HSA providers even allow you to submit receipts online and store them digitally, creating a “paper trail” that can make life easier down the road.

Strategy #5: Enroll in a Dependent Care FSA

Think of a Dependent Care FSA as a prescription for reducing the financial stress of childcare, allowing you to save money pre-tax for daycare, after-school programs, or even elder care. Just like preventive medicine can save you from bigger health issues down the road, using this account can shield your wallet from hefty caregiving costs. By leveraging this benefit, you can create a healthier financial routine while ensuring your loved ones get the care they need.

In Illinois, like in most states, accessing a Dependent Care Flexible Spending Account (FSA) typically involves enrolling through your employer's benefits program during open enrollment. Here's how you can get one:

1. Check Your Employer's Benefits Package: Dependent Care FSAs are employer-sponsored, so confirm with your HR or benefits department that your company offers this option.

2. Enroll During Open Enrollment: Most companies have an annual open enrollment period, usually in the fall, where you can select or adjust your benefits. If you have a qualifying life event (e.g., having a child), you may also be able to enroll or make changes mid-year.

3. Set Your Contribution: During enrollment, decide how much of your pre-tax income you want to allocate to the Dependent Care FSA for the year (up to the IRS limit of $5,000 for married couples filing jointly or $2,500 if filing separately).

4. Submit Claims: As you incur eligible expenses (e.g., daycare, after-school programs, summer camps), submit receipts to your FSA provider for reimbursement.

Ask HR for a detailed benefits guide to ensure you're making the most of your options!

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Tax Savings and Peace of Mind

Both FSAs and HSAs offer significant tax advantages that can lower your healthcare costs, but they also provide peace of mind—knowing that you have a financial cushion for medical expenses. Think of it like preventive care: just as staying on top of your health can prevent costly treatments later, managing these accounts wisely can save you from financial stress down the road.

Using these accounts effectively can also boost your financial wellness. Every dollar saved on taxes is a dollar that stays in your pocket, and those savings can add up over time. Whether you’re managing healthcare costs today or building a nest egg for tomorrow, FSAs and HSAs provide tools that help you take control of your financial health.

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Final Thoughts: Making the Most of Your Healthcare Toolkit

FSAs and HSAs may feel like alphabet soup at first, but once you understand how they work, they become essential tools in your financial toolkit. Just like a good treatment plan depends on the needs of the patient, the best account for you depends on your specific situation.

If you have regular, predictable expenses, an FSA can be a great way to cover them while saving on taxes. If you’re playing the long game, an HSA offers unmatched flexibility, investment options, and the ability to carry your savings into retirement. And if you can manage both? You’ll be setting yourself up for success—like having both an emergency room and a long-term care unit at your disposal.

At the end of the day, using FSAs and HSAs effectively is about planning, saving, and staying organized. Whether you’re covering today’s expenses or preparing for the unknowns of the future, these accounts give you the tools you need to manage healthcare costs and maintain financial wellness. So, open that toolkit, use these accounts wisely, and enjoy the peace of mind that comes with knowing you’ve got your healthcare expenses covered.

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

Woman typing on a calculator with tax papers scattered on desk

The end of the year is fast approaching, which means you’re probably focused on holiday shopping, family gatherings, and maybe squeezing in some well-deserved rest. But if you take just a little time to do some year-end tax planning, you’ll thank yourself when spring rolls around. Think of it like changing the oil in your car before winter—you invest a little effort now to avoid bigger, more expensive problems down the road.

The good news? You don’t have to be a tax expert to make smart moves that keep more money in your pocket. Here’s a year-end checklist to guide you through it, with simple strategies to save on taxes and make the most of what you’ve earned.

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1. Max Out Retirement Contributions: Boost Savings While Reducing Taxes

Deadline: December 31

Saving for retirement isn’t just about securing your future—it’s also a quick way to lower your taxable income today. Every dollar you contribute to a 401(k), 403(b), or similar plan reduces your taxable income, which means less money owed to Uncle Sam.

• Contribution Limits for 2024:

• Up to $23,000 for most people (and an extra $7,500 if you’re 50 or older).

• How to Do It:
  Check your paystub to see if you’re on track to max out your contributions. If not, consider bumping up your payroll deductions for the rest of the year—especially if you got a year-end bonus.

Why It Matters:

Think of it like using a coupon at the store. You’re buying yourself a more secure future and paying less today. That’s a win-win.

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2. Use Your HSA: Save Now for Health Expenses Later

Deadline: December 31 for contributions to count toward this year’s taxes

If you have a Health Savings Account (HSA) through a high-deductible health plan, don’t overlook it. HSAs offer a rare triple tax benefit:

1. Contributions reduce your taxable income.

2. Investments inside the HSA grow tax-free.

3. Withdrawals for medical expenses are tax-free too.

• Contribution Limits for 2024:

• $4,150 for individuals, $8,300 for families, and an extra $1,000 if you’re 55 or older.

Why It Matters:

Think of your HSA like a rainy-day fund that doubles as a health piggy bank. It’s there for you now, and if you don’t need it right away, it rolls over and grows for the future—like a trusty umbrella you keep in the closet.

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3. Tax-Loss Harvesting: Turning Market Losses into Savings

Deadline: December 31

If you have investments in a taxable brokerage account, take a look at how your portfolio is performing. This has been a bumpy year for the markets, and you might have some losing stocks or funds. Selling those losers can help reduce the taxes you owe on other investments that made a profit.

• How It Works:
  Losses can offset gains, dollar for dollar. If your losses exceed your gains, you can subtract up to $3,000 from your regular income, and anything left over can be carried forward into future years.

Why It Matters:

Think of it like cleaning out your closet. You get rid of the old things you don’t need (investments that aren’t performing) and make room for new ones (or at least get some tax savings). It’s a financial fresh start.

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4. Charitable Contributions: Do Good, Get a Break

Deadline: December 31

Donating to charity not only feels good—it can also reduce your tax bill if you itemize deductions. You can give cash, stock, or even household items, and it all counts toward your charitable deduction.

• Pro Tip:
  If you have stocks that have gone up in value, donating them directly to a charity can help you avoid capital gains taxes. You’ll get the full deduction for the stock’s current value without paying taxes on the gain.

Why It Matters:

This is like donating clothes to Goodwill. You declutter your life, help someone else, and come tax time, you might get a little bonus for your generosity.

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5. Check Your FSA: Use It or Lose It

Deadline: December 31, though some plans give a short grace period into the new year

If you have a Flexible Spending Account (FSA) through your employer, now’s the time to check your balance. Unlike HSAs, most FSAs come with a “use it or lose it” policy. Any money left over in the account at the end of the year (or after the grace period) disappears.

• How to Avoid Losing It:
  Schedule any last-minute doctor appointments, stock up on prescription glasses, or buy eligible medical supplies. Many plans also cover things like first-aid kits or sunscreen.

Why It Matters:

Imagine if a gift card in your wallet expired at the end of the year. Wouldn’t you want to use it while you still could? Your FSA works the same way.

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6. Estimate Your Taxes: Avoid a Surprise Bill

Deadline: December 31

Did you get a big bonus this year? Sell some investments? Or start a side hustle? If so, you might owe more in taxes than expected. The IRS wants you to pay taxes as you earn, and if you underpay, you could face a penalty.

• How to Check:
  Use an online tax calculator or ask your accountant for a quick estimate. If it looks like you’ll owe more, you can make an estimated tax payment by December 31 to avoid penalties.

Why It Matters:

This is like checking the gas gauge before a road trip. If you’re running low, it’s better to fill up now than get stranded on the highway (or hit with a surprise tax bill).

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7. Review Your Beneficiaries: Make Sure They’re Up to Date

Deadline: Ongoing, but the end of the year is a great time to check

Life changes—like getting married, divorced, or having kids—should prompt a review of your beneficiary designations on things like retirement accounts and life insurance policies. These designations override what’s written in your will, so it’s important they reflect your current wishes.

Why It Matters:

Think of it like updating your emergency contacts. If something happens, you want the right people to be notified and taken care of, without complications.

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8. Take Your RMDs if You’re 73 or Older

Deadline: December 31

If you’re 73 or older, the IRS requires you to take Required Minimum Distributions (RMDs) from certain retirement accounts, like traditional IRAs or 401(k)s. If you don’t, you could face a steep penalty—25% of the amount you should have withdrawn.

• What If You Don’t Need the Money?
  Consider using your RMD to make a Qualified Charitable Distribution (QCD). This allows you to donate directly to a charity and satisfy your RMD without adding to your taxable income.

Why It Matters:

Think of it like taking the trash out before it overflows. Even if you don’t need the space right away, it’s better to take care of it now than deal with a mess later (or in this case, a tax penalty).

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Wrapping It All Up: Start the New Year Strong

Year-end tax planning doesn’t have to be complicated, but it does require some attention. A little bit of effort now can save you money and prevent future headaches. It’s just like prepping for a road trip—if you check the oil, fill the gas tank, and pack your snacks ahead of time, the ride will be much smoother.

If any of this feels overwhelming, don’t hesitate to reach out to a financial planner or tax advisor. Having someone in your corner to guide you through these steps can make all the difference—just like having a good mechanic for your car or a trusted doctor for your health.

Here’s to finishing the year strong, staying organized, and keeping more of what you’ve worked so hard to earn!

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

As a healthcare professional, you spend your career prescribing treatments and procedures to help patients live healthier lives. But when it comes to managing your own healthcare expenses, figuring out the best financial strategies can feel like trying to read an MRI without any training. That’s where Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) come into play—they’re like financial prescriptions for managing healthcare costs. While they both offer tax advantages, understanding the differences and which one suits your needs will help ensure you maximize your financial health.

Whether you’re a physician, nurse, or administrator, knowing how to integrate these accounts into your financial strategy is crucial. Let’s break down how FSAs and HSAs work, who they’re best suited for, and how they fit into your overall financial treatment plan.

FSAs and HSAs: The Overview

Before diving into the details, let’s start with the basics of how these accounts function:

Flexible Spending Accounts (FSA)

Allows you to set aside pre-tax dollars from your paycheck for eligible healthcare expenses like co-pays, prescription drugs, and medical equipment. The catch is that FSAs have a “use-it-or-lose-it” policy—funds must generally be spent within the plan year or risk being forfeited.

Health Saving Accounts (HSA)

Allows you to set aside pre-tax dollars, but they’re only available if you’re enrolled in a High-Deductible Health Plan (HDHP). Unlike FSAs, HSAs are yours to keep, and unused funds roll over year to year. Think of it like a long-term savings tool for medical expenses today and in retirement.

These two accounts both reduce taxable income, but they have key differences in flexibility, eligibility, and how they fit into a larger financial plan.

FSA vs. HSA: Key Differences at a Glance

Here’s a side-by-side comparison to get us started:

This comparison makes one thing clear: HSAs offer more flexibility and long-term potential, but they aren’t available to everyone. FSAs, on the other hand, can be used with any health insurance plan, making them more accessible for healthcare professionals employed by hospitals or larger organizations with robust benefit packages.

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When an fsa is the right prescription

For many healthcare professionals working at hospitals like Rush or Advocate Lutheran, the default option through your employer’s benefits package may be an FSA. Here’s when an FSA makes the most sense:

1. You Have Predictable Healthcare Expenses

If you know you’ll have predictable out-of-pocket expenses—like ongoing prescriptions, therapy visits, or routine dental work—an FSA can be a great way to pay for these costs with pre-tax dollars. Think of it like scheduling routine lab work: you know what’s coming, so you plan ahead.

2. Your Employer Offers an FSA Match or Incentive

Some hospitals and healthcare networks provide contributions or incentives to encourage FSA participation. If your employer offers a match, it’s essentially free money. Much like taking advantage of employer-sponsored wellness programs, you should seize any financial perks available to you.

3. Your Healthcare Plan Isn’t an HDHP

Not all healthcare professionals have access to high-deductible health plans, especially if you’re working for a large healthcare network that offers multiple tiers of traditional PPO plans. If that’s the case, an FSA may be your best bet for tax-advantaged healthcare savings.

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When an HSA is the Ideal Treatment Plan

If you have access to a high-deductible health plan (HDHP), then an HSA can become a cornerstone of your financial health strategy. Here’s why:

1. You Want Long-Term Savings and Tax Benefits

HSAs are like the “triple threat” of the financial world:

• Contributions are tax-deductible

• Growth is tax-free if invested

• Withdrawals for qualified expenses are tax-free

Think of it like the compound benefits of early preventive care—saving a little now can have exponential benefits later. You can invest unused HSA funds for growth over time, making it an ideal vehicle for healthcare expenses in retirement.

2. You’re Healthy and Want to Save for Future Healthcare Needs

If you don’t expect to have high healthcare expenses in the near term, an HSA allows you to build a financial buffer for when you’ll need it down the road—perhaps in retirement when Medicare doesn’t cover everything. This can be particularly valuable if you anticipate rising healthcare costs over the years.

3. You Value Portability

One of the biggest advantages of an HSA is that it stays with you, even if you change jobs. This makes it ideal for physicians or nurses who may move between hospitals or healthcare systems throughout their careers.

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Using FSAs and HSAs Together

In some situations, healthcare professionals can use both an FSA and HSA strategically. Here are two ways you might be able to maximize both accounts:

1. Limited-Purpose FSA (LPFSA)

If you have an HSA, you can also enroll in a Limited-Purpose FSA, which only covers dental and vision expenses. This allows you to preserve your HSA funds for future use while using the LPFSA to cover more immediate out-of-pocket costs for dental and vision care.

2. Dependent Care FSA (DCFSA)

In addition to healthcare FSAs, many hospitals also offer Dependent Care FSAs. These accounts allow you to set aside pre-tax dollars to cover childcare or eldercare expenses. If you’re a healthcare professional balancing the demands of work and family, a Dependent Care FSA can provide valuable savings.

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Choosing the Right Prescription for You

Here’s a simple framework to help you decide whether an FSA or HSA (or both) is right for your situation:

• If you have predictable, recurring healthcare expenses (like prescriptions or therapy visits), an FSA is often the way to go.

• If you have access to an HDHP and want to save for future healthcare costs, an HSA provides flexibility and growth potential.

• If you’re balancing family obligations, consider pairing a Dependent Care FSA with your other healthcare savings options.

Remember, selecting the right healthcare savings account is a bit like personalizing a treatment plan. Just as you consider a patient’s unique needs before prescribing medication, you should evaluate your healthcare plan, financial goals, and lifestyle to determine the best strategy.

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Final Thoughts: Your Financial Health Matters Too

As a healthcare professional, it’s easy to focus on the needs of your patients while putting your own financial well-being on the back burner. But just like scheduling regular check-ups ensures physical health, reviewing your financial options annually is essential to maintaining your financial health.

Whether you decide to leverage an FSA, HSA, or both, these tools can help you manage the high cost of healthcare more efficiently. And just like you encourage your patients to make preventive care a priority, I encourage you to take control of your healthcare savings today—it’s an investment in both your present and your future.

If you need help evaluating your healthcare benefits or integrating these accounts into your broader financial plan, don’t hesitate to reach out. A little proactive planning now can make all the difference down the road—just like the best medical care.

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Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.