HSA Benefits: How to Use Your Health Savings Account for Maximum Impact

Posted on August 20, 2025August 13, 2025 by Brian Colvert

HSA Benefits Explained

When it comes to building a smart financial plan, few tools are as underutilized and as powerful as the Health Savings Account (HSA). If you have access to an HSA through your employer or qualify on your own, you might already know it can help pay for medical expenses. But what you might not realize is just how many HSA benefits there are, how they extend far beyond the doctor’s office, and how an HSA can become a long-term wealth-building tool.

While we’ve broken down the basics and eligibility rules in the past, today we’re diving into the next level, creative ways to use your HSA, lesser-known benefits, and how this account can be a game-changer for your retirement strategy.

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The Triple Tax Advantage: A Quick Refresher

We won’t spend too much time here since you may already know it, but the triple tax advantage is what makes an HSA so special:

Tax-free contributions – Lower your taxable income each year you contribute.
Tax-free growth – Invest your balance and watch it grow without paying capital gains tax.
Tax-free withdrawals – Spend it on qualified medical expenses and never pay tax on those withdrawals.

It’s the only account that does all three, which is why we encourage eligible clients to use one.

Going Beyond the Basics: Lesser-Known HSA Uses

Many people only tap their HSA for immediate medical needs, doctor co-pays, prescriptions, or urgent care visits. While that’s a perfectly valid use, you may be leaving significant opportunities on the table.

Here are some HSA benefits you might not know about:

1. Dental care
Implants, dentures, crowns, orthodontics, and even regular cleanings are eligible expenses.

2. Vision care
Eye exams, prescription glasses, contact lenses, and cataract surgery all qualify.

3. Hearing aids
Including fittings, batteries, and repairs—these can be expensive in retirement.

4. Medicare premiums
Parts A, B, C, and D are eligible (Medigap is not), giving you a tax-free way to cover monthly costs.

5. Long-term care insurance
Premiums are eligible up to IRS limits, depending on your age.

6. COBRA premiums
If you leave your job or retire early, you can use your HSA to pay for COBRA coverage.

7. Alternative treatments
Acupuncture, chiropractic care, and other approved therapies are covered.

8. Travel for medical care
Mileage, lodging, and transportation for necessary treatment can be reimbursed.

9. Medical equipment
CPAP machines, glucose monitors, wheelchairs, and similar items qualify.

10. Medical education
Attending a conference related to a specific condition or treatment may be eligible.

These categories make HSAs far more versatile than most people realize.

Using Your HSA for Early Retirement

One of the most overlooked HSA benefits is its ability to help you retire before 65 without worrying as much about healthcare costs.

If you build a substantial HSA balance and invest it over time, you could use it to pay for COBRA premiums, cover out-of-pocket expenses, and bridge the gap until Medicare kicks in. This allows your other retirement accounts to remain invested for lifestyle spending, not medical bills.

The Power of Investing Your HSA

An HSA shouldn’t just sit in cash unless you plan to spend it in the next year or two. Many HSA providers allow you to invest in mutual funds or ETFs once you meet a minimum cash threshold.

Consider this:

Contribute the annual max ($4,300 individual / $8,550 family for 2025, plus $1,000 catch-up if 55+)
Invest it for 20 years at a 6% average return
You could easily grow your balance into the six-figure range

That’s a dedicated, tax-free healthcare fund waiting for you in retirement.

Real-World Example: The Retirement Safety Net

Meet Lisa, 58, who plans to retire at 62. Over the past 15 years, she’s maxed her HSA contributions and invested the balance. She now has $95,000 in her HSA.

Here’s her plan:

Use her HSA to pay for three years of COBRA premiums and out-of-pocket costs before Medicare
Avoid tapping her IRA early, allowing her investments to grow untouched
Transition to Medicare at 65 with her retirement portfolio intact

By planning ahead, Lisa uses her HSA as a bridge to retirement freedom.

Tips to Maximize Your HSA Benefits

Max out your contributions every year
Invest early so your money compounds over time
Pay out-of-pocket now, reimburse later, keep receipts for decades if you want
Review eligible expenses yearly to make the most of the rules
Coordinate your HSA with your retirement plan instead of treating it as a separate bucket

Why HSAs Deserve More Attention

HSAs are not just for people with frequent medical needs. They’re for anyone who wants to:

Lower their taxes now
Grow investments tax-free
Cover future healthcare costs without dipping into taxable accounts
Potentially retire earlier

Treat your HSA as a long-term, strategic asset, not just a checking account for doctor bills, and you’ll unlock its full potential.

FAQ: HSA Benefits

What are the main HSA benefits?
The triple tax-free advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses.

Can I invest my HSA funds?
Yes, most providers allow you to invest once you have a minimum cash balance.

What can I use my HSA for besides doctor visits?
Dental, vision, hearing aids, certain insurance premiums, medical equipment, alternative treatments, and travel for medical care.

Can I use my HSA in retirement?
Yes, for Medicare premiums, long-term care insurance, and other qualified expenses.

What happens if I use my HSA for non-qualified expenses?
Before 65, you’ll owe taxes and a 20% penalty. After 65, you’ll owe income tax but no penalty.

Ready to make the most of your HSA benefits?

An HSA can be one of the most powerful tools in your financial plan, but only if it’s used strategically. Our team at Bonfire Financial can help you create a plan that integrates your HSA with your overall retirement and investment strategy.

Schedule a call with our team today and let’s explore how to maximize your account for both now and the future.

Making It Count: How to Balance Living for Today and Saving for Tomorrow

Posted on June 11, 2025August 14, 2025 by Brian Colvert

Living for Today

“Live for today.” It’s a popular phrase, often used to justify a spontaneous purchase, a once-in-a-lifetime trip, or even just a splurge on a fancy dinner. But when you’re trying to plan for the future, that mindset can feel risky. So, how do you walk the line between enjoying life now and being responsible about your future?

In this post, based on insights from our recent episode of The Field Guide, we explore what it really means to live for today while still planning for tomorrow. We break down why the balance is more of an art than a science, how risk tolerance and personal experience shape financial choices, and ways to build a plan that supports both joy and security.

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The Myth of the Perfect Equation

Too often, financial advice is reduced to formulas: save X% of your income, invest in Y, and you’ll be fine. But that one-size-fits-all approach rarely works. Why? Because everyone has a different comfort level, past experience, and vision for what makes life fulfilling.

What makes one person feel secure could leave another anxious. For example, traditional advice suggests keeping three to six months of expenses in an emergency fund. But if you lived through a financial crisis, lost a business, or faced long-term unemployment, that might not feel like enough. You might want a year or more of expenses in cash. And that’s okay.

Financial planning must account for human nuance. It has to be personal. That means accepting that your version of “right” might not look like anyone else’s and putting aside the fear of missing out. Instead of seeking a perfect algorithm or rigid formula, the real strategy lies in flexibility, adjusting as your life, income, goals, and even the economy change.

What It Means to Live for Today

Living for today isn’t about reckless spending. It’s about aligning your financial choices with what brings you meaning and joy. That could be:

Taking a family vacation
Learning a new skill or hobby
Traveling to experience new cultures
Hosting a big family reunion
Attending a cooking class or enrolling in art school
Starting a small side business based on passion

These experiences create memories and fulfillment that can never be duplicated. And while they might not offer a monetary return, their emotional ROI is priceless. Money is a tool, not the goal. The balance sheet is important, but it isn’t where life happens. No one wants to reach retirement with a full bank account but a list of regrets.

When you invest in experiences that feed your soul, the returns go beyond numbers. They improve mental well-being, strengthen relationships, and offer a sense of purpose. We believe in balance, not deprivation, read our perspective in Why the FIRE Movement is BS.

Your Lifestyle Is the Starting Point

When making spending decisions, always start with your lifestyle. If your current standard of living includes mid-range hotels and coach flights, that’s the baseline you should work from. It’s easy to fall into the trap of upgrading everything because “it’s a special occasion.” But if you can’t afford luxury in your everyday life, why stretch to afford it on vacation?

Instead of chasing someone else’s version of the good life, define your own. Choose experiences that truly resonate with you. If you hate wine, don’t waste your money on a vineyard tour in Tuscany. Do what you love, in a way that fits your means.

Your lifestyle should guide your choices and that includes how you travel, dine, shop, and even give. If you’re giving up your future stability to appear wealthier in the present, you’re not living for today. You’re borrowing from tomorrow.

Timing Matters More Than You Think

We all assume we have time. Time to travel. Time to learn. Time to reconnect. But what if you don’t?

As we age, physical limitations, unexpected health issues, or just the demands of life can chip away at those opportunities. A dream trip put off for “someday” may not be possible when that day finally comes.

Living for today is also about recognizing the fragility of time. If there’s something meaningful you want to do, find a way to do it now, even if it’s on a smaller scale.

Even delaying by a few years can change your capacity to fully enjoy an experience. Climbing a mountain or hiking Machu Picchu might not feel as doable at 70 as it would at 50. Your energy, enthusiasm, and ability to embrace adventure evolve with time.

How to Spend Without Regret

Spending money isn’t bad. Overspending is. And often, regret doesn’t come from what we buy, but how we buy it.

Here are a few ways to spend without guilt:

Plan ahead: Build the experience into your budget. Save for it in advance.
Stay within your lifestyle: Enjoy what’s aligned with your means.
Get creative: Use points, miles, and off-season deals.
Focus on meaning: Choose experiences that deeply matter to you or your family.

Most people don’t regret the experiences they invest in. They regret the ones they missed.

Remember, spending isn’t just about dollars, it’s about values. Make sure your money is going toward things that truly reflect your priorities, not someone else’s expectations.

The Financial Foundation

Enjoying the present doesn’t mean abandoning your future. It means building a strong financial foundation that gives you the freedom to enjoy life today.

Make sure you:

Max out retirement contributions (401(k), Roth IRAs, etc.)
Keep a realistic emergency fund
Manage excess debt wisely
Invest consistently over time
Pair CDs with your short-term goals to lock in higher rates safely, see our deep-dive on how CDs work
Revisit your financial plan at least once a year
Consider creating a “fun fund” for guilt-free spending

Think of it this way: responsible planning gives you permission to spend. When the basics are covered, you can enjoy your money guilt-free.

Conversations That Matter

If you’re unsure whether a big purchase or experience fits into your plan, talk to a financial advisor. Not to get permission, but to get clarity.

Sometimes you need a second set of eyes to say, “Yes, you can absolutely afford this. Here’s how.” Or, “Let’s find a smarter way to do it.” Either way, it helps eliminate the stress of guessing.

A great advisor doesn’t just manage your investments. They help you live the life you want with the resources you have.

These conversations matter even more when there’s uncertainty, market volatility, a job change, or a sudden windfall. Knowing how to navigate big shifts can be the difference between peace of mind and financial anxiety.

Your Values Should Drive Your Strategy

At the core of all good financial decisions are values. What do you care about? What kind of legacy do you want to leave? What makes you feel most alive?
When you base your plan around what matters most, it becomes easier to:

Say no to things that don’t serve you
Spend confidently on what does
Adjust your goals when your life changes

Living for today means honoring those values now, not just someday.

Final Thoughts

Living for today doesn’t mean blowing your savings or ignoring the future. It means being intentional. It means knowing your priorities, staying within your lifestyle, and making room for experiences that bring you joy.

You worked hard for your money. It should work hard for you, not just someday, but today. Whether you’re planning your next trip, debating a big purchase, or just trying to feel less guilty about spending, remember this: You can’t take it with you. But you can make it count.

So spend wisely, plan boldly, and live fully.

Ready to build a plan that lets you live fully today and confidently into the future? Reach out to our team at Bonfire Financial. We’re here to help you find that sweet spot.

Mutual Funds Explained: Because No One Ever Actually Reads the Fine Print

Posted on May 7, 2025August 26, 2025 by Brian Colvert

Mutual Funds Explained

Mutual funds are like your sock drawer. You know it’s full of something useful, but you’re never quite sure exactly what’s in there. Occasionally, you find something surprisingly valuable, kind of like that lost gift card from three Christmases ago.

Recently, at a dinner party, your friend confidently declared, “My Fidelity fund was up 25% last year!” And sure, that sounds impressive. But let’s face it, most of us aren’t entirely sure if that’s amazing or just dumb luck.

In this article, we’ll cut through the confusion, getting mutual funds explained clearly, highlighting mutual fund vs ETF differences, and squashing a few misconceptions along the way. And we’ll try to do it without making your eyes glaze over.

Listen Now: iTunes | Spotify | iHeartRadio | Amazon Music

Misconceptions: The Sock Drawer Problem

One of the biggest misunderstandings about mutual funds is that they’re all basically the same. But they come in countless varieties, much like those socks we mentioned earlier. They’re just bundles of stocks, bonds, or other investments, chosen by professionals. (Hopefully professionals who don’t rely on tips from Reddit.)

Here’s a fun-but-scary fact: there are around 8,700 mutual funds registered in the U.S. alone, and almost 135,000 if you toss ETFs into the mix. Compare that to just 6,000 publicly traded companies and you start wondering if everyone and their cat has their own mutual fund.

Clearly, understanding your mutual fund choices is important for smart financial planning.

Mutual Fund vs ETF Differences: Grandma Calls vs. Caffeine Moods

Mutual funds and ETFs might look like identical twins, but they’ve got distinct personalities. Mutual funds trade just once per day, kind of like your grandma calling every evening at exactly 7 pm. Predictable. Stable. Comforting.

ETFs, meanwhile, trade throughout the day, matching the unpredictable energy of someone who’s had three triple-espressos by noon…looking at you Dave. Understanding these differences matters, especially when you’re thinking seriously about optimizing your retirement accounts.

Beyond just trading behavior, mutual funds and ETFs differ in how they’re managed and taxed. Most mutual funds are actively managed, meaning a team of professionals is trying to beat the market by picking winning stocks. That often comes with higher fees, usually baked into something called an “expense ratio.” ETFs tend to be passively managed, simply tracking an index like the S&P 500. That hands-off approach often translates to lower costs and fewer surprise charges hiding in the fine print.

Then there’s how taxes work. ETFs are generally more tax efficient thanks to something called the “in kind redemption” process, which helps them avoid triggering capital gains distributions when investors buy or sell. Mutual funds? Not so much. If someone else in the fund sells a big chunk, you might end up with a tax bill even if you didn’t sell a thing. While grandma’s routine might be comforting, ETFs often give you more control, agility, and fewer tax headaches; we all can deal with less headaches, especially if you just had three triple-espressos.

Your Friend’s Mutual Fund Brag: The Biggest Misconception

Another classic misconception: vague bragging about owning a “Schwab fund.” Saying you own a mutual fund without knowing what’s in it is like proudly announcing, “I drive a vehicle,” without specifying if it’s a Ferrari or a riding mower. Details matter, especially when they involve your money.

Getting clarity about what’s in your fund helps you make smarter financial moves, such as improving your portfolio’s diversification. Plus, it’ll give you something clever to say the next time your friend starts talking finance.

Mutual Funds Explained

Mutual funds aren’t a one-size-fits-all thing. Some focus on big, steady companies (“large-cap”). Others chase growth in smaller, ambitious ventures (“small-cap”). Then you’ve got funds that specialize in international markets or emerging economies. Some even hold gold, oil, or cows. Literal cows.

Understanding exactly what’s inside clears up confusion and gives you more confidence about where your money is going. And hey, confidence looks great on you.

Another consideration is performance reporting. Mutual funds often compare their results to a benchmark, like the S&P 500, but actively managed funds do not always beat those benchmarks. In fact, many underperform after accounting for fees. That is why it is smart to look past just past performance and ask whether the fund’s strategy, costs, and holdings align with your long-term plan. Because at the end of the day, investing should serve your goals, not just chasing returns, or cows in some instances.

Understanding Mutual Funds Matters

Navigating thousands of mutual funds and ETFs can be overwhelming, no matter how smart you are. That’s why working with a CFP® is a pretty smart move. Think of us like your financial Siri, except funnier, and more helpful.

When you clearly understand your investments, you feel calmer, smarter, and way less stressed. Not a bad trade-off.

Ready for Clarity? Let’s Chat

We’ve covered a lot here, but at the end of the day, your financial goals are unique, and personalized advice is crucial.

So, if you’re ready for tailored financial help (minus the judgment), go ahead and schedule a free introductory call. Because your retirement plan deserves better than vague bragging at dinner parties.

High Net Worth Financial Planning – What You Need to Know

Posted on March 5, 2025March 1, 2025 by Brian Colvert

High net worth financial planning is essential for preserving, growing, and strategically managing wealth. While having substantial assets may provide financial security, a well-structured financial plan ensures that your wealth aligns with your long-term goals, minimizes tax liabilities, and provides a clear roadmap for investments, estate planning, and risk management.

Many individuals with a high net worth question the need for financial planning because they aren’t worried about running out of money. However, as Brian discusses in The Field Guide podcast, a financial plan is more than just a tool —it is a blueprint for decision-making. It helps ensure that every financial move aligns with broader goals, whether it’s investments, taxes, estate planning, or philanthropy.

Even the wealthiest individuals benefit from a structured approach to their finances. In this guide, we break down why financial planning is essential for high net worth individuals and families, the key components of a strong financial plan, and how working with a fiduciary financial advisor can provide a roadmap to financial security and success.

Listen Now:

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Why Financial Planning Still Matters for Wealthy Individuals

Many assume that because they have substantial assets, they don’t need a financial plan. However, financial planning isn’t just for those worried about running out of money—it’s about making informed decisions, optimizing opportunities, and helping to ensure financial stability across generations.

Here’s why having a customized financial plan is crucial:

1. Ensuring Your Investments Align with Your Goals

A financial plan acts as a roadmap, helping you align your investments with your lifestyle, retirement, and legacy goals. Without a clear plan, it’s easy to make impulsive investment decisions that may not serve your long-term interests.

As Brian mentions, many clients approach him with specific investment ideas—such as buying Bitcoin or allocating more funds into tech stocks like Apple and NVIDIA, or other AI investments. However, without a plan, it’s impossible to determine whether these investments align with personal financial goals. Are you looking to grow wealth aggressively, or are you risk-averse and more focused on wealth preservation? These questions must be addressed before making investment decisions.

2. Managing Risk and Market Volatility

Even wealthy investors need to consider risk management. Market downturns, economic shifts, and unforeseen expenses can impact anyone. A solid financial plan ensures that you have diversified investments and strategies to mitigate risks.

In the podcast, Brian highlights how some investors chase trends without considering whether they can stomach the volatility. For example, Bitcoin may be a great long-term investment, but if a client is highly risk-averse and uncomfortable with large fluctuations in value, it may not be the right fit. A financial plan helps align investment choices with an individual’s risk tolerance and financial objectives.

3. Optimizing Tax Strategies

Those with substantial assets are often in higher tax brackets, making tax-efficient investing and estate planning essential. Without strategic tax planning, you could end up paying significantly more in taxes than necessary.

A good financial plan considers:

Which accounts to invest in for tax efficiency
When and how to withdraw funds to minimize tax liability.
Strategies for charitable giving to optimize deductions.

4. Legacy and Estate Planning

Wealth preservation isn’t just about making money—it’s about ensuring your assets are passed down effectively. A well-structured estate plan as part of your larger financial plan ensures that your wealth is protected and allocated according to your wishes.

Many individuals fail to update their estate plans, leaving their heirs with unnecessary tax burdens or legal complications.

1,000 adults with over $3 million in investable assets were surveyed and found that only 48% of them had the three most basic planning documents in place: a will, a healthcare proxy and power of attorney. That is a shocking statistic. A financial plan helps you keep estate strategies up to date and aligned with your long-term vision.

5. Philanthropy and Charitable Giving

Many successful individuals want to leave a lasting impact through philanthropy. A financial plan helps structure tax-efficient charitable giving, maximizing the benefits for both you and your chosen causes.

Key Components of a Strong Financial Plan

To maximize and protect your wealth, your financial plan should include the following core components:

1. Investment Strategy & Asset Allocation

Investment planning goes beyond buying stocks and bonds—it’s about building a balanced portfolio tailored to your risk tolerance and financial objectives. Key strategies include:

Diversification: Spreading investments across various asset classes to minimize risk.
Alternative Investments: Private equity, hedge funds, and real estate can offer unique opportunities for wealth preservation and growth.
Tax-Efficient Investing: Using tax-advantaged accounts and strategies to reduce capital gains and income tax burdens.

2. Tax Optimization Strategies

Minimizing tax liabilities is one of the most valuable aspects of financial planning. Strategies include:

Tax-Loss Harvesting: Offsetting gains with losses to reduce taxable income.
Roth IRA Conversions: Managing income tax liabilities through strategic conversions.
Trusts & Charitable Giving: Using donor-advised funds or charitable remainder trusts to reduce tax exposure while fulfilling philanthropic goals.

3. Estate Planning & Wealth Transfer

Estate planning ensures that your assets are passed down efficiently. Key tools include:

Revocable & Irrevocable Trusts: Protecting assets from estate taxes and ensuring privacy.
Gifting Strategies: Annual gift tax exclusions and family limited partnerships to pass wealth tax-efficiently.
Business Succession Planning: If you own a business, structuring a succession plan is critical for maintaining generational wealth.

4. Risk Management & Insurance Planning

Risk management is a crucial component of high net worth financial planning. It ensures that your assets, income, and estate are protected against unforeseen circumstances such as market volatility, lawsuits, health crises, and other financial risks. A well-structured risk management strategy should include the following elements:

Asset Protection Strategies: Legal structures such as LLCs and asset protection trusts.
Life Insurance Planning: Using permanent life insurance as a tool for estate liquidity and wealth transfer.
Long-Term Care & Disability Planning: Ensuring you have adequate coverage in case of unforeseen health issues.

Common Mistakes High Net Worth Individuals Make Without a Financial Plan

Even those with substantial wealth can face financial pitfalls without a well-structured financial plan. Some of the most common mistakes high-net-worth individuals make include:

Lack of Investment Strategy: Without a clear investment strategy, individuals may take on excessive risk or miss out on key diversification opportunities. Over-concentration in certain stocks, industries, or asset classes can lead to significant financial losses.
Overlooking Tax Efficiency: Many wealthy individuals fail to take advantage of tax-efficient strategies, resulting in unnecessary tax burdens. Without proper planning, they may miss out on deductions, tax-deferred growth opportunities, and estate tax reduction strategies.
Neglecting Estate Planning: Failing to have a well-structured estate plan can lead to disputes, excessive estate taxes, and assets not being distributed as intended. A lack of trusts or beneficiary designations can create unintended complications for heirs.
Ignoring Risk Management: Wealthy individuals often underestimate risks such as lawsuits, asset protection, and long-term care expenses. Without proper insurance coverage or legal structures, their wealth could be vulnerable to unexpected claims or liabilities.
Spending Without a Long-Term Plan: A high income or large net worth does not guarantee financial security if spending habits are unchecked. Without a financial plan, individuals may deplete their wealth faster than expected, jeopardizing long-term goals like legacy planning or philanthropy.
Failing to Adapt to Market Changes: Financial markets fluctuate, and tax laws evolve. Without an ongoing financial strategy, individuals may miss opportunities to adjust their portfolios, capitalize on new tax incentives, or navigate economic downturns effectively.
Not Working with a Fiduciary Advisor: Many high net worth individuals rely on financial advice from brokers or advisors who may have conflicts of interest. Without a fiduciary advisor, they may receive guidance that prioritizes commissions over their best interests.
A comprehensive financial plan helps mitigate these risks and ensures that high-net-worth individuals make informed strategic financial decisions. Working with an experienced financial planning team can help preserve wealth, reduce liabilities, and provide peace of mind for the future.

Final Thoughts

Financial planning is essential regardless of wealth level. A structured approach to investment strategy, risk management, tax optimization, and estate planning provides clarity, direction, and the ability to make informed financial decisions that align with long-term goals. Having a financial plan in place not only protects your assets but also allows you to take advantage of opportunities that align with your lifestyle and values.

By regularly reviewing and adjusting your financial plan, you can ensure that it remains relevant as your goals evolve and as financial markets shift. The right high net worth financial planning strategy allows you to build a legacy, protect your family’s future, and make confident financial decisions without unnecessary stress.

Next Steps- Get a Plan

If you’re looking for expert guidance tailored to your financial needs, our team at Bonfire Financial specializes in fiduciary, planning-based strategies designed to optimize your wealth. Contact us today to start building a financial plan that works for you.

Turning High Income into Lasting Wealth: Proven Strategies for High Earners

Posted on February 26, 2025August 14, 2025 by Brian Colvert

Strategies for High Earners

Earning a high income is an incredible advantage, but it doesn’t automatically mean you’re building real wealth. Many high earners, whether doctors, business owners, pilots, executives, or professionals, find themselves living an expensive lifestyle without accumulating enough assets to sustain it long-term. Without a strategy, even a seven-figure salary can disappear quickly.

If you’re making $400K, $600K, or even more annually, the key question isn’t how much you make, but what you do with it. This article explores strategies for high earners to maximize their income, build long-term wealth, and avoid financial pitfalls.

Listen Now:

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1. Automate Your Savings and Investments

One of the most effective strategies for high earners is automating savings. When money flows into your bank account, it’s easy to spend more than you intend. Automating your savings ensures you consistently put money aside before you even have the chance to spend it.

Max Out Your Retirement Accounts: Contribute the maximum allowable amount to your 401(k), IRA, or Roth IRA (if applicable). If you own a business, consider a SEP-IRA or Solo 401(k).
Set Up Automatic Transfers to Brokerage Accounts: High earners often hit retirement contribution limits quickly. A taxable brokerage account allows you to invest beyond those limits.
Leverage High-Yield Savings for Short-Term Goals: Automate transfers into high-yield savings accounts for planned expenses like vacations, home renovations, or large purchases.

By setting up these transfers to occur automatically, you remove the temptation to spend your entire paycheck and ensure consistent wealth accumulation.

2. Avoid Lifestyle Creep

A common trap for high earners is lifestyle inflation—the tendency to spend more as income increases. It’s easy to justify upgrading homes, cars, and vacations when your paycheck allows for it, but this can leave you with little to show for years of high earnings.

To combat lifestyle creep:

Define Your Wealth Goals: What does long-term financial success look like for you? Owning investment properties? Retiring early? Creating a passive income stream?
Keep Fixed Expenses in Check: Just because you can afford a bigger mortgage doesn’t mean you should take one. Be mindful of recurring costs like luxury car leases, club memberships, and high-end subscriptions.
Invest in Assets, Not Just Status Symbols: A $100,000 car loses value over time. A well-chosen $100,000 investment property generates income and appreciates in value.
Maintaining a balanced approach to spending allows you to enjoy your wealth while securing your future.

3. Build Multiple Income Streams

Even high earners benefit from diversifying their income sources. Relying solely on a paycheck—even a large one—can leave you financially exposed if your industry changes or your role is impacted.

Consider these income streams:

Real Estate Investments: Rental properties provide consistent cash flow and potential appreciation.
Private Investments: Opportunities like private equity, venture capital, and angel investing can offer high returns, though they come with risk.
Side Businesses: Many professionals create consulting businesses, online courses, or digital products to diversify income.
Dividend Stocks and Bonds: A well-structured investment portfolio, specifically with dividend stocks, generates passive income over time.

Building multiple income streams ensures financial stability and accelerates wealth accumulation.

4. Minimize Taxes Strategically

Taxes can significantly impact your ability to grow wealth. High earners must be proactive about tax planning to retain more of their income.

Key tax strategies for high earners:

Maximize Tax-Advantaged Accounts: Contribute to 401(k)s, HSAs, and Roth Conversions where possible.
Utilize Tax-Efficient Investments: Invest in municipal bonds, tax-efficient index funds, and real estate with depreciation benefits.
Take Advantage of Business Deductions: If you own a business, structure it to maximize deductions and reduce taxable income.
Work with a Tax Professional: A tax strategist can help identify deductions, credits, and investment structures that minimize your liability.

By implementing tax-efficient strategies, you can keep more of your earnings working for you.

5. Invest with a Long-Term Mindset

High earners sometimes fall into the trap of chasing quick returns or risky investments. A disciplined, long-term approach to investing is far more effective.

Diversify Your Portfolio: Don’t put all your wealth into a single stock, business, or asset class. Diversification is wildly important here.
Rebalance Regularly: Adjust your portfolio as market conditions change and your goals evolve.
Stay the Course: Market volatility is inevitable, but a long-term strategy yields strong results over time.
Invest in What You Understand: Avoid speculative investments unless you have deep knowledge of the space.

A well-structured investment strategy ensures your wealth grows steadily and sustainably.

6. Protect Your Assets and Plan for the Future

Earning and investing wisely is just part of the equation—protecting your wealth is equally important. Many high earners overlook estate planning, asset protection, and risk management.

Have Proper Insurance: Ensure you have adequate life, disability, and umbrella liability insurance.
Create an Estate Plan: Establishing a will, trusts, and power of attorney documents is crucial for protecting your assets and ensuring your wishes are carried out. Proper estate planning helps safeguard your wealth for future generations and provides clarity in managing your financial affairs.
Consider Asset Protection Strategies: High earners can be targets for lawsuits—proper legal structures (LLCs, trusts) can shield assets from unnecessary risk.

Planning for the future ensures that your wealth is preserved and passed on according to your wishes.

The Bottom Line:

Earning a high income is an incredible opportunity, but without a plan, it’s easy to end up with little to show for it. By automating savings, avoiding lifestyle creep, diversifying income, minimizing taxes, and investing wisely, you can turn your earnings into lasting wealth.

The key is consistency and discipline. Small, intentional decisions over time lead to big financial outcomes.

If you’re ready to take control of your finances and build real wealth, start implementing these strategies today. And if you’d like expert guidance in setting up a wealth plan tailored to your income and goals, reach out to us today and get the conversation started.

Roses Are Red, Violets Are Blue… Are Your Beneficiaries Still Right for You?

Posted on February 19, 2025August 14, 2025 by Brian Colvert

Nothing says “I love you” like chocolates, flowers, and… updating your beneficiaries? That’s right! While it may not sound as romantic as a candlelit dinner, making sure your assets go to the right people is one of the most thoughtful things you can do for your loved ones.

Life happens—marriages, divorces, new babies, and unexpected events can change everything. Yet, many people forget to review and update their beneficiary designations, potentially leaving their hard-earned money to an ex-spouse, estranged relative, or even the government (yikes!).

Today we’ll break down why updating your beneficiaries is crucial, common mistakes to avoid, and how to make sure your financial love story has the perfect ending.

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What Is a Beneficiary? And Why Does It Matter?

A beneficiary is the person (or people) who will receive your assets—such as life insurance, retirement accounts, or investment accounts—when you pass away. Naming a beneficiary ensures your money goes exactly where you want it, without going through probate, the long and costly legal process of settling your estate.

Many financial accounts allow you to name both:

Primary beneficiaries – The first person(s) in line to receive the assets
Contingent beneficiaries – The backup(s), in case the primary beneficiary is no longer living

Where Do You Need to Name Beneficiaries?

You can and should assign beneficiaries to:

401(k) and IRA accounts
Life insurance policies
Annuities and pensions
Brokerage and investment accounts (via a Transfer on Death designation)
Bank accounts (via Payable on Death designation)
Trusts and estate plans

If you don’t name a beneficiary, or if it is outdated, your assets may default to your estate and be subject to probate, causing delays, unnecessary taxes, and legal battles.

Common Mistakes to Avoid

1. Forgetting to Update After Life Changes

Major life events often impact financial plans. You might:

Get married but forget to update your 401(k), still listing your parents as beneficiaries.
Have kids but never add them
Get divorced but still have your ex-spouse listed as your life insurance beneficiary.

If you don’t update your designations, your assets may end up in the wrong hands.

2. Leaving It Blank

If you never designate a beneficiary, your assets will go to your estate by default. This means probate court decides who gets what, which can lead to delays, legal fees, and unintended consequences.

3. Not Naming Contingent Beneficiaries

A primary is important, but what if they pass away before you do? Without a contingent beneficiary, your assets could be tied up in probate.

4. Unequal Distribution

If you have multiple beneficiaries, double-check the percentages assigned. Mistakenly leaving one person out or assigning uneven percentages could cause family tension.

5. Naming Minor Children Directly

Children under 18 cannot legally inherit assets directly. If you name them as beneficiaries, the court will appoint a guardian to manage the funds. Set up a trust to make sure everything is how you want it.

6. Assuming a Will Covers It

Even if your will states who should inherit your assets, beneficiary designations on financial accounts override a will. If your will and your beneficiary list don’t match, the beneficiary designation takes precedence.

7. Naming a Trust Incorrectly

Trusts can be a powerful estate planning tool, but they must be properly structured and funded. If your accounts are not titled correctly or beneficiaries aren’t aligned with the trust, the trust won’t control those assets as intended.

8. Forgetting to Update Employer Retirement Accounts

Your old 401(k) from a previous employer might still list your parents, an ex, or someone else you no longer intend to inherit your funds. Make sure to update all employer-sponsored accounts whenever you switch jobs.

How to Review and Update Your Beneficiaries

Updating is easier than you think. Here’s how to do it:

Step 1: Make a List of Your Accounts

Look at all your financial accounts that have beneficiaries, including:

Retirement accounts (401k, IRA, Roth IRA, pension plans)
Life insurance policies
Bank and brokerage accounts
Annuities and investment accounts
Trusts and estate documents

Step 2: Verify Your Current Beneficiaries

Log into your accounts or call your financial institution to check:

Who is currently listed as your primary and contingent?
Are the names, relationships, and percentages correct?

Step 3: Make Necessary Updates

To update, you’ll typically:

Log into your financial institution’s website or request a beneficiary form.
Choose your primary and contingent beneficiaries.
Assign percentages to each.
Review the changes and submit the form.

It’s a good practice to update beneficiaries once a year or after major life changes, such as marriage, divorce, or the birth of a child.

Special Situations: Who Should You Name as a Beneficiary?

1. If You are Married:

Your spouse is typically the default primary.
Name a contingent beneficiary (children, trust, or charity) in case your spouse predeceases you.

2. If You Have Kids:

Avoid naming minor children directly. Instead, use a trust or custodial account to manage the funds.

3. If You’re Divorced:

Remove your ex if they’re still listed.
Consider naming children, a new spouse, or a trust instead.

4. If You’re Single With No Kids:

Consider naming siblings, parents, nieces, nephews, or a charity.

5. If You Have a Trust:

Make sure your trust is properly funded and your beneficiaries align with it.

Final Thoughts: The Greatest Love Letter You’ll Ever Write

Estate planning and beneficiary updates might not be the most romantic topic, but they are one of the greatest gifts you can give to your loved ones. By keeping your designations up to date, you ensure that your hard-earned money goes exactly where you want it—without confusion, legal headaches, or financial heartbreak.

This year, take a few minutes to review everything. It’s a small step that can make a huge difference for those you love.

If you need help reviewing your overall plan? We’d love to help. Schedule a call with us today!

Prosper, Protect and Pass it on– Estate Planning Tips

Posted on January 15, 2025August 26, 2025 by Brian Colvert

Want your wealth to stand the test of time? Looking for Estate Planning Tips? Estate planning is one of the most important steps you can take to secure your legacy and protect your loved ones. While estate planning might not top your list of fun dinner topics, but let’s face it—neither does “who’s going to water the plants when I’m gone?” The truth is, getting your ducks in a row now means less chaos for your loved ones later. Think of it as future-you doing future-them a solid.

Without a plan, Uncle Sam (or worse, Cousin Eddie) might end up with more of your hard-earned wealth than you’d like. And trust us, Cousin Eddie does not need a new jet ski.

Estate planning doesn’t have to be overwhelming. Today we are diving into the basics of estate planning, common mistakes to avoid, and practical steps to secure your legacy for generations to come.

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The Foundation of Estate Planning

At its core, estate planning is about making decisions for the future. This includes determining how your assets will be distributed, who will handle your finances and medical decisions if you’re unable to, and ensuring your wishes are carried out effectively. While estate planning is highly customizable, certain foundational elements apply to everyone.

1. Power of Attorney (POA)

A Power of Attorney is one of the most critical components of any estate plan. This document allows you to designate someone to manage your financial and medical decisions if you’re unable to do so.

Financial POA: This ensures that someone you trust can pay bills, manage investments, and handle other financial responsibilities if you’re incapacitated.

Medical POA: This allows a trusted individual to make healthcare decisions on your behalf if you cannot.

Without these documents, your family may face significant legal hurdles to take care of essential matters.

2. Beneficiary Designations

Your estate plan isn’t just about wills and trusts. Many financial accounts, such as retirement accounts, life insurance policies, and annuities, pass directly to beneficiaries you name on the account. Keeping these designations up to date is vital, especially after major life events like marriage, divorce, or the birth of a child.

3. Titling of Assets

Properly titling your assets is another critical step. Whether it’s an individual account, a joint account, or a trust, the title determines how the asset will be distributed. Improper titling can lead to confusion, legal battles, and assets being subjected to probate—a lengthy and expensive process. IF you only take away one estate planning tip from today, let it be this.

Common Estate Planning Mistakes

Estate planning is about more than just creating a will or trust. There are several common mistakes that can undermine even the most well-intentioned plans.

1. Failing to Notify Key People

Creating an estate plan is only half the battle. Many people forget to inform their financial advisors, attorneys, or executors about the plan’s details. This oversight can lead to assets being excluded from the plan or distributed incorrectly.

2. Neglecting Updates

Life changes, and so should your estate plan. Events like marriage, divorce, the birth of children, or the death of a loved one can all impact your wishes. Regularly reviewing and updating your plan ensures it aligns with your current circumstances.

3. Ignoring Beneficiary Designations

Even with a robust estate plan, failing to update beneficiary designations can create major issues. For instance, if an ex-spouse remains listed as a beneficiary on a retirement account, they will inherit those funds regardless of your intentions.

4. Overlooking Tax Implications

Estate planning isn’t just about who gets what; it’s also about minimizing taxes. Strategic planning can help reduce estate taxes, capital gains taxes, and other financial burdens on your heirs.

Tools to Simplify Estate Planning

Thankfully, estate planning doesn’t have to be overwhelming. With the right tools, tips and professional guidance, you can simplify the process and ensure your wishes are carried out effectively.

1. Trusts

Trusts are a powerful tool for managing and distributing assets. They can help avoid probate, provide for minor children, and ensure your assets are used according to your wishes. Some common types include:

Revocable Living Trusts: These allow you to maintain control over your assets during your lifetime while ensuring a smooth transition after your death.

Irrevocable Trusts: Often used for tax planning, these trusts remove assets from your estate, potentially reducing estate taxes.

2. Transfer on Death (TOD) Designations

For taxable accounts like brokerage accounts, you can add a TOD designation. This works like a beneficiary designation, allowing assets to transfer directly to the named individual without going through probate.

3. Professional Guidance

Estate planning involves legal, financial, and personal considerations. Consulting with an experienced attorney and financial advisor (like us) ensures that your plan is comprehensive and aligns with your goals.

Steps to Get Started

If you’re ready to tackle your estate planning, here’s how to get started:

1. Assess Your Assets

Take inventory of your financial accounts, real estate, personal belongings, and other assets. Understanding what you have is the first step in determining how you want it distributed.

2. Identify Key People

Decide who will serve as your executor, trustee, and agents for financial and medical powers of attorney. Choose individuals who are trustworthy, organized, and willing to take on these responsibilities.

3. Draft the Necessary Documents

Work with an attorney to draft essential documents like your will, trust, and POAs. Be sure to include instructions for the distribution of assets, care of minor children, and other specific wishes.

4. Communicate Your Plan

Inform your financial advisor, attorney, and key family members about your estate plan. Provide them with copies of relevant documents and ensure they understand their roles.

5. Review and Update Regularly

Set a reminder to review your estate plan every few years or after major life events. Keeping your plan up to date ensures it remains effective and aligned with your goals.

Why Estate Planning Matters

Estate planning is more than just a financial task; it’s a way to care for your loved ones, protect your legacy, and provide peace of mind. By taking the time to create a comprehensive plan, you can:

Reduce stress for your heirs
Minimize taxes and legal fees
Ensure your wishes are honored
Protect your assets for future generations

Final Thoughts

Estate planning may not be the most exciting topic, but it’s one of the most important. By using these tips and avoiding common mistakes, you can create a plan that prospers, protects, and passes on your wealth for generations. Whether you’re just starting or need to update an existing plan, now is the perfect time to take action.

If you’d like personalized guidance, we’re here to help. From leveraging estate planning software to connecting you with trusted attorneys, we can walk you through every step. Don’t leave your future to chance—start planning today, yes, really… take the first step and schedule a call, and help ensure your legacy lasts for years to come.

401k Do’s and Don’ts: Smart Strategies as You Near Retirement

Posted on October 23, 2024January 20, 2025 by Brian Colvert

As retirement approaches, the way you manage your 401k becomes more critical than ever. With the right strategies, you can protect your hard-earned savings, minimize risks, and set yourself up for a comfortable retirement. In this Podcast, we’ll explore essential do’s and don’ts for managing your 401k as you near retirement, helping you make informed decisions about your financial future.

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1. Understand How Your Risk Tolerance Changes Near Retirement

Don’t assume your risk tolerance remains the same as you age. When you’re younger, it’s easier to take on higher risk for the potential of higher returns, as you have more time to recover from any downturns. However, as you approach retirement, you should reevaluate your tolerance for risk.

Do consider shifting towards a more conservative investment strategy. This could involve reallocating your assets to include more bonds or other fixed-income securities, which tend to be less volatile than stocks. Target-date funds, which automatically adjust your investment mix as you age, can be a convenient way to ensure your portfolio becomes more conservative over time.

2. Avoid Overly Aggressive Investments

It can be tempting to chase high returns, especially if you’re trying to catch up on retirement savings. However, overly aggressive investments can expose you to significant losses, especially if there’s an economic downturn close to your retirement date.

Don’t let short-term market trends drive your decisions. Avoid investing heavily in high-risk stocks based on recent performance. The market’s past performance doesn’t guarantee future results, and downturns can occur suddenly.

Do seek a balanced portfolio that aligns with your updated risk tolerance. Consider consulting a CERTIFIED FINANCIAL PLANNER™ to review your portfolio and ensure it aligns with your long-term goals and timeline. This can help protect you from the emotional impulse to sell during market dips or take unnecessary risks.

3. Keep Contributing to Your 401k

Many people assume they should stop contributing to their 401k once they hit a certain age, but there are often advantages to continuing to save. The closer you get to retirement, the more crucial these contributions become.

Do take advantage of catch-up contributions if you’re over 50. These allow you to contribute additional funds beyond the standard annual limit, giving you a boost in retirement savings. Make the most of your employer’s match as well, as this is essentially free money going into your retirement fund.

Don’t assume that just because retirement is near, saving becomes less important. Every contribution counts, as it not only grows through investment returns but also helps keep you on track with your financial goals.

4. Regularly Rebalance Your Portfolio

Over time, certain investments in your portfolio may grow faster than others, leading to an unintended imbalance in your asset allocation. This can increase your risk exposure if, for instance, stocks outperform bonds, making equities a larger portion of your portfolio than originally intended.

Do rebalance your portfolio at least once a year to ensure it aligns with your target asset allocation. As you approach retirement, your target asset allocation will likely lean more toward stability and income generation rather than growth. By rebalancing, you can reduce your risk and bring your portfolio back in line with your retirement goals.

Don’t ignore market fluctuations. By rebalancing, you’re essentially selling high and buying low, which can be a disciplined approach to investing. If you’re unsure how to rebalance your portfolio, a financial advisor can help you assess and adjust your asset allocation as needed.

5. Be Cautious with Annuities

Annuities can be an attractive option because they offer guaranteed income. However, they are not a one-size-fits-all solution and can come with high fees and complex terms.

Don’t buy an annuity without fully understanding how it works and whether it’s appropriate for your situation. Some advisors may push annuities due to the commissions they receive, but that doesn’t mean it’s the right choice for everyone. Annuities can limit your liquidity and may have penalties for early withdrawal.

Do consider an annuity if it aligns with your overall retirement plan and you’re looking for a stable income source. Work with an advisor who will explain the pros and cons without a bias toward selling you a specific product. Annuities might be suitable in situations where you need a guaranteed income stream, but it’s essential to weigh the costs and benefits carefully.

6. Make Tax-Efficient Withdrawals

When you start withdrawing from your 401k in retirement, you’ll need to pay income taxes on the distributions. Depending on your total retirement income, these withdrawals could push you into a higher tax bracket. See what tax bracket you are in here.

Do plan your withdrawals strategically to minimize your tax burden. If you have other retirement accounts, such as a Roth IRA, consider taking distributions from them in a way that helps you manage your tax liability. For example, withdrawing from a traditional 401k and a Roth IRA in the same year can help you stay within a lower tax bracket.

Don’t withdraw large sums from your 401k in a single year unless necessary. Large withdrawals can trigger higher taxes and potentially Medicare surcharges. By managing your withdrawals thoughtfully, you can stretch your savings further and avoid paying more tax than necessary.

7. Consider the Role of Social Security

For many retirees, Social Security forms a crucial part of their retirement income. However, when and how you claim these benefits can significantly impact the amount you receive over your lifetime.

Do research the optimal age to start claiming Social Security based on your situation. While you can start as early as age 62, waiting until full retirement age (or even age 70) increases your monthly benefit. If you’re married, coordinating benefits with your spouse can also maximize your household income.

Don’t overlook Social Security as a part of your retirement plan. It’s essential to understand how your 401k distributions and Social Security benefits work together. A well-planned approach to claiming Social Security can help ensure you get the most out of your retirement income sources.

8. Review Beneficiary Designations

Life changes, such as marriage, divorce, or the birth of a child, may impact whom you want to inherit your 401k savings. Your retirement accounts don’t pass through your will but are instead directed by the beneficiary designations on the account.

Do periodically review and update your beneficiary designations to ensure they reflect your current wishes. This is a simple task but can prevent potential disputes or complications for your heirs. Make sure your beneficiaries are aware of their status, so they know what to expect.

Don’t assume that your will covers your 401k. Many people make this mistake and inadvertently leave their retirement savings to the wrong person. By keeping your beneficiary designations up to date, you can avoid this oversight.

9. Work with CERTIFIED FINANCIAL PLANNER™ (CFP)

As you get closer to retirement, your financial decisions become more complex. It can be challenging to navigate investment choices, tax implications, and withdrawal strategies without professional guidance.

Do consider consulting a CERTIFIED FINANCIAL PLANNER™ (CFP) who specializes in retirement planning. A CFP can provide personalized advice that considers your entire financial picture and helps you create a tailored strategy for your 401k and other retirement assets.

Don’t go it alone, especially if you feel uncertain about any aspect of your retirement planning. The insights and guidance of a professional can be invaluable, particularly as you make significant decisions that will impact your future financial security.

10. Stay Informed and Flexible

The financial landscape is always changing, with new laws, products, and strategies emerging regularly. As a retiree or soon-to-be retiree, staying informed can help you make better decisions and adapt to changing circumstances.

Do continue educating yourself on retirement topics, whether through podcasts, articles, or books. Financial literacy can help you feel more in control and make informed choices.

Don’t assume that your plan is set in stone. Flexibility is essential as you move through different stages of retirement. Regularly reviewing your plan and making adjustments as needed can help you stay on track.

In Conclusion

Planning for retirement involves more than simply building a nest egg. By paying attention to these 401k do’s and don’ts in retirement, you can make smarter choices about your savings, protect your assets, and set yourself up for a more secure retirement. Remember, retirement planning is an ongoing process, and the strategies that work for you today may need adjustment in the future. By staying proactive and seeking guidance when necessary, you’ll be well-equipped to make the most of your retirement years.

Next Steps:

Ready to take control of your retirement planning? Schedule a call with us today to discuss your 401k strategy and make sure you’re on the right path for a secure and comfortable retirement. Contact us at today.

Financial Planning for Pilots with Nick Coleman, CFP®

Posted on June 19, 2024January 24, 2025 by Brian Colvert

In the most recent episode of The Field Guide Podcast host Brian Colvert is joined by Nick Coleman, a CERTIFIED FINANCIAL PLANNER™ with Bonfire Financial. Nick has developed a unique specialty in helping pilots navigate their financial planning journey. Below is a summary of the insights shared during the interview, highlighting the distinct financial challenges pilots face and the tailored strategies Nick employs to guide them from the runway to retirement.

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The Journey to Specialization

Nick’s journey into specializing in financial planning for pilots began with a personal connection. His father, Jerry Coleman, has been a pilot with United for over 30 years, with a prior career as a Navy pilot. This background gave Nick an intimate understanding of the unique benefits and challenges pilots encounter. Starting with his parents as his first clients, Nick quickly expanded his network, working with many pilots across various airlines, including United, Spirit, Southwest, and many others.

Unique Challenges Pilots Face

Pilots have a distinct set of financial planning challenges compared to other professionals. The path to becoming a pilot involves significant time and financial investment. It often takes around ten years, whether through the military or commercial route, to reach a major airline. Once there, pilots face industry volatility, with crises emerging approximately every ten years. Events like the COVID-19 pandemic have led to hiring freezes, early retirements, and reduced hours, posing substantial financial risks.

One of the major issues is the cyclical nature of the airline industry. Pilots must prepare for potential furloughs, layoffs, or reductions in hours. For instance, Spirit Airlines faced challenges with their Pratt & Whitney engines, affecting many pilots’ job security and financial stability. Thus, having a solid financial plan that accounts for these fluctuations is crucial.

Strategic Financial Planning for Pilots

Nick emphasizes the importance of a comprehensive financial plan tailored to each pilot’s specific needs and goals. The plan starts with maximizing retirement accounts, particularly the 401(k). Bonfire Financial partners with Charles Schwab, allowing access to the PCRA (Personal Choice Retirement Account). This partnership enables Nick to build custom strategies within pilots’ 401(k) plans, significantly impacting their retirement savings.

Additionally, Nick sets up tax-free Roth accounts for pilots and their spouses using the Backdoor Roth IRA strategy. Over time, these contributions grow significantly, providing a substantial tax-free retirement fund.

Medical and Long-Term Care Planning

Medical expenses are a significant concern for pilots, especially as they approach retirement. Many pilots come from military backgrounds and may have TRICARE benefits. However, each airline offers different medical benefits, which Nick meticulously reviews to maximize their potential.

Health Savings Accounts (HSAs) are another critical component. These accounts provide a tax-free way to pay for medical expenses both now and in retirement. United Airlines, for example, offers HRA (Health Reimbursement Arrangement) and RHA (Retiree Health Access) accounts, which pilots can use to cover medical bills tax-free, reducing the need to tap into their 401(k).

Long-term care insurance is another essential aspect of financial planning for pilots. While disability insurance provided by airlines is generally comprehensive, it doesn’t cover long-term care. Nick advises pilots to consider long-term care insurance between the ages of 50 and 65 to cover potential future expenses not included in their standard benefits.

Estate Planning

Estate planning is crucial for everyone, not just pilots. Ensuring that assets are distributed according to one’s wishes is vital. Nick collaborates with estate planners and offers software solutions to help pilots create wills, estates, and trusts affordably. This planning is especially important for those with complex family situations, ensuring their financial legacy is secure.

Managing Risk and Alternative Investments

Pilots often have high salaries and generous benefits, leading to the issue of maximizing their retirement accounts too quickly. Nick addresses this by exploring alternative investments such as private real estate, private equity, and private credit. These options provide higher returns than traditional investments and help pilots build additional wealth once their foundational retirement accounts are maxed out.

Risk management is another critical area. Pilots typically want the best available investment strategies, which sometimes involves higher risks. Nick ensures that the baseline is secure, focusing on maximizing 401(k) returns and other retirement accounts. Once this foundation is established, he explores riskier investments to potentially yield higher returns.

Tax Planning and Roth Conversions

Tax planning is an integral part of Nick’s strategy. He emphasizes the importance of minimizing tax liabilities both now and in the future. One effective method is the Backdoor Roth IRA, which allows pilots to save tax-free. Another strategy is converting part of their 401(k) to a Roth IRA after retirement when their income is lower. This conversion leverages lower tax brackets, ensuring that future withdrawals are tax-free.

The timing of these conversions is crucial. Pilots often retire at 65 but aren’t required to take minimum distributions until 73. This gap provides an opportunity to convert portions of their 401(k) to Roth IRAs at a lower tax rate, significantly reducing their tax burden in retirement.

Personalized and Custom Approach

Nick’s approach to financial planning for pilots is highly personalized. He understands that each pilot’s situation is unique, requiring tailored strategies. Whether it’s setting up emergency funds, exploring alternative investments, or managing retirement accounts, Nick ensures that his clients are well-prepared for any financial eventuality.

He also emphasizes the importance of regular reviews. Meeting with clients every quarter allows Nick to adjust strategies as needed, ensuring that pilots stay on track to meet their financial goals. This proactive approach provides peace of mind, allowing pilots to focus on their careers and families while knowing their financial future is secure.

Conclusion

In conclusion, Nick Coleman’s expertise in financial planning for pilots offers invaluable guidance for navigating the unique challenges they face. His tailored approach, leveraging strategies like the PCRA, Backdoor Roth IRA, and comprehensive tax planning, ensures that pilots are well-prepared for a secure retirement. By focusing on personalized plans and regular reviews, Nick helps pilots achieve their financial dreams, from takeoff to touchdown in retirement.

Next Steps

For pilots seeking specialized financial advice, co nnect with Nick Coleman by setting up a call today!

When can I retire? Navigating Retirement

Posted on March 27, 2024January 19, 2025 by Brian Colvert

Are you contemplating retirement? Are you wondering when you can retire?

In the most recent episode of The Field Guide Podcast, Brian Colvert, CFP® of Bonfire Financial, dives into the complexities of retirement planning and addresses the question we often get asked… When can I retire? From financial considerations to psychological readiness, Brian offers insights to help you navigate this significant life transition.

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Psychological Preparedness:

One of the key factors in determining when to retire is psychological readiness. Many individuals tie their identity to their careers, making the prospect of retirement daunting. Brian emphasizes the importance of having a plan in place to alleviate anxiety and uncertainty. Whether it’s traveling, pursuing hobbies, or spending time with loved ones, having a structured schedule can enhance the retirement experience.

Financial Considerations:

While psychological preparedness is crucial, financial planning is equally important. Brian acknowledges the variability in retirement lifestyles, from extravagant globetrotting to simpler pleasures like hiking and local gatherings. Understanding your current expenses provides a baseline for retirement preparedness. Contrary to the popular notion that retirees spend significantly less, Brian suggests that initial retirement years may involve increased spending due to travel and leisure activities.

The 4 Percent Rule:

To estimate retirement income needs, Brian touches on the 4 percent rule—a widely used guideline in financial planning. By dividing the desired income by 4 percent, one can determine the required investment portfolio. While this rule provides a starting point, Brian emphasizes the need for flexibility and ongoing financial planning.

Beyond the Basics:

Retirement planning extends beyond simple calculations. Brian highlights the importance of accounting for factors like healthcare costs, inflation, and unexpected expenses. Collaborating with a financial advisor ensures a comprehensive strategy tailored to individual needs and goals.

Final Thoughts:

Answering the question of “When can I retire?” requires a blend of financial prudence and lifestyle considerations. While the prospect may seem daunting, proactive planning can pave the way for a fulfilling retirement experience.
If you’re seeking personalized guidance or additional resources, don’t hesitate to reach out to us. Our team is dedicated to helping individuals like you achieve their retirement aspirations.

Remember, retirement is not just about reaching a financial milestone—it’s about crafting a life that reflects your values and passions. Start planning today to embark on a retirement journey that’s as rewarding as it is fulfilling.