Retirement Income, Mortgage Rates & Markets | Money Matters

Wes Moss [00:00:03]: Your host, Wes Moss, along with the Jeff Lloyd here in studio.

Jeff Lloyd [00:00:08]: Wes, thanks for having me back. Good to be here.

Wes Moss [00:00:11]: Where do we start? Do we go in rates, inflation, oil, Fed, Chick-fil-A? Well, you know, let’s start with Chick-fil-A.

Jeff Lloyd [00:00:18]: I love Chick-fil-A. It’s Sunday and I feel like they know exactly what they’re doing when they close every Sunday. It makes you want Chick-fil-A even more. On Sundays.

Wes Moss [00:00:28]: It’s a genius strategy. It’s so good that when you’re driving, let’s say you’re on a road trip and you forget it’s Sunday and you’re driving, and then you see the Chick-fil-A sign on the, you know, McDonald’s, Wendy’s, Chick-fil-A, but then it says closed Sunday.

Jeff Lloyd [00:00:42]: Closed Sunday.

Wes Moss [00:00:43]: And it’s always Sunday when you see that sign. But they are in the business of not utilizing artificial intelligence, which is interesting. They came out this week and essentially said, hey, we know that most of our competitors are using bots and artificial intelligence to take your orders, and McDonald’s is doing it, and supposedly it is going to take orders in 3 different languages, and Wendy’s is doing it, and lots of other companies are doing it. And I, I had experience this week with Hertz, uh, the— or this was last week.

Jeff Lloyd [00:01:20]: Rental car.

Wes Moss [00:01:21]: I had to rent a car for a day. Did the rental car, then my flight changed and I was gonna be there earlier. So I went in to try to change the reservation and it just kept pushing me to an AI chat, AI chat. And then after it couldn’t, I tried to change the reservation, wouldn’t work. Then the AI person, the AI bot tried to do the same thing and got the same error I did. So I knew it kind of wasn’t working. Then I said, is there any way I can talk to a human? Well, we would still like to try to figure this out for you. And I said, is there a number I can call? Well, we’d still like to do this as a chatbot.

Wes Moss [00:01:57]: It just never works. So we want to talk to humans.

Jeff Lloyd [00:01:59]: I always yell when that’s happening to me and I can tell it’s, it’s a, it’s computer. I always yell, speak to representative. Now, now I’m yelling, speak to a human being.

Wes Moss [00:02:10]: According to a recent survey, almost 80% of consumers said they would still rather interact with a human Versus an automated customer service. Of course, who wants to talk to a robot?

Jeff Lloyd [00:02:24]: So I saw that 80% number, that 79% number, and I actually thought that was, that was low. I thought it would be higher.

Wes Moss [00:02:30]: I thought it’d be 90. Think about, let’s do these numbers. $24 billion in sales. I just did this quick math. 20, well, I did the math on the average Chick-fil-A is a little over 9 million. So if you do 9 million and imagine your average bill is $15, That may be for 2 people, maybe more like 1. Is that 1?

Jeff Lloyd [00:02:53]: That’s probably 1.

Wes Moss [00:02:54]: Okay, that may be 1.

Jeff Lloyd [00:02:55]: I’m kind of frowning right now. That seems a little low with chicken inflation.

Wes Moss [00:02:59]: Divided by 365, which is in itself wrong because you have to take minus 52 because Sundays, you’re looking at about 1,500, 1,600 people a day that go through a Chick-fil-A that get served. So that’s my estimate, and that seems about right. Constantly crowded, constantly Multiple lines going through. It makes sense. I mean, that’s a big time— that’s a lot of revenue for one restaurant location. And I love that they’re, they’re saying no to AI. It was CEO Andrew Cathy came out this week, told CNBC their customer wants to keep personal interaction between humans and their employees. And I get it.

Jeff Lloyd [00:03:38]: Well, you’ve been through the drive-through, you see the people out there walking car to car. They have like the little like Mobile ordering device, you can pay right there. They’ve gotten really efficient and they still utilize AI in some of their operations. They’re just not replacing people with robots and using AI to displace those employees.

Wes Moss [00:03:59]: God bless Chick-fil-A. There’s another study that you found this week, Jeff Lloyd, that really goes back to the core of why— I mean, we hit another all-time high this week. It didn’t feel that way at all, did it?

Jeff Lloyd [00:04:12]: No, it was the 28th all-time high for the S&P 500, and it doesn’t even feel like it. You’re right.

Wes Moss [00:04:17]: And then the very next day we had another, well, the next couple days we had markets down because we had oil spike back up. We have an inflation number coming next week that is forecasted to be a little hotter, a little higher than it was last month in the 3.6% range for CPI. So that’s Consumer Price Index. And there’s a couple things happening. One, even though the S&P 500 has hit an all-time high, now it’s off of that, let’s say now, but the Dow at the same time, still down almost 6%. If you look at small caps, down, still up on the year, but they were up 25% and now they’re only up 10, 11, 12. So they’ve come down. Utility companies as an index, as an example, down 10, 15%.

Wes Moss [00:05:05]: from their highs. Financial companies down. So there are, in fact, this is a statistic that you and Connor Miller pulled this week. Even though you see stocks hitting an all-time high, how far is the average S&P 500 stock below its all-time high or 52-week high? And that number is 18%. So the average company is 18% below where it peaked. And that’s telling in a market that has primarily been driven— we’re back to— we had this great run of broadening where we saw most sectors do really well. Wasn’t just technology. In fact, technology has been lagging.

Wes Moss [00:05:47]: What’s happened in the last couple of weeks is we’ve seen the market get narrow again, and we’ve seen huge moves by a couple of the biggest stocks. We saw— we’ve seen big moves from Meta, After they introduced Muse, which is their new agent bot. Again, let’s go back to humans versus robots. And Nvidia has been on a tear and those companies are giant. So when you have the giant companies that are doing well, they move the index. It doesn’t mean the average company has been doing as well. And it certainly doesn’t mean that all sectors have been doing well recently. And Why are we seeing that? Well, there’s a couple different reasons.

Wes Moss [00:06:26]: One, every time we get an oil spike, and we had a 5+% oil spike in one day this past week, you see oil go up, then you see interest rates go up, and then you see the market come down. And I think that’s partially the reason why this market, as good as it’s been, and it has been a really good year, 2026, it doesn’t necessarily feel all that great. Because if you have a ton of diversification, you may not be back to your all-time high, even though— the S&P 500 did because it’s so concentrated in a couple of those names. Then we have the worry of, well, if rates are up and the reason rates are up is because inflation, and the reason inflation is up is because of oil, until we get some sort of settlement agreement, some calming of what’s happening in the Middle East, we’re going to continue to see oil in the range that we don’t like. We would like to see $70 a barrel oil. We’re nowhere close to that. Oil hit $100 again this past week, and every— it seems as though every time there’s a hint of an escalation, even though we see a very large amount of flow that is coming out of the Strait of Hormuz, coming through pipelines, we’re getting back close to the pre-war levels. But every time there’s this threat of re-escalation, oil goes right back up.

Jeff Lloyd [00:07:49]: Well, look no further than driving by a gas station and seeing gas prices close to $4, if not above $4. And then you see diesel prices in $6 to $7 per gallon.

Wes Moss [00:08:01]: And it goes beyond that. And this is the question back to inflation rates and then what the Fed’s going to do. The Fed’s meeting this week. It looks like they’ll probably be on hold, but the cycle is certainly higher versus lower. And if you look at what the New York Fed—

Jeff Lloyd [00:08:17]: Fed meets in a couple weeks.

Wes Moss [00:08:19]: Couple weeks.

Jeff Lloyd [00:08:19]: Couple weeks.

Wes Moss [00:08:20]: It’s not this week.

Jeff Lloyd [00:08:20]: Yeah, end of October.

Wes Moss [00:08:21]: It’s at the next Fed meeting, not next week. But there’s a really interesting study you just pulled from the New York Fed, and the New York Fed is looking into where the inflation is coming from. And what are they very recently saying?

Jeff Lloyd [00:08:37]: So they’re just looking at consumer good inflation, not the overall goods and services that we’ll see next week with CPI that’s released next Wednesday.

Wes Moss [00:08:46]: Which is everything. It’s goods.

Jeff Lloyd [00:08:47]: Which is everything. And this is just looking at goods. And what they’re showing is what the actual inflation is with and without tariffs and tariffs’ contribution to inflation. And what they’re saying is with tariffs, the actual inflation is about 2% on goods. However, without inflation—

Wes Moss [00:09:12]: Or without tariffs.

Jeff Lloyd [00:09:13]: I’m sorry, without tariffs, prices would actually be down almost 1%, 0.9%.

Wes Moss [00:09:20]: We’d have deflation if it weren’t for the tariffs, according to the New York Fed. And think about this, it’s been really almost— no, it’s been over a year and a half, and it took a long time for— and that this debate’s gone on, and there was a lot of debate last year in 2025 that the tariffs were not inflationary. Oh, they haven’t done anything. They haven’t raised goods. But to some extent, what the New York Fed is saying is it’s been enough time in the system so they can measure and see what the impact is. And according to the New York Fed, we would have good deflation if it weren’t for The tariffs. Again, that’s just in the goods space. That’s things we can buy, that we could tangibly buy.

Wes Moss [00:10:08]: They’re not measuring services, which tariffs have not inflated, arguably not nearly as much.

Jeff Lloyd [00:10:15]: And I’ve also seen some studies that said the impact of tariffs on inflation takes about like 9 to 12 months, maybe a little bit longer, to work themselves into that price.

Wes Moss [00:10:25]: And that’s kind of where we are now. It’s been a little over 12 months. And it’s starting to show up in inflation. Again, all of that has been putting pressure on rates. It’s not just the Fed that raised rates last time. Maybe they raise next meeting, maybe they stay put for a little bit and then they raise the next meeting. But the bond market doesn’t care about that. Interest rates have already gone up without the Fed being aggressive in their hiking of rates.

Wes Moss [00:10:53]: And we see now 10-year Treasury Continues to be at 5.25%, which is a world away from where it was only a year ago. The 10-year government bond is up well over, it’s really up over, well over 1%. So we’ve gone from around 4% to 5.25%. It’s happened on the 5-year government bond, again, up almost 1.5%, the 2-year government bond, the 1-year government bond, et cetera, all the way through what we call the yield curve. curve, which is simply, hey, what are rates doing at the 5-year mark, the 10-year mark, the 20-year mark, et cetera? And that’s where we are today. And of course, long-term rates have gone up as well, about a full percentage point, and now they are well over 5.5%. And of course, what that has really done is we’re back into an environment where mortgage rates are very high on a relative basis, even on a historical basis. Yes, there are periods of time where, wow, remember my 14% mortgage? Yes.

Wes Moss [00:11:52]: But now we’re back at the 7.5% level, and it’s a dramatic difference in what it costs to make a home payment. Difference in what it costs to get a mortgage for the median home price in America. Jeff Lloyd, what is that right now?

Jeff Lloyd [00:12:10]: The median price is $435,000.

Wes Moss [00:12:15]: Median.

Jeff Lloyd [00:12:15]: Median.

Wes Moss [00:12:16]: Okay.

Jeff Lloyd [00:12:16]: Right in the middle.

Speaker C [00:12:19]: Okay.

Wes Moss [00:12:19]: Line up every house, take the middle price. Cost at a 3% versus where we are today.

Jeff Lloyd [00:12:25]: This doesn’t include any down payment. This is just straight 100% financing at a 3% interest rate. Your monthly principal and interest is just over $1,800.

Wes Moss [00:12:38]: Pretty affordable.

Jeff Lloyd [00:12:39]: Yeah.

Wes Moss [00:12:40]: At today’s 7.5%.

Jeff Lloyd [00:12:42]: 7.5%. I even saw it in like 7.7, but let’s just use 7.5. That payment jumps to over $3,000 a month. That’s an additional $1,200 a month out of your pocket going toward your mortgage payment.

Wes Moss [00:12:56]: And that’s just the reality we see in America today. And that’s why it’s so hard for a 30-year-old in the environment we’re in to be able to afford a home. And that’s why we’ve continued to see a slow housing market. It’s because of rates and it’s because of mortgage rates. And they all work in concert. Now, speaking of rates, there was an interesting article this week, and here I’m gonna give you the exact headline, Jeff Lloyd. Cramer, talking about Jim Cramer from CNBC, who, by the way, I love. I watch this guy every day of my life.

Jeff Lloyd [00:13:28]: Almost every day. He brings a lot of energy.

Wes Moss [00:13:30]: Morning, night, where he’s on Squawk on the Street for a couple hours.

Jeff Lloyd [00:13:36]: Mad Money.

Wes Moss [00:13:37]: Then at night he’s on Mad Money. This guy is incredible, his energy level. He’s on TV 3, 4, 5, 6 hours a day, and then he’ll do a special. He just never sleeps. This was an article that I found on, I think it was Yahoo Finance, it was really from 247 Wall Street. Cramer says high dividends are dangerous. Wes Moss says that’s where retirement income lives. Can you believe that? Can you believe that?

Speaker C [00:14:03]: What?

Jeff Lloyd [00:14:04]: War on Wes Moss?

Wes Moss [00:14:05]: Yeah, just, that’s me. They’re talking about me.

Jeff Lloyd [00:14:07]: Catching strays from Cramer like that? Are you serious?

Wes Moss [00:14:11]: Well, it wasn’t Cramer. It was somebody writing about what he said.

Jeff Lloyd [00:14:13]: Yeah, yeah, on the article. I know, I’m kidding.

Wes Moss [00:14:14]: But they get it all wrong. The headline got it backwards is that when I had done, I don’t know if it was Money Matters or on Clark Howard’s show, but we talked about the income ladder or the yield ladder, really the yield ladder. And we started out and we said, the S&P 500 is yielding. 1.25%. And then you can find stocks that are 2% and stocks that are 3% and stocks that are 4%. And then when we get to that next rung, we said, if you’re looking for a 5% yield, did we say go find 5% yielding stocks? No. We said that next rung on the ladder, now government bonds are paying 5%. And what they mistakenly said is that anything in the high yield range, I’m talking stocks.

Wes Moss [00:15:02]: And that’s just not true. If a stock is yielding 6% or 7%, there’s usually some— first of all, there’s a lot of risk involved. Secondly, there’s usually something going wrong and you’re in the camp or category where you might see a dividend cut. So we want moderately yielding companies. We’re not stretching. You can go find stocks that are paying 8%, 9%, 10%. There’s usually a real issue going on, and you’re usually seeing a principal decline along with that. They just took a story of the yield ladder and they bucketed everything into stock dividends when yield is just a term that means income from any different asset.

Wes Moss [00:15:43]: It could be stocks, it could be REITs, it could be bonds. And these are apples and oranges. So just to set the record straight, They’re making it seem like I’m advocating for super high yielding stocks, and that’s just not the case. I’m advocating for looking at the whole yield ladder, both apples, oranges, and even there’s some bananas along the way. More Money Matters straight ahead. You know, retirement is a lot like football. The best teams don’t just show up on game day. They’ve got great coaches and a smart game plan.

Wes Moss [00:16:17]: Without one, things go off the rails quickly. At Capital Investment Advisors, we would act as your retirement coach, building both a big picture strategy and the detailed plays that aim to help you score the retirement you want. Don’t go into retirement with a bad playbook. Visit us at yourwealth.com. That’s yourwealth.com. The S&P 500 hitting records, but much of the stock market isn’t. Jeff Lloyd. And I think that we’ve got one headline and 2 somewhat or maybe very different markets if you’re looking under the hood.

Wes Moss [00:16:57]: You love all-time highs and we’ve had—

Jeff Lloyd [00:16:59]: It’s my favorite thing to say on air, all-time high.

Wes Moss [00:17:02]: And we’ve had 28 of them this year. So we hit another one and it sounds like everyone’s winning, but small companies and, you utility companies and banks. To some extent, you were looking at the financials over the past month, and not every sector is doing well. And part of that is that we’ve had this really rapid rise in rates. And when you get a rise in interest rates, some sectors don’t like that. Particularly utilities are a really good example of that. Rates go up, utility companies typically get hit, and there’s a variety of reasons for that. One of them is that utilities tend to carry a fair amount of debt.

Wes Moss [00:17:42]: So higher debt payments, lower valuation in general. But that’s what we’ve been seeing. IJR, which I was looking at, is a small-cap index, still off almost 10% from its high. Utility ETF down 13% from its high. The Dow still 6% off its high. And it’s because we’ve gone back to, over the last couple of weeks, a pretty narrow market. And you’ve got this AI engine that is hyper-focused, not just within tech, but the AI trade within tech. That’s what’s doing the heavy lifting in the market.

Wes Moss [00:18:19]: And that happens to be some of the biggest companies. As we know, S&P 500 is cap-weighted. So the bigger companies have a bigger impact on the index. So this rally that we’ve had, and even though we’ve had some choppy days this week as well, increasingly powered by that same old familiar group of companies that are hyperscalers, AI-oriented. Nvidia has climbed pretty significantly. Meta has had a huge move up since kind of mid-August. And if you take a look at the combined value of the Mag 7, the Magnificent 7, it’s been a little while since we’ve talked about the Mag 7. It’s roughly to— and then this word, this is— I don’t know, can this possibly be right? It’s in the trillions and trillions of dollars because these are multi-trillion-dollar companies, each one of them.

Wes Moss [00:19:12]: So something like $20+ trillion just for the Mag 7, which is kind of mind-boggling. It’s just almost hard to even fathom that a handful of companies can have that much weight. But the reality here, and this is some digging from our investment committee, Less than half of the stocks in the S&P 500 have closed above their 200-day moving average over this past week. And the average S&P 500 stock, the average is down 15% to 20% from its particular all-time high. So we’ve got a couple big names powering this market higher. Many of the, quote, average stocks in the S&P 500 that are not trillion-dollar dollar companies. They may only be $100 billion companies, which is— That’s still pretty big. Still giant, but on a relative basis is somewhat small.

Wes Moss [00:20:06]: That’s what’s been left behind recently. And again, the worry here is that rates keep going up. That could continue. I am a little skeptical of that. I look at this rate environment that we’re in, and this goes back to the article about Me saying high yields are, are good and Cramer saying they’re dangerous. When I’m talking about higher yields, 5% is a high yield. Well, that’s a good old-fashioned government bond is doing that now. So the safer side of the marketplace is paying a lot more than it used to.

Wes Moss [00:20:43]: The worry for bond investors is the seesaw. The seesaw means rates go up, bond prices go down. But what also starts to happen is when rates are higher, that impact of further higher rates becomes a little less biting. And here are a couple examples. Let’s look at the 5-year Treasury. So right now, the 5-year US Treasury has about 1.5% more income, more yield than a money market. Average money market’s around 3.5%. The 5-year Treasury is around 5.1%.

Wes Moss [00:21:17]: You’re getting an extra percent and a half. Now, technically, you’re locking up your money for a 5-year period. Now, if you have an ETF, you’re not really locking anything up. But if we’re looking to say, I’m going to hold it over that period of time, if rates go down by 1%, so remember the seesaw, rates down, prices up, what would happen to that 5-year Treasury? Well, over the course of 1 year, you’d actually make 9%, almost 10%. How could that be, Wes? Well, first of all, you’re getting over 5% in interest. Rates go down, your price goes up. So, you’re getting another 4% in price appreciation. Voilà, you’re at almost 9.5%.

Wes Moss [00:22:01]: Think about that. A 5-year Treasury. If you own one of those today, it’s paying you over 5%. Rates go down, price actually goes up. You could end up with a high single-digit, almost double-digit return. Now, but what— wait a minute, the scary part. What if rates keep going up and they go up a whole nother percentage point, 100 basis points? Our producer Ryan, he only talks in basis points. 100 bps is 1%.

Wes Moss [00:22:34]: You’d still actually not lose money in a 5-year Treasury in the year where rates would go up a full percent. Because again, you’ve got the cushion, the buffer of the income, 5%. Yes, you’re going to lose some price because rates went up, prices go down. You still end up with about a half a percent to 1% rate of return. So is it a risky proposition to own government bonds in this rate environment? And I would argue that it’s actually a lot less risky today than it would’ve been when rates are at 4 and rates are at 3 and rates are at 2 and rates are at 1. We’re in an environment where bond yields are pretty darn favorable. Now, one of the things I actually did hear Cramer say about this, speaking of Jim Cramer, is that we do start to get into this competitive worry in the investment landscape when the quote risk-free rate or low-risk investments like fixed income start to be really attractive from a yield perspective, does it— and I don’t think that that has been the case just yet, but does it start to pull away? And actually, maybe it is somewhat the case. Does it start to compete? And an investor looks at 2 options and says, I can own these stocks that are paying me 2% or 3%, I can now own a bond paying me 5%.

Wes Moss [00:23:58]: Wait a minute, maybe more money goes to the bond side. And that’s part of the reason you see these dividend sectors like utilities and financials take a little bit of a hit.

Jeff Lloyd [00:24:10]: That’s what I was going to say. Look no further than what’s happened to utilities. Historically, they have been an investment for the dividend, for the yield, and Whether it’s in the 3%, 3.5%, 5% range, I like that dividend income coming from utilities. Now you got government bonds paying more, and I think you’ve definitely seen some selling pressure on utilities from that income and cash flow generation standpoint.

Wes Moss [00:24:41]: So competitive pressure from other areas in the marketplace, and that’s what we do as investors all the time. We’re looking around. Do I want to own stocks at these levels? Do I want to own bonds at these levels? Do I want to own real estate at these levels? And those are always, those are the decisions that are happening every single day. And the marketplace is looking and weighing these different asset classes and saying, well, at this environment, this looks attractive today. And I, and, and that’s been a big part of the financial sector as an example, utility sector. Taking a little bit of a hit. They’ve still done well over the course of the last couple of years. It’s not as though it’s ruined these sectors at all.

Wes Moss [00:25:21]: It’s just taken some of the shine away. And that’s what we’ve seen over the last couple of months. Do we think rates are going to keep going up? We’ve gone from 4 to 4.5 to 5, now 5.25. Are we going to see 6.25? Are rates going to go up that much more? Trying to predict the interest rate market, even though it seems like it’s simple because it’s just this one number. Hey, can’t we predict this one? It’s a— is it going to be at 5, Wes, or 5.5? Where are we going next? And the answer is we don’t know. I can’t say rates are going to come back down over the next week or they’re going to go up a little further where they are today or go up a lot from where they are today. It does seem to me that the move from 4% to 5%, the next 1% going from 5% to 6% is a lot harder. I think that to have that big of a move in the interest rate environment, I mean, that’s going to slow things down because you think nobody’s buying a house with a 7.5% mortgage, try 8.5%.

Wes Moss [00:26:31]: I mean, we’re going to talk about grinding to a halt. And then when we slow down, if we slow down, what happens? Inflation goes down and then the Fed can lower rates again. And they’re back to— and that is this aquarium that just continues to circle and we’re looking for equilibrium and high rates create lower inflation, then rates can come back down. And that’s the cycle that we live in.

Jeff Lloyd [00:26:57]: Yeah, Wes, one of our favorite charts or graphics is the magic mortgage rate. You remember seeing that?

Wes Moss [00:27:03]: Yes. Do we?

Jeff Lloyd [00:27:04]: We don’t have it. We don’t have it in front of us right now, but it’s around that 5% where at least half of Americans would take on a new mortgage at this rate. If you’re in the 7.5%, 8.5%, it’s only like 10%, 15% of Americans that would even take on a new mortgage at that rate.

Wes Moss [00:27:23]: Not to mention there’s zero refinancing happening. When rates are at 7.5%, nobody’s refinancing because everybody, everyone has a 3%, 4%, 5% mortgage. So you’re not gonna refinance at a higher rate. Those are only gonna be for purchases. And that marketplace obviously has slowed. It will continue to slow as rates, if in fact rates continue to climb. I just tend to believe that We’ve already seen a really big move. Do they continue? Possible.

Wes Moss [00:27:57]: Hard to predict. It just seems less likely for the next full 1% move. But Chick-fil-A is not getting rid of their employees because they prefer humans. And that’s the good news for, for today. HSA stacking revisited, meaning that We do so much. I don’t even know if we’ve talked about HSAs on Money Matters.

Jeff Lloyd [00:28:24]: Health Savings Account, for those wondering what HSA is.

Wes Moss [00:28:29]: And I had a question from a Clark Howard listener who said, Wes, you said that you spent your HSA money last year. Why aren’t you stacking it? And I thought to myself, yeah, why am I not stacking it? And the reality here is that our company is new to HSAs. So we’ve only had it for, let’s say, 2 years. And we were excited about it. We had a lot of medical costs with some of our kids and you get a card with it and you put your money in pre-tax. My company matches some of that. So we were kind of excited to be able to go to CVS and pay for a prescription with HSA money. It goes in pre-tax, lowers your overall income, comes out tax-free for medical costs.

Wes Moss [00:29:07]: Hooray. But upon further review, if you can afford to be paying out of pocket and not touch the HSA money, It’s the only account that I know of that’s got the triple tax threat. Goes in pre-tax, grows tax-deferred, and then comes out tax-free. Nothing else can do that. A Roth? Yeah, it’s tax-free when it comes out, but it’s after-tax when you put it in. So it is perhaps the most, it’s got the most superpowers of any of these accounts. The only catch is that you have to use it for medical costs. The other great thing you can do is keep track of your medical costs over the course of time.

Wes Moss [00:29:47]: And eventually use it. So, you can stack up medical costs for 2, 3, 4, 5, 10 years. As long as you have a record of that, you can then eventually have HSA money come out because of those and prove that you were spending it on healthcare. So, if you think about the amounts, and we talk about, well, how do I afford long-term care? And how do I afford healthcare in retirement? Well, if you are 45 and and you start committing to the $400 a year for our family, $8,750 a year towards an HSA account, and you invest it in a, let’s call it diversified growth and maybe even a balanced account and get, let’s call it 7% a year. From 45 to 65, a single person would accumulate $180 grand. A couple, a family would accumulate $350,000 at a 7% rate of return. So now what you’ve done, is you’ve funded in a tax-free way all of your medical costs for the rest of time. So the idea of this HSA stacking it, if you can afford to pay for your costs out of pocket, it is one solution to have a healthcare-like 401 that comes out tax-free.

Wes Moss [00:31:01]: It’s really like a Roth in retirement. So it would, if, and I’m newer to HSAs, but now— that we really think about it. That’s— if we can afford to do that, that’s the way to really maximize this idea long-term. Now, yes, you do need to spend it on medical. If you’re pre-65 and you pull money out, it’s a 20% penalty and income tax. Post-65, it’s just like an IRA. You get— it’s income tax if it’s not used for medical. But the reality is we’re all going to be spending— almost all of us will be spending a lot long-term when it comes to healthcare.

Jeff Lloyd [00:31:37]: I just love when I use my HSA card from now on, I’m just going to call it my triple threat card.

Wes Moss [00:31:42]: Well, no, you’re not supposed to use it.

Jeff Lloyd [00:31:43]: I’m stacking it.

Wes Moss [00:31:44]: That’s right. Stacking from now on. You are listening to Money Matters. Jeff Lloyd, thanks for being in the studio, my friend.

Jeff Lloyd [00:31:52]: Great being here.

Wes Moss [00:31:53]: You can find Jeff Lloyd, you can find me, the Money Matters team, easy to do so at Your Wealth. That’s Y-O-U-R Wealth. Have a wonderful rest of your day.