One For The Money

• Exercising and long-term financial goals [01:33]
• Greater quality of life [04:17]
• Benefits of HSAs [08:28]
• Tips to help you exercise more [11:22]

January is a time of resolutions that often focus on physical health. Unfortunately, most of these resolutions have faded away by mid-February. Investing in your health is in your long-term financial interest, and health brings a freedom that few realize until it’s gone. Not only does exercise extend our lives, but it extends the years we have good health. Good health allows us to spend less on healthcare and more on things we want. 

Longevity is most impacted by major modifiable behaviors such as exercise, sleep, nutrition, and emotional health. Exercise itself is in a league of its own because of its ability to extend one’s life and reduce all-cause mortality. This observation was made by the famous Dr. Attia, whose practice consequently focuses on exercise. Dr. Attia also noted that this is the most challenging aspect of behavior for people to change because of the significant time commitment. 

Exercise doesn’t just buy you more time; it buys you more quality time. Quality of life isn’t the only benefit. Good health is essential because healthy people can have lower healthcare expenses. Healthcare is expensive now, but even more so in retirement. The average retired couple will spend $285,000 in today’s dollars just for medical expenses, not including long-term care expenses. 

Early retirees will especially want to consider exercise, as they must pay most of their healthcare expenses before Medicare does. Just because someone turns 65 does not mean Medicare covers everything. Deductibles, premiums, and prescription costs add up quickly, and all must be considered. Stay healthy, and you may be able to avoid many of these costs.

One of my favorite planning tools is a Health Savings Account. HSAs are the only investment vehicles that are triple tax-free. If used for qualifying medical expenses, growth and distributions are tax-free. The money in an HSA is not susceptible to taxes and isn’t impacted by the amount of the individual’s income. While anyone can get this deduction, not everyone is eligible to invest in an HSA. You must have a qualifying, high-deductible medical plan. Additionally, the contributions are limited per individual and family. 

What if you don’t need all the money in an HSA for health care expenses? Essentially the account becomes like a traditional IRA, and distributions are taxed at ordinary income tax rates. Remember, the earlier you invest your money, the longer it grows. That growth can be significant. With just $2,000 invested annually for thirty years, earning a 7% rate of return could grow that account to over $200,000. That money would go a long way to help offset healthcare expenses in early retirement. 

• Exercise, VO2 max, and longevity | Mike Joyner, M.D
• Jerry Morris: Pathfinder for Health Through an Active and Fit Way of Life
• How to plan for rising health care costs | Fidelity